Fighting a default judgment for debt

If first hearing was missed for legitimate reasons, you have a chance

Court judgements for debt: after the gavel

Having a judgment for debt filed against you is frightening, but not the final word. Consumers have choices when dealing with a court judgment.

Fighting a debt judgment in courtEven after a court enters a judgment against you, it is possible to fight the decision -- and win.

In John Grisham novels, the final banging of the gavel is a climactic affair that draws everyone in town to the courthouse. In reality, most judgments for debt are issued quietly with just one side present -- the creditor. In some districts, the debtor fails to appear in 95 percent of debt collection cases, according to research from the University of Maryland Law School.

How do you know if you should fight a judgment? The answer depends on the reason for missing the original court date in the first place. If you received papers in advance of the date and simply skipped the proceeding, judges are not likely to hand out a second chance, consumer lawyers say. "At that point it's a real uphill battle," said Rex Anderson, a consumer lawyer in Michigan.

But if you did not receive notice, there's a good chance of having the default judgment set aside, or "vacated," in legalese. Often clients "only become aware of the judgment when a wage garnishment begins," said Martin Wegbreit, director of litigation at the Central Virginia Legal Aid Society in Richmond. In Virginia, for example, process servers may mail papers to your home instead of delivering them in person -- but they frequently use an old address. Clients can erase the default judgment by showing they lived elsewhere.

"I would say that in 10 to 20 percent of cases, they have the wrong person," said Joanne Faulkner, a consumer attorney in Connecticut. Also, military service members on active duty have additional protections under the Servicemembers Civil Relief Act, which debt collectors may have ignored.

In California, process servers might claim to have handed papers to you when in fact they did not, said Fred Schwinn, attorney at the Consumer Law Center Inc. in San Jose. Sometimes his clients can prove they were not at home -- for example, with a pay stub from their workplace -- at the time the papers supposedly arrived.

"Proving a negative is never easy -- consumers are at a disadvantage," Schwinn said.

Process servers are paid a flat rate per lawsuit, regardless of how many visits are necessary to reach the defendant, creating incentives to fudge the delivery records. As a result, Schwinn said, faulty service crops up in many debt collection cases. "I've had people who found [papers] under a mat on their front porch," he said, even when process servers swore they put the papers into defendants' hands.

Document the reason you missed
Other valid reasons for missing the original court date, such as health problems or car trouble, have erased default judgments, lawyers said. The key, they said, was documenting the excuses, for example with hospital bills or auto repair records.

Having the judgment set aside may be only half the battle. Once a new proceeding is set, consumers should prepare to defend the debt charges with their own records. Courts, especially small claims courts, often have information on their websites about how to prepare a case, aimed at do-it-yourself defendants. But unless the court is for nonlawyers only, it is good to have the help of an attorney. You might qualify for subsidized legal aid based on income or hardship. Check with the National Association of Consumer Advocates to find a consumer lawyer in your area.

The most vulnerable points of the creditor's case are likely to be their proof of the amount you supposedly owe, and its unexpired status under the statute of limitations. The time limit is four years in many states and three in Delaware, whose law applies to cards issued by Chase, BarclayCard, Discover and Bank of America. Debt buyers also need proof that they own the debt, usually in the form of a sale contract from the original creditor, consumer lawyers say. If the default judgment is set aside, the burden of proof is on the creditor to show that the debt is valid and accurate.

If you lack a slam-dunk defense against the debt, your chances for success vary greatly. While some courts allow a debt buyer's sworn statements to serve as proof of the debt, others require account documents showing the amount due. Consumer lawyers say that in some districts, the creditor often drops the case before trial rather than come up with years-old documentation. In Wisconsin, the legislature confronted this practice by enacting standards of proof for default judgments, requiring documentation of the debt.

Even if the creditor's proof of the underlying debt is strong, lawyers say it makes sense to fight an unfair default judgment when you have not been notified of your court date. Erasing the judgment will give you more leverage in settlement discussions, and will keep the judgment off your credit report, although the default on the debt will continue to appear.

However, if it looks like the creditor is holding a winning hand, one of the other options may be the way to go.

Main story:  Court judgments for debt: after the gavel

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Updated: 01-23-2018