What is a “Dismissal for Want of Prosecution”?

A potential client recently called our office. He said that he has learned that he is being sued for a debt. However, this potential client has not actually been formally served with the lawsuit paperwork. After looking at the online county civil records docket sheet, he noticed that a “Dismissal for Want of Prosecution” (DWOP) hearing is set in the case. He wanted to know what that means.

Whenever a lawsuit is filed with a civil court, the court sometimes immediately sets that case for a DWOP hearing in the near future. (Sometimes, this hearing is simply called a “Dismissal Hearing” or a “Dismissal For Failure to Prosecute Hearing” or something similar.) This type of hearing allows the courts to keep cases moving and allows their dockets to run smoothly. Whenever a DWOP hearing is set, the court is telling the plaintiff to go out there and serve the defendant with the suit; otherwise, the court may dismiss the case from the docket due to the plaintiff’s failure to do so. Texas law mandates that the burden is on the plaintiff — not the court — to make sure that the defendant is properly served with the suit. The DWOP hearing, therefore, is an incentive for the plaintiff to keep the case moving forward, notify the defendant that they have been sued, and diligently prosecute their case. The DWOP hearing is very common in Dallas courts (especially County Courts at Law and District Courts), where it may be set as early as 2 months after a case is filed. On the other hand, I have seen where a DWOP hearing is set 9 or 10 months after a case is filed. The DWOP hearing does not happen as frequently, or as quickly, in Denton or Tarrant counties.

Judgment debtor bank accounts are being garnished…..

If you have had a judgment entered against you as a result of a credit card lawsuit, beware of bank account garnishment. It seems that, based on some recent calls to our office, several of the more aggressive consumer debt collection law firms in the state of Texas have stepped up their post-judgment collection efforts. Bank account garnishments — perhaps the scariest thing for a debtor-Defendant who has had a Judgment entered against them — are being filed in our courts right now.

Garnishment is a fairly antiquated post-Judgment remedy for creditors. It is “a statutory proceeding whereby the property, money, or credits of a debtor in the possession of another are applied to the payment of the debt.” Bank One v. Sunbelt Sav., 824 S.W.2d 557, 558 (Tex. 1992). In reality, garnishment is a lawsuit against the holding bank, not the Judgment debtor, for the assets held on behalf of the debtor: the money in the account. The holding bank, called the garnishee, is formally served the Writ of Garnishment. The debtor must be served “as soon as practicable following the service of the writ.” One Court has said that a 15-day delay in serving notice to the debtor is insufficient. Lease Fin. Group, LLC v. Childers, 310 S.W.3d 120 (Tex. App. Fort Worth 2010).

A little more information about bank account garnishment:

*** Your bank account can be seized as soon as the Court renders Judgment against you and, in some very limited circumstances, before or simultaneously with the filing of a civil lawsuit.

***If your bank account is garnished and you have direct deposit whereby your wages are deposited into the account automatically, funds that are directly deposited into the account after the account is frozen in the garnishment action are frozen, also.

What are your options if this happens to you? There are a few things you can do:

(1) Consider filing bankruptcy. This is likely stop the garnishment in its tracks because of the powerful “automatic stay,” a Federal bankruptcy rule that provides that most creditors must cease all collection activity while the bankruptcy case is pending. The difficulty with filing for bankruptcy is that you will need to act very quickly to file.

(2) Attempt to settle the Judgment. Perhaps call the Judgment creditor and try to work it out before the funds are taken from the account. Many creditors will settle, even at this late stage, especially debt buyers.

(3) Fight the garnishment. You can contest the garnishment action, but it will be an uphill battle. Unless the garnishing creditor has failed to follow the exacting procedural notice or filing requirements or you have a clear exempt source from which the funds in the account derived, you can at least buy yourself some time while the garnishment is pending even if you ultimately have your account zeroed out.

First steps in defending a debt lawsuit…

So you had a debt that you quit paying on some years ago. Perhaps you lost a job and couldn’t pay it. Perhaps a tragic medical situation left you without funds to pay seemingly harmless bills like this one. Or maybe you noticed that your minimum monthly payment amount skyrocketed because of an increased interest rate over which you had no control and decided to protest by not paying. Or maybe some other financial struggle left you with a tough decision to make: let the debt go.

Since you last paid on the account, you may have sought the advice of a debt settlement or credit repair company, but have been frustrated with the results of clearing up the debt. You have felt guilty about owing but not paying, but have not forgotten that it was there (since the negative sign on your credit report will not allow you to forget..) You’ve received, but ignored, lots of collection calls. And here lately, you have gotten some letters from attorneys threatening legal action and offering settlements that you cannot afford. But now a strange person has found you and handed you some paperwork which says you have been sued and tells you, “you have been served.”

What do you do?

First things first, do not overreact. Do not freak out. Stay calm. While no one likes to be sued and you probably do not understand what the court system will be like or what is the worst that could happen to you, you should understand that this kind of thing happens to people all the time. According to judges in our north Texas courts, as many as 60% of all cases filed annually are comprised of debt collection lawsuits. You are definitely not alone: not alone in owing money, not alone in getting sued. This happens to more people than you think.

Second, do not get upset with the person who served you with the lawsuit papers (in Texas, these papers are collectively called the Petition). This person is called a “process server” and their job is to find you and hand you the Petition. That is what they get paid to do. The process server is not the person suing you and is not affiliated with the company bringing its claim against you. The process server is literally the messenger, so don’t hurt or annoy the messenger.

Third, sit down and begin reading through the Petition. The first page, usually called the summons or citation, should read as follows: “You have been sued. You may employ an attorney. If you or your attorney do not file a written answer with the Court… then a default Judgment may be rendered against you.” You will either have 10 or 20 days to file a written response with the Court. This written response is called an Answer. The Answer is your first responsive pleading to the Court; it is your first chance to defend yourself in the lawsuit. You may assert a denial to the creditor’s claims and, depending upon your particular situation, you must include certain things in the Answer like specific affirmative defenses, a plea to the jurisdiction, special exceptions, a special appearance, and other things.

Fourth, you should read the Petition to determine what discovery you must respond to and the deadline to respond to it. Discovery is defined as the “efforts of a party to a lawsuit…to obtain information before trial through demands for information… The theory…is that all parties will go to trial with as much knowledge as possible and that neither party should be able to keep secrets from the other…” In other words, discovery is the process within a lawsuit where a party can gather information and evidence about the other party.

In most of our debt collection cases, the lawsuit paperwork will contain any of four popular forms of discovery: (1) requests for admission, (2) requests for production, (3) request for disclosure, or (4) interrogatories (these are simply written questions which require an answer to be stated under oath, or signed in front of a notary public). If the Petition contains any of these requests, you must respond to them. The deadline for responding to these requests depends upon whether the Petition with which you were served contained these requests. If the requests are contained within the Petition, your responses are due 50 days after you were served. If the requests are served to you after you were served with the Petition, they are due 30 days after you are served with the requests.

There is a lot more to the process, but these are the first steps in defending against a debt collection lawsuit.

Resources for Consumers or Wolf in Sheep’s Clothing

I have a love/hate relationship with all that the internet has to offer.  I preach daily on the importance of information and for consumers to become informed about their rights and the remedies that are available to them. However, the internet is filled with all kinds of misinformation. What used to be a grand source for knowledge and discourse is now run amuck with advertising, promotion and scams. Sadder is that many people are really craving hope and some sites will whisper the words that a consumer craves to hear, but in reality it is just another falsity.

So where should people turn to find the good information? You would think I would say, lawyers…but…well, sometimes the jokes are true (not me of course…).  There are all kinds of valuable trustworthy resources.  First and foremost is the Federal Trade Commission’s website. You can find wonderful materials on every aspect of consumer protection.  For businesses, the FTC provides guides on compliance and for advocates such as myself, you can even order in bulk educational material to provide clients.

Bulletin boards and forums may provide you with comfort with discussing the wrongs that have been done to you, but rarely are you going to find good information about how to protect yourself.  That is one of the reasons why this site is here, but you don’t need to take my word for it, just go to the Federal Trade Commission or your State’s Attorney General’s website and become empowered by the education that is there.

 

 

Notorious debt buyers…

Debt buying companies make lots of money preying on debtors whose delinquent accounts have been charged off by original creditors. They sue people for the full amount of the debt that the consumer owed his or her original creditor, even though the debt buyer paid a cheap price for the rights to sue on the account. How cheap? In many cases, debt buyers pay virtually nothing for the accounts they buy. While the rumors abound as to how little they actually pay, rest assured that it is not very much. I have heard that if a debt buyer pays 12 cents on the dollar for a batch of accounts, they got a “bad deal.”

In our line of work, we see some repeat offenders. Some of the bigger, more nationalized companies sue thousands — perhaps tens of thousands — of debtors per year. These are some of the biggest:

— Midland Funding, LLC

— Equable Ascent Financial, LLC

— Asset Acceptance, LLC

— CACH, LLC

We see massive filings of lawsuits across the state of Texas from these companies. In Collin County, for example, Asset Acceptance filed 19 lawsuits during the month of October, 18 in December, 12 in January, and 12 this month. Midland Funding filed at least 86 different lawsuits in the Denton County court system during the last three months of 2011.

If you are “working” with one of these companies, getting annoyed with their collection efforts, or even getting sued by one of them, you need to understand how they operate. These companies work from a global perspective, dealing with millions upon millions of dollars in charged-off debt and hundreds of thousands of consumers across the nation. You are but one in a million. You are definitely not alone.