By Ryan C. Wood
Yeah, I know you were not. That does not mean a judgment, that is, a default judgment was not entered against you accruing judgment interest at 10% per annum (California Law). You were sued and the process service company committed a fraud when serving you. They lied about who they served and even possibly when you were allegedly served. The process service company then sent a proof of service to the attorney that filed the lawsuit against saying you were somehow personally served with the summons and complaint. The attorney that filed the lawsuit says great and files the proof of service with the court. You never knew about the lawsuit so time to answer the complaint expired and the plaintiff requested and received a default judgment against your for $11,000. The original issue was a credit account you stopped paying two or three years ago; breach of contract. Your bank accounts can be levied on. Your wages can be garnished. A judgment lien can be recorded against your home or other real property if you own any. Not good.
The lawsuit filer does have information about you that may or may not still be accurate. You filled out an application for the credit card or some other type of credit account. You also made payments on the debt and your checks provide additional information. Your address, phone number and bank account information.
You are now finding out about the lawsuit because your employer received a wage garnishment notice or your bank account was levied on. I know, this is the first you are hearing of this lawsuit. The lawsuit was probably filed over five years ago and has now grown in amount substantially given the 10% judgment interest and addition of attorneys’ fees and expenses. So what happened?
Top Five Indicators The Lawsuit Was Served Illegally
1. The Debt or Judgment Is Being Enforced By a Third-Party
These are in no particular order, but the judgment will probably be held or enforced by a third-party collection agency or debt buying company and not the original creditor you did business with. I have never dealt with this issue when JP Morgan Chase, N.A. or Wells Fargo, N.A. is the named plaintiff and sued someone for breach of contract for nonpayment on a credit card. It is always some company you will never have heard of that bought the original debt or was assigned the right to enforce the debt.
Why is this? It is called capitalism. The third-party collection agency purchased the original claim against you for less than the amount originally owed. It is in their financial interest to make the amount owed as large as possible period. If you try and settle with them they can ask for more money and they make more money. If they garnish your wages they can get more money.
It is like anything with high risk. They have to balance out all of the claims they purchase that they get nothing on with the ones they do get paid on.
2. The Default Judgment Is Being Enforced 5 Years Or More After It Was Entered
Overwhelmingly the default judgment is being enforced as long as possible from the entry of the illegal default judgment. There are two reasons for this. The main reason is to make your ability to prove the service of the summons and complaint was illegal. Obtaining records and other proof of your whereabouts from 7 years ago can be challenging. If you were working at the time the proof of service says you were served at your home do you still have the pay statement evidencing this? If you are no longer at that job will your former employer help and provide you pay statements from 7 years ago? If you were living at an address that is different than the address listed on the proof of service do you have your rental agreement from 7 years ago? It can be very challenging to obtain evidence of your circumstances from 7 years ago. So they wait. The default judgment is good for 10 years and then can be renewed.
The other reason is the judgment interest keeps accruing. If the default judgment was only $3,500 the judgment interest here in California accrues at 10% per annum. In 7 years that $3,500 default judgment is now includes $2,450.96 in interest for a total of $5,950.96. Why enforce the default judgment and only receive $3,500 when we can just wait, let the interest accrue and make your ability to prove the service of the lawsuit was not proper more difficult.
3. The Proof of Services Says You Were Served By Substitute Service
So what is substitute service? It is another form of personal service. It means someone else was served with the summons and complaint other than you. In California there are a number of requirements to substitute serve someone, but the general requirements are three or more failed attempts at serving you at your dwelling house or usual place of abode. Then someone you live with over the age of 18 can be served instead. The process server will give the summons and complaint to your roommate, spouse or some other person over the age of 18 that also lives in you dwelling house or usually place of abode. Then the summons and complaint must be mailed to you at that service address as well. A declaration of due diligence is filed with the court describing all of the attempts at service and a description of who was served on your behalf.
You can be served at your place of employment if the summons and complaint are left with your boss or someone in charge. There are issues with personal service by substitute service at your place of employment though given the nature of it. You can even be served personally but publication believe it or not.
Time and time again there is a description of a human being you have no idea who that person is. If your name is Maria Rodriguez they will insert a description of a Latino person male or female. Yeah, I know you have no idea who that person is because they never substitute served them. It is just a made up person. The problem is height and age are difficult to know when just looking at someone, so there is some gray area.
The thing is many times someone is living alone. Or the substitute service was at an address you no longer lived. There is absolutely no one to substitute serve. Nonetheless there is a proof of service signed under penalty of perjury that says you were personally served and a default judgment was entered against you.
4. The Lawsuit is a Collection Lawsuit For Breach of Contract
I am talking about primarily collection lawsuits for various debts such as credit cards, medical debts or personal loans. For whatever reason you stopped making payments therefore breaching the contract. It is easy to hide a lawsuit for an unpaid debt. It is not possible to hide a lawsuit between neighbors for building a fence on the others property or a lawsuit that is filed to actually fix a problem in real life. The problem cannot be ignored for years and a party wants it resolved and a lawsuit is filed to have the fence removed. It is very easy to hide a lawsuit for an unpaid bill and have the lawsuit move forward without your knowledge.
5. You Find Out About The Lawsuit Due To Collection Efforts
Okay, so now 7 years have gone by and the third party collection company that can enforce the illegal default judgment comes to life. Seven years of interest has accrued so they can maximize their profit. You then get notice of wage garnishment from your employer’s payroll department. Or you get a notice of levy on your bank accounts from your bank. What is this? It is the illegally obtained default judgment coming back to haunt you. In California your wages can be garnished up to 25%. It is usually crippling to most people. Deduct 25% of your income and see if you can get by each month. This is when bankruptcy attorneys usually get wind of this problem.
So What To Do Now?
The first thing you need to do is investigate how the plaintiff or third-party plaintiff collector obtained the default judgment against you at all. You will need to obtain the complaint and proof of service that were filed with the Court. These documents in some jurisdictions were free online. These days like many things that used to be free from the government there is a fee. You may have to create an account and then pay around a $1.00 per page for the documents. You need to know how and when the plaintiff and now judgment creditor alleges you were served with the summons and complaint. First was the debt your debt? Do you remember incurring the debt and then not paying it? Next review the proof of service for the date, time, location and description of the person that was allegedly served. If there are any inaccuracies or impossible circumstances listed you may or may not want to seek advice of counsel about seeking recourse.
Getting Rid of the Default Judgment
So this is not so simple and it is not free. If the service was illegal the process server or plaintiff should have to pay for getting rid of the default judgment. Nothing is ever that simple though. The first thing you must consider is what is the recourse if you are successful in getting the default judgment vacated? Can the plaintiff just turn around and then immediately serve you properly and proceed to collect on the judgment? If so what good is spending the time and money to get rid of the illegal default judgment? If you get rid of the default judgment do you have funds to try and settle the debt or make payments so the plaintiff will not continue to seek a judgment against you again? Can the case be dismissed entirely with prejudice with prejudice so you never have to worry about it again? There are many issues to discuss as to what to do about an illegally obtained default judgment. Everything takes time and money and there is no guarantee the Court will vacate the default judgment or make the other party pay for the time and expense to make it right.
Bankruptcy Could Be The Answer
Sadly filing for bankruptcy and obtaining a discharge could be the cheapest, quickest and easiest way to stop the wage garnishment or bank levy. Filing bankruptcy fast enough can even get back garnished earnings or levied funds. Please contact a bankruptcy attorney in your jurisdiction for more information about whether you qualify to seek relief from your debts via bankruptcy. Bankruptcy will make it all go away forever by federal court order; an order of discharge. You have to file for bankruptcy to get it though………….