What seniors should know about debt collection (second part of a two-part article)
In part one of this article, we discussed the substantial increase in consumer debt by older Americans and the anticipated increase of subsequent debt collection efforts against older Americans. Thereafter, we began a discussion of what seniors should know about debt collection so as to prepare for that unwelcome event should it arise. We now continue with a discussion about litigation, the first significant step in debt collection.
Once demand letters have been delivered and an amount of debt remains thereafter, the collection of consumer debt, whether secured or unsecured, is generally addressed through use of civil litigation. A civil lawsuit, also referred to as civil litigation, is a lawsuit authorized by non-criminal statutes in Missouri. In the alternative, criminal lawsuits rely upon Missouri criminal statutes for their authority. Unlike criminal lawsuits that involve governmental authorities, fines and/or incarceration, civil lawsuits commonly involve damage awards, individuals, groups of people, businesses, or other legal entities and incarceration is not a factor.
In a civil dispute, both plaintiffs and defendants should consider consulting with an attorney for legal advice before beginning the process. More specifically, you should always hire an attorney when there is a lot of money at stake, your opponent has an attorney, and if you feel you are in over your head. Once the decision to hire an attorney is made, you should consider the following variables when picking an attorney: (1) seek referrals from friends and family you trust; (2) you should find an attorney with a history of helping others in the areas of debt collection and defense; (3) find an attorney well respected in your community or by his or her legal associations; (4) find an attorney located in your jurisdiction (or the jurisdiction of where the dispute arose); and (5) find an attorney you can afford. The initial consultation with an attorney will allow legal counsel to assess your case and provide a summary of the potential pitfalls. Ultimately, you want an experienced civil lawyer that makes you feel comfortable.
With legal counsel in place, a debtor should prepare for the process of civil litigation. First, confirm the case is filed timely and is within the state’s statute of limitations. If filed untimely, the plaintiff is precluded from seeking any damage award from the debtor regardless of whether the case is supported by evidence or not.
If timely filed, the case follows four common steps: (1) pleadings; (2) discovery; (3) trial; and (4) appeal. Pleadings are a written complaint, filed by a plaintiff which initiates a lawsuit. Each complaint sets forth the relevant allegations that gave rise to one or more legal causes of action along with the plaintiff’s request for damages or prayer for relief from the court. While there are instances when pleadings may be filed in other jurisdictions, most pleadings are filed where the debtor resides. Our constitution has long established that each defendant is afforded due process. Due process provides that each defendant in civil litigation has the opportunity to defend themselves against the allegations set forth in the pleadings. Among those defenses are the response that the allegations are untrue, or that the alleged amount set forth in the pleadings was already paid.
While due process is an inherent power enjoyed by all defendants in the United States, that power is not enjoyed without some legal obligations placed on the defendant. For example, if a defendant fails or refuses to appear in court timely or does not file an answer to the pleadings, then the court may enter a judgment determining the plaintiff has proven its case and is awarded an amount of damages even if the pleadings themselves are incorrect, mistaken or untrue.
Once a lawsuit is underway and the defendant has timely addressed and responded to the pleadings, the parties to the lawsuit begin gathering information related to the case in preparation for trial. This investigative process is commonly referred to as discovery. In general, discovery is a process of exchanging information, either written or oral. Written discovery is most often performed through the exchange of Interrogatories or Requests for Production of Documents and Things. These requests for information often narrow the contested issues between the parties. Oral discovery is generally performed through depositions. Depositions are incredibly valuable in that witnesses to an event may be called to answer questions under oath in advance of trial. The process locks in a person’s testimony and also provides the party asking questions with valuable intelligence on the credibility of the person being questioned.
Upon conclusion of discovery, if the matter remains contested, a trial occurs. Trials are proceedings in which plaintiff and defendant to a dispute present evidence and make arguments on the application of the law before a judge or jury. If an older adult debtor does not prevail at trial, a judgment will likely be entered.
An appeal is the final step in litigation. If the amount in question is large enough to warrant an appeal and the losing party is somewhat certain an error was made at trial, he or she may seek to file an appeal wherein the case is brought before a higher court for review of the decision of the lower court.
Once all appeals have been exhausted and the judgment is determined to be valid, the plaintiff may request the court assist in post-judgment execution procedures to collect the amount reflected in the judgment. Post-judgment procedures generally include (1) an application for a garnishment of the defendant’s wages; (2) an execution against a known bank account owned exclusively by the defendant; (3) or a lien against real property owned exclusively by the defendant. In Missouri, plaintiffs may also obtain post-judgment interest on judgment amounts. Recently, the Missouri Supreme Court held if an amount of interest is not written in a judgment, then post-judgment interest shall accrue at the statutory rate, which is currently 9% per year, non-compounded.
Todd Miller is a monthly contributor and regularly writes and speaks on various legal topics including bankruptcy, estate planning, probate and elder law. He formed the Law Office of Todd Miller, LLC, 1305 Southwest Blvd., Ste. A, Jefferson City, Missouri in 2006 and represents civil, criminal, business and governmental clients. Most recently, he was recognized by the Missouri Bar in its Best of CLE Spotlight for his contribution to educate Missouri lawyers and in 2016, he received the prestigious Adviser of the Year award by GolfInc. Mr. Miller earned his juris doctorate degree from the University of Missouri School of Law in 1999 and graduated with honors from Lincoln University in 1991. You may find him at www.toddmillerlaw.com (573) 634-2838 or on Facebook, LinkedIn, and Twitter.