$13,000 Credit Acceptance Judgment Vacated for Lack of Personal Service – Alabama Collection Defense Attorney Judson E. Crump

In 2012, Credit Acceptance Corporation took a Default Judgment Against My Client for $8,177.

She knew nothing about it, however, until one day in the middle of 2017, when her boss told her that 25% of her upcoming paycheck was going to be garnished!  She looked at the writ of garnishment and saw that it came from a judgment that had been entered against her by Credit Acceptance back in 2012.  Looking into the court records, it turns out that they had sued her for an old car note that she thought had been paid.  The car was repossessed and sold, and she hadn’t heard a word from Credit Accpeptance since.

And because she had paid a lot of money for the car, she figured that the value of the car was at least as much as what she owed them for it.  She was, unfortunately, wrong.  As is too often the case, when her car was repossessed, the creditor appears to have sold it for a mere fraction of its real market value and leaving her with a big bill.  So they had apparently sued her.

But they never notified her of the lawsuit.

Instead, they sent a process server to her uncle’s house.  Her cousin answered the door and introduced herself.  The process server handed the cousin the paperwork and left.  Based on his report, Credit Acceptance told the Court that they had properly notified my client of the lawsuit.

They were wrong.  Rule 4 of the Alabama Rules of Civil Procedure says that you have to serve someone with notice of a lawsuit personally or by delivering it to their residence.  In this case, Credit Acceptance had done neither.  But the court had no idea of the truth, so when Credit Acceptance filed a Motion for a Default Judgment against my client, the judge granted it.  That is how a judgment can be entered against you without you knowing it.

Luckily, she came to me and we were able to gather the proof that we needed to show that she had not, in fact, been living at her uncle’s house at the time she was allegedly served with the court papers.  I filed a motion to vacate the default judgment, and we provided copies of her utility bills at her real address to show that she had really been living somewhere else and hadn’t received her papers.

We went to court and we won.  The judge granted our motion.  The default judgment was set aside, and because the judgment was void, the garnishment had to stop.

You can see a copy of the order here: Order Vacating Default – Credit Acceptance 2017

This was an important win for our client because a judgment can be reported against  you for 10 years.  If you vacate the judgment, it can no longer be reported against you.  Note that vacating a default does not automatically deal with the underlying lawsuit or debt: it gets the judgment off your record and gets you a trial, where you have the chance to defend yourself from the collector’s allegations.  But it is a big win because it takes any garnishment off your back, which saves you a lot of money while you’re waiting for your trial – money you can use to settle the case, prepare for bankruptcy, or simply survive.  If you get a default vacated, it may not automatically come off your credit record – it is always advisable to submit a written credit report dispute to the credit reporting agencies to make sure that they don’t report the debt against you.

NOTE: The facts of this case can be confirmed by Alabama state court records in Case No. 02-DV-2011-92563.