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Alabama Couple Sues American Recovery Service, Inc. & Gateway One for Wrongful Taking of Personal Property during Repossession – Alabama Consumer Rights Attorney Judson E. Crump

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American Recovery Service, Inc. is a nationwide repossession agency.  In December of 2017, one of their subcontractors, Semmes Towing & Recovery, repossessed a vehicle which contained several valuable items of my client’s personal belongings.  They refused to return the property unless my client paid a fee.

We believe that this is illegal.  Nothing in the contract (or most purchase money security interest contracts) authorizes any specific fee for the return of personal property that is left in the vehicle at the time of a repossession.  Without a contractual or legal basis for charging a fee, it should not be charged.  Nevertheless, they did.

My client’s grandfather’s vehicle was repossessed by Semmes Towing & Recovery, which was a local subcontractor for American Recovery Service.  American Recovery Service is a nationwide repossession agency which, according to our research, is owned by the Patrick K. Willis Company.  We believe that they have charged people for the return of their own property, even when they had no legal basis for doing so.  If this has happened to you, feel free to call us at 251.272.9148.

We also sued the Gateway One, the finance company that authorized the repossession.  Gateway One Lending & Finance, LLC is a California-based financial institution that purchases automobile retail installment contracts.  In our case, Gateway One authorized the repossession of our client’s grandfather’s vehicle.  We also believe that Gateway One authorized the charging of an unlawful fee for the return of our client’s personal belongings.  We believe that it is illegal for a finance company, repo agent, or repossession agency to withhold unsecured personal property for payment of a fee unless there is a written contractual provision or statute authorizing such a fee.

If you have had a vehicle repossessed by Gateway One and your personal property was not returned for free, please feel free to call our office at 251.272.9148.

Vacating A Default Judgment in Alabama – Alabama Debt and Credit Attorney Judson E. Crump

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When a collection lawsuit is filed against you, failure to file a written answer with the court can result in a default judgment.  If that happens, what can you do about it?

Failing to file a timely answer to a lawsuit is a very bad thing.  A default judgment is just as enforceable as a regular judgment.  Legally, it is just like you went to trial and had a verdict entered against you.  Fortunately, Alabama law does provide you with some help.  Under the classic case of Kirtland v. Fort Morgan Authority Sewer Service, Inc., 524 So.2d 600 (Ala. 1988), the Alabama Supreme Court made it clear that the laws of our state have a strong policy favoring the resolution of cases on the merits, rather than by default.  Under the rule in Kirtland, the courts are supposed to liberally entertain motions to avoid default judgments if they were entered in violation of due process or the rules of civil procedure.

As a practical matter, there are generally two reasons why default judgments get vacated: either the defendant was not properly served with the original lawsuit paperwork, or the defendant had a good reason for not answering in time, and moves the vacate the default judgment within 120 days of it being entered.

Rule 55 of the Alabama Rules of Civil Procedure governs default judgments, and states that a default can be vacated for any reason within 30 days of being entered. If you ask the court to vacate a default within 30 days of it being entered, then you usually have a very good chance of getting the judgment set aside and having your day in court.

The best way to get a judgment vacated is to be able to prove that you never received notice of the lawsuit in the first place.  This is not easy, though.  You can’t just stand in court and say you were never served: you have to present persuasive evidence contradicting the plaintiff’s proof of service.  Before a default judgment can be entered against you, the plaintiff has to file a Service Return with the court.  This document states when and how the plaintiff served you with notice of the lawsuit.  For instance, if a sheriff’s deputy or private process server delivered the papers to your residence, then they will file a document with the court showing just that.  If the Service Return states falsely that you were served personally, then you may need to prove that you were not living at that address at the time you were allegedly served.  Or you may be able to show that they served the wrong person.  Keep in mind, though, that they are allowed to leave the summons at your residence with any adult who lives there.

If you were served with the lawsuit summons, then your options are narrower.  Rule 60 of the ARCP governs judgments generally, and allows a judgment – including a default judgment – to be vacated within 120 days of being entered if the defendant can show that the judgment was entered due to “excusable neglect.”  This includes, for instance, where a consumer debtor hired a lawyer or debt settlement company who was supposed to handle the case, but failed to file an answer or appearance on time.  It could also include a situation where a consumer defendant sent an answer directly to a collection law firm, but failed to file one with the court. The most important thing to remember about these sorts of motions to vacate default judgments is the 120 day rule.  If the motion to vacate is not filed within 4 months of the entry of the default, then you lose, even if you had a good reason for not answering in time.

The trial judge has a lot of discretion and may require testimony as to why the default should be vacated, but in my experience, they usually try to give the honest defendant a chance to have their day in court.

Alabama Consumer Files Arbitration Case Against Debt Settlement Firm Boulder Legal Group, LLC – Alabama Consumer Rights Lawyer Judson E. Crump

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Boulder Legal Group, LLC is a Debt Settlement firm. A recent arbitration case was filed against them by an Alabama couple alleging that despite paying the debt settlement company thousands of dollars to settle some credit card debts, they were sued by Discover Bank and then abandoned by Boulder when they needed them most.

My clients hired this debt settlement company back in October of 2016 to help resolve some credit card debts.  When they signed up with Boulder Legal Group, they were told that they would be protected from collection lawsuits, and that if any collection lawsuits were filed against them, the debt settlement firm would help defend them from the lawsuit.  So they agreed and signed a contract, believing that Boulder Legal Group was a legitimate law firm who would actually defend them if their creditors sued them.

According to the Complaint, the couple made steady payments to this debt settlement firm for months, paying them well over $10,000.  But sure enough, they were sued by Discover Bank for one of the credit cards that they had included in their debt settlement program.  They notified the debt settlement company, and expected some legal defense.  But no attorney ever appeared in the lawsuit or filed an answer for them.  So a default judgment was entered against them for over $12,000.  Soon after that, a garnishment was filed with the court for the garnishment of the husband’s wages.  Neither Boulder Legal Group nor any attorney associated with them filed anything to stop the garnishment, to defend the lawsuit, or to prevent Discover from obtaining a judgment against them.

So they came to us.  Like all predatory contracts, the agreement they signed with Boulder Legal Group contained a mandatory arbitration provision and class action waiver, which was designed to prevent consumers from getting their cases to court.  We filed an arbitration case against Boulder Legal Group, the Law Offices of Camron Hoorfar (an attorney associated with Boulder), and Global Client Solutions, LLC (the payment processing company used by Boulder Legal Group).

The arbitration demand alleges that Boulder Legal Group and its attorneys committed legal malpractice by failing to provide any defense whatsoever when our clients were sued by Discover Bank.  It also alleges that Global Client Solutions, LLC violated the Electronic Fund Transfers Act by failing to send written statements to our clients, which prevented them from ever seeing where their money was going.

If the arbitration is successful, we should be able to obtain a court judgment against this debt settlement company, putting a public record out there for the information of anyone else who may find trouble from this company.

Debt Settlement companies are almost always scams.  I’ve never encountered one that has done a good job for their clients.  As an attorney, I am disgusted by out-of-state lawyers who fool people into paying good money for what they believe to be bona fide legal representation.  If you are considering hiring a debt settlement company, don’t.  Talk to a real, local lawyer today.

Joint Bank Accounts in Bankruptcy – Alabama Bankruptcy Attorney Judson E. Crump

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Here’s a question I recently received from a potential client considering Chapter 13 bankruptcy:

“My husband and I need to file Chapter 13 to save our business tools and other assets from credit card companies and their debt collectors.  We don’t have much cash on hand or in the bank, but my elderly mother has a substantial savings account with my name on it.  The money in there belongs to her and is used solely for her care and needs: my name is jointly on the account just to allow me to help handle her affairs.  Will the bankruptcy court take that money?”

This is a great question that not only illustrates the difference between Chapter 7 and Chapter 13, but also touches on a very important issue for lots of people in this situation.  If you’ve been an adult for long enough, chances are you have found yourself in the often difficult position of being responsible for the business affairs of an elderly relative.  One of the more common ways that people manage money for others is by adding their name to a joint bank account with the relative.  At first glance, this seems like a reasonable way to help manage a relative’s money, but if you’re facing financial troubles of your own, then it can be dangerous for both you and the owner of the money.  If you end up drowning in debt and need to declare bankruptcy, then you will have to face the question of how to handle the bank accounts that are attached to your name.

You may be tempted to think that since the money in the account is “not really yours” and didn’t come from your own income or property, then that it shouldn’t be available to your creditors.  But you’d be wrong.  If your name is on the account, then legally you have access to all the money in the account.  And so do your creditors.

This applies both to garnishments before you file bankruptcy and in a bankruptcy case itself.  Section 541 of the Bankruptcy Code defines “property of the estate” to include “all legal or equitable interests of the debtor in property as of the commencement of the case.”  Translation: if it has your name on it, it’s part of the bankruptcy estate.  This means that unless the money can be claimed as exempt under your state’s law, then it belongs to your bankruptcy case and is under the power of the bankruptcy trustee.

However, this doesn’t mean that the money just automatically disappears when you file a bankruptcy.  What happens to the money depends on what type of bankruptcy case you file.  If you file a Chapter 13, for instance, then the money will remain in your account, but you’ll just have to account for it in your Chapter 13 Plan.  In Chapter 7, however, the trustee is authorized to take and liquidate your assets, and if there’s a substantial amount of money in the account, he certainly will.  So if your name is on a joint account for a loved one, then one option is to simply file Chapter 13 and have your attorney account for the value of the money in your payment plan.

The general rule in Alabama is that ALL of the money in a joint account is garnishable by your creditors, unless you can affirmatively prove that the money really belongs to someone else. Amarlite Architectural v. Copeland Glass, 601 So. 2d 414 (Ala. 1992).  Under the Amarlite rule, it could be possible to prove that you didn’t really own the money in the account, but that could be a very difficult and risky undertaking.

“What if we just take my name off the account?”

Too late.  There’s another provision in the Bankruptcy Code that specifically forbids this.  Section 548 of the Bankruptcy Code requires you to disclose any transfers of property during the 2 years preceding your bankruptcy filing, and allows the trustee to recover any property transferred for the benefit of a relative during that time frame.  So if you were to take your name off the account, the trustee could simply un-do that transaction and take back the money.  If you have already taken your name off of a relative’s bank account, then you will need to wait 2 years before filing any sort of bankruptcy.

A better way to deal with this situation is to never put yourself in this position in the first place.  Rather than put your name on a relative’s account, you could create a trust account with you named only as a trustee and the relative as the beneficiary.  Any decent estate planning lawyer can help you with this.  There are huge risks involved in putting your name on someone else’s account, and you need to think about it before you do so.

Is this Debt Collector a Scam? – Alabama FDCPA Attorney Judson E. Crump

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There are a lot of Scam Debt Collectors out there.  How do you tell the real ones from the scammers, though?  Here’s a quick guide.

Debt collectors can be scary.  Really scary.  They can call you all the time, send you frightening letters, report your delinquencies on your credit reports, and even take you to court.  But there are lots of things they can’t do.  They can’t lie to you.  They can’t threaten to sue you when they either have no right to sue or intention of suing.  They can’t use harassing or offensive language.  They can’t tell other people about your financial woes.  And here’s one important thing they have to do: within 5 days of first making contact with you, they have to send you a written letter explaining who they are and why they’re pestering you.  When it comes to distinguishing scams from real debt collectors, this is the most important provision of the Fair Debt Collection Practices Act (or FDCPA).

Why?  Because the scammers never follow this part of the law.  Never.  Here’s a common scenario: out of the blue, you get a phone call from some stranger saying that you’ve got a big unpaid bill that must be taken care of now.  If you don’t pay up, they say, they’ll send the cops, serve papers on you, garnish your paycheck, or put a lien on your property.  Scary stuff, right?  So you ask what they’re collecting and for some proof, and they verify your name and address, maybe even your social security number or account number.  Now you’re even more scared because they seem to know so much about you.  If they know that much, they have to be legitimate, right?  WRONG.

In today’s world of mass data breaches, Dark Web ID Thieves, and election-warping Russian hackers, getting your personal information is easier than ever.  If you’ve ever had an account with any company that’s been hacked, a scammer can buy your personal information off the Dark Web for a few bucks per account.  But that doesn’t make them legit.  On the contrary, it makes them criminals.

Fortunately, there’s a very simple test to determine whether or not a debt collector is real or scam: do they have a physical address in the United States of America?  If so, they’re probably a real debt collector (but who may still be breaking the law).  If not, they’re a scam.  It is literally that simple.

Let me repeat that: if a debt collector refuses to give you their address, they are a scam.  Period.

How do you go about finding their address?  Offer to send a money order.  Real debt collectors love accepting money orders at their place of business or payment address.  Scams don’t have a payment address because they’re afraid of getting shut down by law enforcement.  If you offer to send them real money, a real debt collector will gladly tell you where to send it.  Scammers, however, will only make excuses like “we can only take a debit card or Western Union,” or “it’s too late, the payment has to be made over the phone.”  Legitimate debt collectors don’t do that.  Trust me.  If a debt collection scam refuses to give you a real address, you know they are fake, and you can tell them that.  There’s nothing they can do to you.  Furthermore, you should go ahead and report them to the CFPB or your state attorney general’s office.  The people in power need to know that this is going on, and they need to hear from you so it is a priority to protect all the consumers out there who are getting scammed.

So please, please, please: if you know anyone who’s dealing with a collection scammer, tell them not to pay them anything.  You aren’t getting anything for your money, and you’re just donating to criminals.  These scams are pervasive nowadays, and it breaks my heart to hear about how many honest working Americans are getting fooled by these criminals.

Someone who owes me filed Chapter 7 Bankruptcy. When do I get paid? – Alabama Bankruptcy Lawyer Judson E. Crump

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Someone owes you money.  After months of haggling and waiting for them to pay up, you hear that they’ve filed bankruptcy.  Chapter 7.  How are you going to get paid now?

Answer: You probably won’t.

Yeah, I know that isn’t what you wanted to hear, but that’s the truth.  The vast majority of bankruptcy cases involve little to no distribution to unsecured creditors.  “Unsecured” means that the debt isn’t secured by any collateral.  In other words, there isn’t a particular piece of property that you can take if they don’t pay you.  There’s just a regular old unpaid debt.  Secured creditors get treated differently depending on what happens to their collateral, but unsecured, non priority creditors don’t have much recourse when a debtor has filed bankruptcy.

“But that’s not fair!” you say, “This is a legitimate debt!”

Yes, and so are all the other debts that are drowning the debtor.  The purpose of bankruptcy isn’t to make sure that you get paid.  It’s to recognize that you can’t get blood from a turnip, and rather than require the debtor to spend his entire remaining life trying to pay you (and everyone else) back, we let the debtor use this legal process to get a fresh start.

To prevent debtors from abusing the system, it has a lot of limits.  If the debtor has lots of property, he’ll lose it in order to get you paid.  If the debtor has too much income, he’ll be forced to file Chapter 13 instead of Chapter 7 in order to get you paid.  If the debtor is hiding assets or lies to the bankruptcy court, he can be prosecuted and thrown in jail.  If he had assets but tried to get rid of them before he filed bankruptcy, those assets can be yanked back and sold to get you paid.  And once he’s filed, he can’t file Chapter 7 again for another 8 years.

So if you have a friend, customer, or business associate that owes you money, you may want to consider working out a compromise settlement.  Because if he qualifies for Chapter 7, he may just leave you with nothing.

Finally, note that every bankruptcy case and every debtor is different.  There are a lot of factors that go into whether someone will file bankruptcy, what chapter they’ll file under, and how they’ll treat their creditors once they’re in bankruptcy.  The first thing you need to do if someone who owes you files bankruptcy is talk to a knowledgeable bankruptcy lawyer who can advise you as to your rights.

Can I keep my car loan out of my Chapter 13 Bankruptcy? – Alabama Bankruptcy Attorney Judson E. Crump

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 I’m going to file Chapter 13 Bankruptcy, but I don’t want to include my car.  Can I do that?

No.  At least, not unless you have a really compelling reason to do so.  I’ll tell you why in a minute.  But first, let’s talk about some definitions.  As a lawyer, I get a lot of questions from folks who want to keep a certain debt or two “out of the bankruptcy.”  And I always have to ask: what do you mean?  Most folks want to keep a certain credit card (maybe for convenience when they don’t have cash) or keep their “good name” with a particular creditor or with a co-signor.  That’s fine, and I understand the impulse, but it’s technically impossible to keep any debt out of your bankruptcy.  Even in the rare cases where you can pay a debt directly to the creditor and not through the Chapter 13 Trustee, that direct payment has to be spelled out in the Chapter 13 plan you file with the Bankruptcy Court, and therefore is technically a part of your bankruptcy plan.

And regardless of how you end up paying them, all of your creditors have a right to be notified of your bankruptcy filing, as do all of your co-signors.  I get it.  It’s embarassing, and you may wonder why they have to know about it, but think about it from their standpoint: if someone you co-signed a loan with filed bankruptcy, wouldn’t you want to know?  Yeah.

So let’s move on to how you can (or can’t) keep a particular creditor from being paid through the Bankruptcy Plan.

As a general rule, the Trustee will insist that you pay all short term debts through the plan.  “Short term” in this case meaning debts whose last payment is due before your plan ends.  So if you have 4 years left on your car note and your bankruptcy plan is going to be 5 years, the car note is considered a short term debt.

However, if you had one of those ridiculous 7 year car loans with a low interest rate and a 5 year bankruptcy, then you could possibly get away with paying the car note directly because that would cost you less.  Paying the car off through your bankruptcy case requires you to cram those 7 years of payments into your 5 year Chapter 13 plan, which naturally increases the amount you’ll have to pay each month.  If you have the income to afford it, that’s fine because you’ll have your car paid off that much sooner.  But otherwise, you’re better off paying it directly.

The “long term” car note is a rare case, though.  The vast majority of car notes are paid through the trustee payments.  Indeed, this is what most debtors want to do, because most debtors file Chapter 13 precisely because they are behind on their payments and want to use the Chapter 13 process to cure their defaults.  In other words, when you’re already in ‘bad standing’ or ‘default’ with a creditor, you don’t care if they have to wait until the Trustee sends them their money.

The other situation where it may be possible to pay a particular debt directly rather than through the Trustee is where that debt is secured by valuable collateral and is being paid by a co-signor who is not part of the bankruptcy.  Example: Debbie files Chapter 13.  She’s a co-signor on her father’s truck, and her father pays the truck note every month.  If she includes it in her Chapter 13 case, her father’s credit may take a hit.  To prevent this, she includes a provision in her plan stating that the truck will be paid directly by a non-filing co-signor.

But those are the exceptions.  The fact of the matter is, if you owe someone money, they are going to have to eventually learn about your bankruptcy filing, and in Chapter 13, you will most likely have to pay them through the bankruptcy plan.

Creditcards.com article on Credit Cards Issued to Minors cites Mobile, Alabama attorney Judson E. Crump

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Opening Credits, the Q & A section of Creditcards.com, recently interviewed me about the law in Alabama as applied to minors who obtain credit cards in their own names.

Ms. Erica Sandberg writes a periodic advice column on the popular credit advice website CreditCards.com.  One of her readers had a question about the enforceability of a credit card contract entered into by a minor.  In Alabama, minority is a defense to a breach of contract lawsuit.  To enforce a contract, the creditor must show that there was an offer, an acceptance of that offer, consideration exchanged, capacity, and legality.  The age of the person entering the contract can create an issue regarding the person’s capacity to enter into a contract.  The general rule in Alabama is that contracts entered into by minors are voidable.  See Ex Parte Odem, 537 So.2d 919 (Ala. 1988).  This means that they aren’t automatically invalid, but the minor cannot be compelled to perform their obligations under the contract if they do not choose to do so.

This includes contracts for the extension of credit, such as a credit card.  In other words, if a lender is dumb enough to lend money to someone who isn’t old enough to enter a contract, the law doesn’t have much sympathy for them.  That’s why so many student loans are co-signed by parents or spouses.

Keep in mind, however, that lying on a credit application about your age or income can be considered fraud, and that could create a separate route for a creditor to take legal action against you.  Though to be honest, in hundreds of debt collection cases I’ve dealt with, I have never seen a credit card company or debt collector sue for fraud on a credit application.

The original Creditcards.com article can be found here:

https://www.creditcards.com/credit-card-news/can-minor-be-sued-for-defaulted-card-debt.php

What is a YoYo Sale? – Alabama Consumer Fraud Lawyer Judson E. Crump

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You go to a car lot and apply for financing to buy a car.  “Congratulations!” they say.  “You’re Approved.”  So you sign the contract and drive off in the car.  Only later do you discover that you were not, in truth, approved.  Your “approval” has been yanked, and now they’re asking you to come back with the car.  That’s a Yo Yo Sale.

Yo-Yo Sales are one of the most pernicious forms of fraud.  The buyer is tricked into putting down good money for a car they will likely never own.  This causes them to lose their ability to shop around to other, less fraudulent dealers.  They may get jerked around for weeks waiting on title applications, tag paperwork, and their deal papers.  Then, worst of all, when the deal falls through, the dealer thinks they can repo the car and keep your down payment.  Yo-Yo sales are the sort of scam that typically only befalls poor working folks.

Don’t let them jerk your chain. Call Alabama Consumer Rights Attorney Judson E. Crump

Depending on how the paperwork is written, Yo Yo sales can be a form of fraud, a breach of contract, false advertising, and violations of federal consumer protection laws like the Equal Credit Opportunity Act and the Truth in Lending Act.

The most common way I address YoYo sales is by claiming fraud.  In Alabama, fraud is defined a false statement of an important fact that the buyer relied upon, causing the buyer harm.  In a Yo-Yo sale, the most common fraudulent misrepresentation is the statement that the buyer is “Approved.”  If the approval is conditional, then it is not really an approval.  Dealers try to paper over this misrepresentation by having the buyer sign a document called a “Spot Delivery Agreement,” a “Conditional Delivery Agreement,” or a “Bailment Agreement.”  These can be enforceable, but often the dealer does not perform his own obligation under the Conditional Delivery Agreement to seek financing in good faith.  Furthermore, some of these agreements impose massive costs on the buyer, making them unconscionable.

My second favorite way to address a YoYo sale is through the Equal Credit Opportunity Act, or ECOA.  ECOA requires that whenever you apply for consumer credit, the creditor has to give you a firm approval, denial, or counteroffer within 30 days, and if they don’t approve you, then they have to send you a written statement of the reasons you were not approved.  The sorts of dealerships that conduct yo-yo sales almost never do this.  They just don’t care about following the law.

Signs of a YoYo Sale.

  1. They don’t give you a copy of the retail installment sales agreement.  This is the document that states what your interest rate and monthly payments are.  It is the document that describes the sale of the vehicle.  When they’re trying to YoYo you, they don’t give you a copy of the contract.  They’ll just give you a copy of a spot delivery agreement.  They don’t want you to have proof that you are the new owner of the vehicle.  They want to hold all the cards.  If you ask for your paperwork copies, they say “We’ll send them in the mail.”  This is the hallmark of a YoYo.  NEVER EVER EVER drive off with a car unless you have a copy of the title application and retail installment contract.
  2. You don’t get a copy of your title application the day you take the vehicle home.  Similarly, they won’t process your title application until they’ve found the financing that they want.  Again, they want to hold all the cards.  Alabama law requires that they process your title application within 10 days.  If they don’t do this, something fishy is going on.
  3. They ask you to sign a Spot Delivery Agreement or Conditional Delivery Agreement.  NEVER do this.  If they won’t make a full and final deal with you, then you need to take your business somewhere else.  Their excuse is that “this is just something we need you to sign while we’re finishing up the financing paperwork.”  It’s a scam.  Don’t believe them.  There are other places you can go that will deal with you fairly.  Shop around until you have a final deal.
  4. Excuses, Excuses, Excuses.  They constantly make excuses for their failure to finish the deal.  They’re dragging you along hoping to steal your down payment.  The longer you have the vehicle, the more they think they can keep your down payment as a charge for the “use” of the vehicle.
  5. They ask you to return the car to the dealership.  Maybe they say they need to sign more papers.  Maybe they want to “repair” something.  Once they’ve decided to pull the YoYo, they will do whatever it takes to get the car back from you.  They want to move the car to another buyer ASAP.

How to Protect Yourself from a YoYo Sale

  1. Get copies of ALL documents you sign.  Insist on getting a copy of every document you sign.  The Truth in Lending Act requires that they give you a copy of your installment agreement before or at the time you sign it.  If they don’t do this, they’re breaking the law.  Tell them that by law they are required to give you a copy.  They know this is true.  In fact, before even asking for copies, you should go ahead and photograph each page of each document you sign.  They can’t prevent you from doing this, or take your cell phone away.
  2. If they won’t give you copies, demand the down payment be returned.  Just go ahead and tell them that you know they’re doing something illegal and you want no part of it.
  3. Return the Car and get your money back ASAP.  If you already signed a Conditional Delivery Agreement or Spot Delivery Agreement, then return the car to the dealership on the day listed in the agreement.  Most of these documents have a deadline for finalizing the deal.  If there is one, be sure that you follow it.  Don’t take any dealer assurances that they’re still working on it or that you can keep it.  They will go back on their word later.  All that matters is what the paperwork says.

If you’ve been YoYo’d by an Alabama dealer, call the law office of Judson E. Crump, PC at 251-272-9148 to learn your rights.

 

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

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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.

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