Midland Funding Garnished Over $7,000 from my Client’s Checking Account. Here is how we fixed it.
Mr. Carter had a few unpaid accounts he wanted help resolving, so he went to a local credit repair organization. They attempted to negotiate with some of his creditors on his behalf, including Midland Funding, who claimed that he owed them $9,029 for an old Sears card that he’d allegedly not paid. They sued him in the District Court of Mobile County. When he got the lawsuit paperwork, he immediately forwarded it to the credit repair folks. They said they would step in and negotiate with the collection agency for him. They did try to negotiate, but either Midland Funding or their lawyers didn’t want to deal with them (since credit repair organizations are not attorneys, creditors can ignore them if they want to), or they just could not reach an agreement that was acceptable to both sides.
Regardless of how negotiations went, nobody filed a written answer for Mr. Carter, so Midland took a default judgment against him for the full amount demanded in the lawsuit: $9,029 plus court costs. The Court entered the judgment and Midland obtained writs of garnishment. One of them went to Mr. Carter’s bank account, which contained all the money he could borrow and save up in order to try and settle his debts: over $7,000. And in the blink of an eye, it was all gone. Midland sent the garnishment to the bank the same day they sent it to Carter (which is perfectly legal in Alabama), and the bank immediately froze all the money in the account and sent it along to the Clerk of Court.
It wasn’t until after all this had happened that Mr. Carter came to see me. We filed a motion to vacate the judgment based on what the Alabama Rules of Civil Procedure call ‘excusable neglect,’ meaning that even though he hadn’t responded in writing to the lawsuit within the 14 days required, he had a good reason for not doing so: he was under the impression that the case was being handled between the debt settlement company and the collection lawyers.
The judge granted our motion and set the judgment aside. Click here to view the Court’s Order. (PDF): order-granting-relief-from-judgment
The Court set the matter for trial 2 months after that, and at trial, we won a judgment for the debtor. You can see that order here: $9,000 Midland Lawsuit Win
Finally, and most importantly, all of the garnished money was released, and the Midland account was gone. You can read the court’s order to release my client’s money here: Order to Release Garnished $$$.
This case was a great example of the sorts of serious problems that default judgments can cause you. We were fortunate that there were some extenuating circumstances in this case that the judge was willing to hear. And we were also fortunate that my client came to me less than 120 days after the default judgment was entered, because after the judgment is 120 days old, the rules allow you fewer ways to vacate it.
After 120 days have passed, the only ways to get a default judgment set aside is to prove you were never notified of the lawsuit in the first place or prove that the plaintiff somehow committed fraud on the court.
If you live in Alabama and get served with a lawsuit, you should call a lawyer immediately. If you can’t afford a lawyer, at the very least, you need to file a written answer. But even if you have had a default judgment entered against you, there still may be some hope of fighting it.