Debt Lawsuits in Texas
Between deteriorating economic conditions in our country, greedy banks, and predatory lending practices, it is hard for many Texans to escape falling into debt. In recent years, banks have changed the way they collect on these debts. They are much more aggressive in their tactics, and have resorted to filing legitimate lawsuits against their consumers to collect the money they allege to be owed.
What does it mean to be sued on an unpaid debt? We will offer you a crash course from beginning to end.
When you stop making your monthly payment on a debt, the phone calls and letters begin. Depending on the type of debt (the majority of debt lawsuits we see are credit card-related), the bank will either outsource your account to an outside collection agency or use internal collectors to harass you. The phone calls get worse. Between the four-month to one year mark, the collection agency will place your account with an outside law firm who will then send you a letter threatening a lawsuit. You may view this as an empty threat, but it is not. About one month later, if you haven’t succumbed to their barrage of harassment, they will likely file their lawsuit.
Do not wait to be served with the lawsuit. We can accept service for you and avoid the harassment and embarrassment from process servers.
Travis Bryan Managing Partner
The Lawsuit Process
1. Getting Served
You will undoubtedly be inundated with advertisements in the mail from consumer law firms like ours when the lawsuit is filed. The first question which pops into your head is “Why am I receiving advertisements letting me know I have been sued, when the creditor hasn’t even notified me?” That is because there is generally a time lapse between when a lawsuit is filed, and when a lawsuit is served on the Defendant.
Service is governed by Rule 106 of the Texas Rules of Civil Procedure. In order for the lawsuit to truly begin, you must be served with the lawsuit. This means that a private process server or a constable/sheriff has to actually physically hand you the lawsuit. This is generally done at your residence, but technically can happen wherever the process server or a constable/sheriff can find you. If they have trouble serving you (if you are good at not answering your door or always out of town), they can ask the Judge permission to serve you by posting the lawsuit to your door! This is called Substitute Service. Be very careful of anything posted to your front door, as the date the lawsuit is posted to your door will count as the day of service.
Generally, we tell our clients that if you are aware of the lawsuit but not have been served…and you know you are going to hire an attorney to defend you…DO NOT WAIT to be served with the lawsuit. An attorney can begin representing you by accepting service on your behalf, in order for you to avoid any potential pitfalls with service (being served at work, process servers knocking on your door at night, etc.).
2. File An Answer
Once you are served, you have 20 days (plus the following Monday) or 14 days to file a response to the creditor’s lawsuit. This depends whether you are in Justice of the Peace Court, or County Court/District Court. Again, you can bypass these deadlines by retaining an attorney to file your Answer BEFORE you are served. If you do not file an Answer by the deadline, the Plaintiff will win their case by default. They will receive a Default Judgment against you, and the case will be over. Thus, it is VERY important to file your Answer timely.
The most common form of an Answer in the State of Texas is called a General Denial. However, the facts of some cases require listing specified defenses, such as the Statute of Limitations defense (a creditor generally has 4 years to file a lawsuit from the date you last made a payment on the account). The Answer must be filed with the Court and served on the creditor’s attorney.
3. Defending the Lawsuit
After your Answer is filed, where the lawsuit goes is completely dependent on which court the lawsuit is filed in. Ultimately, the key to every case is the evidence submitted by the Plaintiff. Will they have enough to prove that you owe the debt?
If your lawsuit is in a Justice of the Peace Court, good luck. Justice of the Peace Courts are for lawsuits seeking damages (amounts owed) less than $10,000.00. The Texas Supreme Court rewrote the rules pertaining to debt lawsuits in Justice of the Peace Courts in 2013 (you can find the rules here). Their hope was to make the process more efficient and streamlined….it didn’t work. It made the process much more difficult to navigate, especially for the Defendant. The Plaintiff in the case (the creditor) is under no obligation to produce their evidence before the trial date. This means they can show up on the day of trial and ambush you with records you have never seen before. You can, however, petition the Judge for those documents before trial. When you add in the fact that Judges in Justice of the Peace Courts don’t have to be licensed attorneys…it is even HARDER to defend a debt lawsuit, because they may not understand the best legal arguments. It truly can be the Wild West, as some attorneys have called it, because some Judges have their own bias and political agendas about debt cases.
If your lawsuit is in a County Court or District Court (generally for amounts higher than $10,000.00), the road to defend the debt lawsuit is much, much easier. For starters, all Judges must be attorneys. Second, there are rules in place that prevent a Plaintiff from being able to ambush you with their evidence at trial without sending it to you first. You can even conduct Discovery, where you can request documents and other information from the Defendant and they are required to respond. You can gain a very good understanding of their case, and the evidence they have against you. You will be able to make an informed decision as to whether you want to take the lawsuit to trial or simply settle the debt.
4. Resolution – Settle? Dismissal before Trial? Fight it in Court?
After you are able to review the evidence the Plaintiff has against you, it is time to decide which resolution is best for you. You have four options:
Settle the Lawsuit - If they have enough evidence which would prove their case beyond a “preponderance of the evidence” at trial, it is a good idea to begin negotiations with the Plaintiff and not risk a judgment at trial. In a settlement, you offer to pay X amount (hopefully a reduced amount) in exchange for the Plaintiff dismissing the lawsuit altogether. This can usually be arranged in a monthly payment arrangement or a lump sum amount.
Dismissal Before Trial - If their evidence has problems, we are usually able to strategically point out those deficiencies to the Plaintiff before trial in hopes that they voluntarily dismiss their lawsuit. The one pitfall with this option is that the Plaintiff can refile their lawsuit if they voluntarily dismiss it without prejudice and the statute of limitations (time period to file) has not run out.
Trial - If their evidence has problems, and the Plaintiff doesn’t voluntarily dismiss their lawsuit, taking the case to trial is the last option. Taking a case to trial, even if you are supremely confident in your assessment of their evidence, ALWAYS carry a risk of losing. But if you win, it is over forever.
Judgment (Losing at Trial) - If you lose at trial, the Plaintiff receives a judgment. A judgment is simply a piece of paper which states that you legally owe the Plaintiff a certain amount of money. However, that judgment can wreak havoc on your credit, and can even lead to your bank accounts being frozen or assets being seized from you if you are not careful.
Ultimately, a debt lawsuit in Texas is full of legal procedures and pitfalls that can trip up even the most experienced attorneys. We highly recommend you retain aggressive legal counsel to represent you against both your creditor and the judicial system. That's what we do every day here at Johnson & Bryan, and would love the opportunity to discuss your specific case one on one. Contact us now for a free consultation.
The information contained in this webpage is for general information and educational purposes and is not legal advice. Reading these posts does not create an attorney / client relationship with the law firm of Johnson & Bryan.