The majority of collection cases are for amounts under $15,000.00 and are therefore filed in the Special Civil Part of the Superior Court of New Jersey. Typically, these are lawsuits to collect credit card balances, medical bills and other consumer debts. Defendants are typically served by mail, and service is presumed to be effective unless the post office returns the process to the court as undeliverable.
Once you are served, you have 35 days to file an Answer with the court. You can proceed with or without an attorney if you are an individual. Corporations and LLCs must in all cases be represented by counsel. If you choose to have representation, the first step is for your attorney to review the matter with you to determine if you have any defenses. Also, a letter can be sent to the creditor pursuant to the Fair Debt Collection Practices Act disputing the debt and requesting verification of the debt.
It may be helpful to review the credit application to see whether you actually signed and whether the creditor has the right to sue you. It may also pay to look over all of the charges on the applicable statements for any discrepancies. Please note that many consumer debts are sold and resold, often at a substantial discount, and the current holder of the debt may not have complete information. These are the kinds of points which may supply you with a defense.
Once the Answer is filed, your attorney should serve interrogatories and a document demand (http://www.middlesexcountylitigationattorney.com/2013/08/), so that you can find out the details of the creditor’s claim. The court will schedule a trial date for your case which may be only 60 days away. You can request an adjournment of the trial date if discovery is not complete and more time is needed.
On the trial date, you and your attorney will appear in court and answer the calendar call in the courtroom. Then a mediator will be assigned to attempt to have the parties work out a resolution of the case. For example, if the creditor is suing for $10,000.00, it might be willing to accept $7,500.00 in a lump sum to be paid within 30 days, or it might take $400.00 per month for 25 months. Typically, any settlement that is reached gives the creditor the right to enter judgment against you (for the amount owed, less any payments you make) if you fail to make the settlement payment. It should be noted that the creditor is not obligated to give you a payment plan, and has every right to go to trial and try to obtain a judgment against you.
An attorney charging for his or her time at the rate of $250.00 per hour is likely to want a $2,500.00 retainer from you at the inception of the case, to cover his/her time in preparing the Answer, interrogatories and document demand, and for spending what could be a full day in court, waiting to mediate or try your case. There is usually only one judge, but many cases to be resolved. It is important to weigh the cost of being represented by an attorney in court against the potential benefit to be gained.
Remember, if you do nothing, a judgment will be entered against you which is generally very difficult to set aside later. You should seek the advice of an attorney when you receive this kind of lawsuit, but understand that you will need to pay for the attorney’s time. We offer a free initial telephone consultation in such cases.