Creditor Lawsuits: How to Defend Yourself Part Four: Discovery
So you appeared at your first case management conference (wasn’t too bad, was it?) and either it was continued to another date or a trial date was set. More often than not, that next date is several months away. So what happens between now and your next hearing?
One thing that can happen is nothing. The creditor can simply wait it out and set a trial date at the next case management conference (if the initial conference was continued) or try their case at trial.
At the debt settlement law firm I used to work for, I was seeing a lot of discovery being served by the creditor law firm. Discovery is the way that the parties in a lawsuit start getting information that the other side has about the case. You know when you watch law shows on TV, the good guy lawyer comes up with this surprise evidence that shocks everyone and wraps up the case before the next commercial? Yeah, that doesn’t happen in real court rooms (or at least it’s not supposed to).
What really happens is one side serves discovery and the other side serves their own discovery and both sides respond to each other’s discovery. After reviewing responses, both sides will see where they stand and whether it’s worthwhile to start talking settlement or to proceed with trial.
In collection cases, I think discovery is used to set up motions for summary. If you don’t respond to discovery or your responses are inadequate, the creditor can speed up the whole process by asking for a judgment based on your lack of response or inadequate responses to the discovery.
You’re probably reading this and thinking, responses? What do you mean responses? Well, if you’re served with discovery, you’ll probably notice that it is a bunch of questions that you need to answer. Receiving discovery in the mail is pretty intimating and I think that’s the whole point. If you are representing yourself, it’s kind of scary getting those documents in the mail. After all, you barely got through your case management conference, now this?
Your first impulse may be to go screaming for the hills. Don’t. If you haven’t filed bankruptcy or worked out some arrangement with the creditor’s attorney, you’re going to have to deal with this paperwork. Moreover, you’ve only got 30 days to answer the questions and send your answers to the creditor’s attorney because there are consequences for not doing so.
If you don’t respond to discovery (or get an extension from the creditor’s attorney) two things will happen. First, if you are served with requests for admissions (see below) they will be deemed admitted. Why is this important? Because you’ve just admitted every fact the creditor needs to prove his case. Since all the facts are true (because you didn’t respond) then the creditor will file a motion for summary judgment and say that there are no facts in dispute (remember, because you didn’t respond) so there is no need for a trial in this case. That is the summary judgment set up.
Second, any legitimate objection you may have to responding (e.g. the name of my employer is irrelevant) is waived; that is, you’re giving up your right to use any legitimate objections to the creditor’s discovery.
Finally, if you don’t respond, the creditor can file a motion to compel responses, which will get the issues in front of the judge. If the judge sees you didn’t respond, he will order you to respond and can order you to pay a fine, called a sanction, and that you pay for the creditor’s attorney fees. If you ignore the court, you answer can be stricken (it would be as if you never filed the answer) which will allow them to file a default judgment against you.
Creditors know that the majority of people they sue are going to ignore the discovery. If you ignore it, you’re doing exactly what they want you to do.
First things first, what does this discovery look like? The usual types of discovery that collection attorneys serve are listed below with a brief description of each.
1. Request for Admissions (and Genuineness of Documents). This type of discovery is asking you to either admit or deny that a particular statement is true. For example, a typical request for admission would be: “Defendant opened up account # 1234 with Plaintiff.” It is usually sufficient to respond either “admit” or “deny”. When you “admit”, you are saying that the statement is true and when you “deny”, you are saying that the statement isn’t true. A request for admissions may also include a request that attached documents are genuine.
2. Form Interrogatories. Interrogatories are simply questions that you have to answer. Form Interrogatories are questions that the Judicial Council came up with. Creditor’s like these (and you can use them, too) because they are easy to use. You just check the boxes next to the interrogatories you want the other side to answer.
3. Special (or Specially Prepared) Interrogatories. These are also questions but they are created by the creditor’s attorney.
4. Request for Production of Documents. This is a request that you produce certain types of documents. Typically creditors ask for documents proving payments were made on the account and for any correspondence between you and the creditor. Although this type of discovery asks you to do something, you still have to provide a written response. Either your written response will say, “I’ll give you the documents that you requested” or “I can’t give you the documents you requested because I don’t have them any more” or “I have the documents or I can get them but I am not going to give them to you because…”.
For example, if the creditor is asking that you produce evidence of all payments you’ve made, ever on the account, you can respond that you are not going to give them the documents requested because the cost to get copies of your cancelled checks going back five years would cost you too much money.
Responding to Discovery
The first and most important thing you need to do is respond to the discovery because, as I mentioned above, there are consequences for not responding. The creditor knows that nine times out of ten, if you’re representing yourself, you’re going to ignore the discovery. DO NOT PLAY THEIR GAME. Take the time to read the discovery and answer the questions to the best of your ability.
When responding to discovery you can either provide the information, documents or admission they want or you can give a reason why you cannot provide that information. If they do not like your answer, then they have to take steps to get you to provide further responses. I’ve given BS responses to discovery and I haven’t had a creditor actually take steps to compel me to provide further responses (By BS, I mean vague, nitpicky and otherwise finding a way to respond without actually responding).
I think the reason they don’t push harder on discovery responses is because the creditor is going to have to pay their attorney more to get you to provide further responses to the discovery. The discovery is just one means to their end and rather than paying more to try and get their judgment by summary adjudication (see above), they’ll just take it to trial and try and get their judgment that way.
One caveat: just because you have a reason why you aren’t responding to a particular question, doesn’t mean the creditor or a judge will buy it. A creditor can try and get further responses from you and if you don’t give them what they want, they can always get it in front of a judge. Anytime they have to get something in front of the judge, they are going to ask the judge that you be sanctioned (fined) and that you have to pay their attorney fees.
Another caveat: when it became obvious that the economy was going down the toilet, discovery slowed down (and maybe even litigation, too), then creditors ramped up their efforts and we started getting served with tons of discovery and litigation went up, too. Why am I warning you? Because I never got hit with a motion to compel further responses but when I left the law firm, if felt like creditor’s were getting more aggressive so it wouldn’t surprise me if they start trying this tactic in their quest to get blood out turnips.
So how should you respond? Well, that depends on your particular case but here are a couple of little rules I go by.
1. Relevance. Just like any lawsuit, your creditor’s case is built on a bunch of facts that proves that you had this card, used it and now you owe them. These facts are the creditor’s evidence. Now, not all facts are relevant, i.e. facts that help prove a part of the creditor’s case and only relevant facts can be part of a creditor’s evidence.For example, either in the Form Interrogatories or the creditor’s specially prepared interrogatories, they are likely to ask the name and address of your employer. Now ask yourself, does having this information prove that you were issued the credit card, that you used it, or that you didn’t pay back the balance due? What does having your employer information have anything to do with the actual case? Nothing. I never answer this question because it isn’t relevant.
2. Dates. I always deny anything that says something like “Admit on December 14, 2009 that you failed to make the minimum payment”. Ask yourself, do you actually remember that you didn’t make the payment on that day? Maybe you made it the day before and it was January when you stopped making payments. So unless you actually remember doing what they want you to admit that you did, don’t. Just deny it or write you couldn’t answer because you don’t recall.
3. Account balances. If they want you to admit that you owe a particular amount, e.g. $3,209.12, I always deny it. With interest, who knows how much you actually owe.
4. Request for Documents. If they ask for copies of documents they should already have, my responses is that you already have these documents in your possession.
Serving Your Own Discovery
Discovery isn’t a one way street. You can serve a creditor with discovery, too. If you’re just treading water until you can get your bankruptcy filed (and it will be soon), I wouldn’t bother. However, if you’re finding that you’re going to have to defend yourself in the lawsuit and see it through to the end, serve discovery. If you are being sued by a debt buyer, definitely serve discovery and find out if they can actually prove that they own the account and if they have any documentation of the debt.
If you decide to serve your own discovery, here are a couple of things to keep in mind:
1. Account numbers. I always ask them to state the account number, especially if they didn’t state the account number in the complaint. This really makes a difference if you have more than one account with a particular creditor e.g. if you have two credit cards with Capital One. My favorite is Bank of America. When you default on a Bank of America card, they eventually assign a new account number to your credit card that is different from the one you originally received. If you have more than one Bank of America credit card and they both have comparable balances, make them prove which account is the subject of the lawsuit by asking them for the original account number.
2. Original contracts. I always ask for the signed credit card application in my requests for production and for the original contract and any amendments or modifications.
3. Proof of Assignment. If you are being sued by a debt buyer, always ask for documentation showing that your particular account was sold to them. This is always fun if there are multiple assignees i.e. XYZ Debt Buyers, assignee of ABC Debt Buyer assignee of DEF Debt Buyer, assignee of Bank of America.
The Bottom Line
Make some attempt to respond to discovery that you receive. It doesn’t pay to ignore the discovery because it will only hurt you later. I know you probably don’t have a law degree and that this lawsuit may be one of a bunch of other financial C-R-A-P that you have to deal with, but deal with it you should. I can’t say this enough.
Ok, so the next thing is summary judgment, then trial and finally judgment (duh-duh-duh, with appropriate scary music). Let’s hope you’ve filed bankruptcy before judgment is entered against you.
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