Indiana Consumer Lawyer Blog

If you've been sued by a debt collector in Indiana, the first thing you probably wondered while reviewing the summons and complaint is: "what am I going to do?" I can't emphasize how important it is at this stage to be proactive and take immediate action. You may give up some of your rights if you don't take action in as little as a week or ten days. For instance, in most small claims courts around the State of Indiana, you lose your right to move the case to a real court (yes, I said it!) if you don't request it within ten days of receiving the small claims notice of claim. (Note: Small claims courts are essentially collection courts since a huge part of their docket is collection cases. They are generally favorable for debt collectors and unfavorable for consumers. I never, ever, ever, ever want to be in a small claims court if I can help it.) And, you have to respond to a summons and complaint within 20 days or risk a default judgment.

Hiring an attorney to defend you in one of these cases unfortunately costs money. But you might be surprised at how affordable you can obtain representation in one of these cases. Our office handles most of these cases on a flat-fee/contingency basis. Depending on the size of the debt, our evaluation of the complexity of the issues of the case, the location of the court where the case is pending, and other factors, there is an initial flat-fee of one to four thousand dollars. A debt of up to six thousand dollars will usually have a flat fee of one thousand to fifteen hundred dollars. (Remember, though, that the fee is set on a case-by-case basis.)

The contingency part of the fee is based on the outcome or results that we obtain for the client. If the case is ultimately resolved with the client paying 50% or more of the amount demanded in the complaint, we receive nothing more. If the case is resolved with the client paying any amount of money up to 50% percent of the amount demanded in the complaint, we receive an additional amount roughly equal to half the flat fee. If the case is resolved with the client paying nothing, we receive an amount roughly equal to the flat fee or slightly less. Our clients like this fee arrangement because it has a relationship to the amount of the debt at issue, an incentive for a favorable result and because it is predictable. When paying by the hour, you never know just how much the representation will cost until is over.

Personally, these are some of my favorite cases to handle. All too often, debt collectors sue the wrong person or sue on a debt that is past the statute of limitations. They don't deserve to win, and I enjoy making sure they don't. Even when they do have the right person and the debt isn't stale, they very seldom have the documentation they should have in order to file a lawsuit against someone. This is because debt collection is all about volume and minimizing expenses. I understand that debt collection is a business, but that doesn't mean you can cut whatever corners you like in search of the almighty dollar. I've seen too many people's lives and well-being injured by greedy debt collectors. I don't think there is much of a difference between a debt collector who sues the wrong person because their practice is to attempt to collect debts without the appropriate documentation and a bus company who injuries a customer because they neglected maintenance on their bus.

Another reason I like these cases is because they sometimes lead to lawsuits against the debt collector or the attorney for violation of the Fair Debt Collection Practices Act.

If you would like to consider hiring the Indiana Consumer Law Group/The Law Office of Robert E. Duff to defend you against a debt collector, please give me a call at 800-818-0461 and I would be happy to discuss the possibility with you.

The vast majority of judgments obtained by debt collectors are by default. That means the alleged debtor didn't show up to court to contest the case. Unfortunately, I believe that debtors often don't show up to contest a case because they feel that there is no use since the debt was once a legitimate debt. This is a mistake and results, no doubt, in many judgments that never should have been. But that's an issue for another day.

Sometimes a default judgment is obtained because the alleged debtor never actually became aware of the lawsuit. The Indiana Rules of Trial Procedure outline how an individual defendant is to be served with the Summons and Complaint. Rule 4.1 states that service may be made on a person by:
1. certified mail to their residence, place of business or employment;
2. handing it to them in person;
3. leaving a copy at their house or where they live; and
4. serving their agent as provided by rule, statute or valid agreement.
These are the only ways, almost, that a person can be served with a lawsuit that has been filed in state court in Indiana. I say almost because a recent unpublished Indiana Court of Appeals decision says that an individual can also be served by sending certified mail to their post office box. See Timothy E. Wellington v. Asset Acceptance, LLC, 49A02-0706-CV-466 (February 20, 2008). I suspect this case will be accepted and reversed by the Indiana Supreme Court because it clearly ignores the plain language of the rule, but I guess we'll see.

If you are surprised that leaving a copy of the summons and complaint at someone's house, or, probably more accurately, their last known address, is valid service, you aren't the first. I regularly speak with defaulted consumers who are surprised and angered by this. But it's true. It's right there in the rule.

If you have been unfortunate enough to discover that a default judgment has been taken against you (often, by seeing it on your credit report), all hope is not lost. A default judgment can be set aside, but it is much, much easier if the motion is filed within one year of the judgment. After a year, it can be very difficult and often impossible to set aside a default judgment.

You just received a telephone call from a debt collector. The debt collector was mean and nasty and threatening and you don't know what to do. First, relax.

Then wait. The debt collector has five days (from the initial communication) to send you a letter with this information:

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

If the debt collector doesn't send you a letter within five days, or the letter doesn't contain this information, that's a violation of the Fair Debt Collection Practices Act. Contact The Law Office of Robert E. Duff!

When you receive the required letter, and you find it contains all the information it is supposed to, your next step is to dispute the debt. This must be done within 30 days of receipt of the letter. You should ALWAYS dispute the debt. Even if you recognize the debt, even if you know you owe it, even if you feel a moral obligation to pay it, you should still dispute the debt. Disputing the debt doesn't mean that you are saying the debt isn't yours. It is simply requiring the debt collector to provide verification to you that the debt is yours. This is information that the debt collector is required to have by law in order to collect the debt, and so it should be very easy for them to provide it to you. Unfortunately, especially with older debt, the debt collector will not take the time or expense to either obtain this information or to respond to your letter, in which case by law they must cease all debt collection efforts.

What does this dispute letter look like? It's very simple. Click here to see a sample letter.

If you've looked up debt collection issues on the web, you've probably seen Bud Hibbs' website. It's a great website. It's got a lot of great information on the sometimes ugly industry of debt collection. I visit it occasionally and receive valuable information there. I have to respectfully disagree with Mr. Hibbs, however, when it comes to the content of the dispute letter.

You can see Mr. Hibbs' "Cease Communication Letter" here.

It is, as he correctly terms it, a cease communication letter under 15 U.S.C. sec. 1692c, not a dispute letter under 15 U.S.C. sec. 1692g. He says it needs to be sent within 30 days from the debt collector's letter, but as I read the Fair Debt Collection Practices Act, I disagree. The dispute letter has to be sent within 30 days, but there is no such requirement for the cease communication letter. The cease communication letter can be sent at any time.

The dispute letter puts additional burdens on a debt collector (and verification is a prerequisite to a lawsuit, whereas the cease communication will not prevent the debt collector from filing a lawsuit), and I think it should be sent first. If the debt collector indeed verifies the debt, then there is a place for the cease communication letter at that time. It may result in the debt collector filing a lawsuit against you, but then again it may not.

Q: I live in Indianapolis, Indiana. I recently received a phone call from a debt collector about a debt on a credit card that my former spouse and I had a long time ago. We have been divorced for over seven years, and this delinquent credit card debt was his per the divorce decree. Can I be held responsible for this debt?

A: First, it's important to note that if you were a joint owner of the account (which means you both signed for the credit card and were jointly responsible for it) as opposed to simply an authorized user, then the fact that your husband was ordered to pay the debt by the divorce court DOES NOT RELEASE YOU FROM LEGAL RESPONSIBILITY FOR THE DEBT. If your husband doesn't pay, the credit card company CAN come after you to collect the debt and CAN report any delinquency or non-payment to the credit reporting agencies to be placed on your record. If you were to pay the debt to avoid this derogatory information on your credit report, your husband would be liable to you in the amount you paid. But as between you and the credit card company, your divorce decree means nothing. However...

In Indiana, the statute of limitations on the collection of credit card debt is six years. The statute of limitations is an affirmative defense to a lawsuit, so what that means is that if the credit card account was delinquent for more than six years at the time the lawsuit against you was filed, your attorney can have the lawsuit dismissed. IT DOES NOT MEAN A DEBT COLLECTOR IS NOT ALLOWED TO TRY TO COLLECT THE DEBT FROM YOU. A debt collector can attempt to collect the debt forever. But since you know any lawsuit they brought against you could be dismissed, the bottom line is that you don't have to pay the debt. And since derogatory information like this can only stay on your credit report for seven years (from the date the account was first delinquent), the debt collector has nothing whatsoever to hold over your head. But as long as the debt collector follows the Fair Debt Collection Practices Act, it can write you and call you and try to convince you to pay the debt (perhaps you feel a moral obligation?!?!?).

Providing you don't feel compelled to pay this debt out of the goodness of your heart, I suggest that you send the debt collector a letter advising them to cease contacting you about the debt. If they call or write you again after that, contact The Law Office of Robert E. Duff immediately, because that's a violation of the Fair Debt Collection Practices Act.