Advice needed--being sued by attorney for Discover Card

[bcohen]

I have just been served with papers for a lawsuit from an attorney representing Discover card. I have not paid on this account since Feb. or Mar. of 2009, and this charged off in November of 2009. Under the old SOL, this would have been too old to sue, but in April of 2011, our scumbag of a governor passed a law extending the SOL to 6 years. (It is an interesting question whether a creative attorney could help me to fight the suit on this ground, since extending the SOL on a debt which was incurred and charged off PRIOR to the law changing might violate the Constitutional protection against ex-post-facto laws).

The total amount being sought is more than $7k, and I have about $3k in the bank, which I am going to withdraw in cash tomorrow.

Any advice on how to proceed with this matter? Since it's an OC suing, I cannot attack chain of custody or challenge the plaintiff's standing to sue, as I would do with a JDB. Once the court opens on Monday, I plan to file a motion for continuance and request that the case be continued for 30 days so that I can either hire a lawyer and/or file for bankruptcy protection.

Now, after I request the continuance, is it a good idea to contact the plaintiff about possibly settling the debt? It would cost me about $2000 to $2500 to file for Chapter 7. Is it likely that I can settle for this amount? I assume that once I take the money out of the bank and stash it, they can't get their hands on it, even if they eventually win a judgment as long as I don't file for bankruptcy (or wait to file until the money has been used for living expenses). Or should I consider hiring a consumer attorney to assist me? I am not sure that an attorney can do anything for me in an OC lawsuit, but I'd rather spend the money trying to fight the suit, than lose and have it garnished.

Any advice would be greatly appreciated, especially from members who are attorneys, or have experience dealing with Discover.

[HHM]

When they change SOL, it usually doesn't operate retro-actively. The issue would be, was the debt past the SOL when the new SOL became effective (not just when the bill was passed, but what is its effective date). If the debt was already passed the SOL, then the old SOL would apply, if the debt was not passed the SOL then (1) you need to read the underlying bill to see if it provides any guidance, or (2) you are probably out of luck on an SOL defense.

As for BK, do you have other debts? it sounds like you do. If so, don't be stupid, you probably should have filed bankruptcy a while ago, just go do it so you don't have to post on this website in the wee hours of the morning.

[GoingDown]

From what I have heard on other forums, it would have to be 3 years since the "date of last payment" before the date the new law took effect.

In other words, the debt would already have to be beyond the old 3 year SOL BEFORE the new law took effect, so based on what bcohen has posted (March 2009), this lawsuit is not time-barred. The SOL will not help in this case.

Unless bcohen is judgment proof and willing to live that lifestyle, file for bankruptcy now, and then file an answer to the lawsuit stating that you have filed bankruptcy to stop them from getting a judgment before your bankruptcy case is finished.

As for settling, the only way to find out is to ask them directly if they will settle. You would then get a 1099-C for the amount forgiven and might have to pay taxes on it.

If you file BK pro se, it won't cost that much.

[despritfreya]

1. I agree with GD and HHM. Cut your losses now and do the bk. But, once filed, you would not file an Answer to the suit. You would simply notify the attny for Discover and he/she would file a Notice of Bk filing with the Superior or Justice Court (or you can file the Notice on your own). Once the Notice is filed the Court will put the matter on the Inactive Calendar and will eventually dismiss the case.

2. Negotiating depends upon the attny representing Discover. Please post the initials of the Law Firm (not the attny who signed the pleadings). If I can figure out the name of the Firm I will let you know the likelihood of settling. But, if settling will only delay the filing of bk because of other debt, it makes no sense to even try.

Des.

[bcohen]

The law firm suing me is Gurstel Chargo, PA out of Phoenix. I am in Tucson, btw, which is more than 100 miles away. They have sent me collection letters for more than a year offering to settle, as low as $3000 on a debt of $6100, however I never contacted them or responded. I also didn't have $3000 in that time, so it was a moot point.

All of my other debts are with JDB's, and those are second or third tier JDB's, so I think a lawsuit by any of them could be attacked easily and I could get it dismissed without paying to settle. (I would still be "out" filing fees and other court costs, of course.)

I am currently a full-time student at the University of Arizona, and the money that I have was income from my summer job. I am not presently working, and I don't have anything which can be seized or garnished, other than the $3k in the bank, which I am taking out ASAP.

I am planning to go to the court on Monday and file a motion for continuance (because 20 days from yesterday is simply not enough time to mount a defense) and request copies of other complaints filed by this plaintiff and the responses which were filed in those cases to see what defenses if any were raised. I am also going to make an appointment with the Student Legal Services to see if one of their attorneys can help me with this, however since they will not actually appear in court, such help may not be too useful if the plaintiff won't fold easily.

[HHM]

So far, I don't see a reason why you wouldn't file BK.

request copies of other complaints filed by this plaintiff and the responses which were filed in those cases to see what defenses if any were raised

That is probably going to be a bit more challenging than you suppose. Unless the court clerk is really friendly or has a computer you can search efficiently (e.g. find cases where an Answer was filed in a case brought by the plaintiff), you may need to already identify the cases before you request copies. Also, the copies will cost you; I have yet to see a court clerk that doesn't charge for copies of case pleadings.

[bcohen]

Also, the complaint indicates that I am being sued for "account stated"; no mention of a CONTRACT is made. Under ARS 12-543 (http://www.azleg.gov/FormatDocument....12&DocType=ARS), the statute of limitations for an oral debt or "stated or open account" remains 3 years, and thus would be time-barred. Under ARS 12-548 (http://www.azleg.gov/FormatDocument....12&DocType=ARS), the statute of limitations for a contract in writing or a "credit card as defined in section 13-2101 (http://www.azleg.gov/FormatDocument....13&DocType=ARS), paragraph 3 subdivision (a) is 6 years.

Since they are suing as "account stated", does that mean that I can file a motion to dismiss because the action is time-barred?

[HHM]

You can sure try.

But since the SOL is an "affirmative" defense, the burden is on YOU to prove the elements of the SOL defense. (1) that the account is of the type that is barred by the SOL, (2) when the SOL started to run (e.g. last activity, probably the date of last payment), (3) and therefore, that the SOL has run.

Keep in mind, a Complaint is merely allegations and can be amended. So, your proof is not going to be what they put in their complaint.

You need to be fairly confident that SOL has run, because in order to prove it, you are going to need to present facts that will tend to show the debt is indeed yours and is valid. Now, the better tactic, if your court will allow it, is to file the Motion to Dismiss and request limited discovery (after all, the date of last activity is in possession of the creditors, not you).

[GoingDown]

Cut your losses now and do the bk. But, once filed, you would not file an Answer to the suit. You would simply notify the attny for Discover and he/she would file a Notice of Bk filing with the Superior or Justice Court (or you can file the Notice on your own). Once the Notice is filed the Court will put the matter on the Inactive Calendar and will eventually dismiss the case.



Des.

Thanks for the info. I learned something from it.

How would you notify the attorney? By sending a written notice by certified mail?

[despritfreya]

How would you notify the attorney? By sending a written notice by certified mail?

Fax or email will suffice and is the quickest way to accomplish the goal.

Des.

[bcohen]

Alright, so yesterday, I searched the Pima County justice court records online for other cases filed by this plaintiff, and looked through more than 1000 case records. Although the vast majority of cases had no response from the defendant (and went to default judgment and garnishment proceedings) I was able to find some where the defendant filed a response, and out of those, some where the defendant used the discovery process to request documents from the plaintiff's attorney.

Of course, they don't let you print any of these documents online, instead the case summary results merely list the description for each document filed in the case, and "available at courthouse". I printed out the case summary results for the particular cases which I want to see documents for. Now, if I go to the courthouse to request copies of documents from all of these different cases, to assist in mounting my own defense, that is likely to be hundreds of pages, and at 50 cents a page, that's going to cost hundreds of dollars, just in copying fees. It also will probably take several hours of my time. Is there a cheaper/easier/better way to get this information, or is this my only option?

Also, can I file for a continuance at this stage of the case, since I need more than the remaining 18 days to do research, obtain documents and other information, consult with the Student Legal Services attorney, and formulate a defense, or is a continuance only applicable after a response is filed and a trial/hearing date is set?

[HHM]

I think you need to step back and look at the big picture for a moment.

1. You are being sued by Discover...not a collection agency, not a JDB.
2. The debt is either outside the SOL or it's not.
3. If its outside the SOL, you win
4. If its not outside the SOL, you lose.

At no point did you ever say you never had a Discover card or that this account is not yours

Aside from the SOL, what defense do you really think you can mount? Judges at the Justice court level don't have a ton of patience, they have 1000's of cases and very little time. All Discover really has to do is present an authenticated bill and some admissible evidence of the balance owed.

You may be able to buy some time buy making everyone jump through hoops. But if you lose on the SOL, this case probably gets resolved, against you, by summary judgement.

As for the continuance; strictly speaking, you would be asking for an Extension of Time to File Your Answer. You can "try", but the judge can say no; so be prepared. After all, an Answer is not a very technical document, you either admin, deny, or claim lack of knowledge as to truth of the allegations contained in the complaint.

[LadyInTheRed]

Now, if I go to the courthouse to request copies of documents from all of these different cases, to assist in mounting my own defense, that is likely to be hundreds of pages, and at 50 cents a page, that's going to cost hundreds of dollars, just in copying fees. It also will probably take several hours of my time. Is there a cheaper/easier/better way to get this information, or is this my only option?

I don't know about AZ, but in CA you can go to the court and view the physical file for a case if it hasn't been sent to storage. More recent cases are available on computers at the courthouse and older cases are available on microfiche. You can look through files and request copies of only what is useful.

But, why waste your time delaying the inevitable? As HHM has stated, if the SOL has not expired and you have no other defense, you lose. If you are not filing BK because you are collection proof, then let them get a judgment. What does delaying get you? Save the money you will spend on photocopying and filing fees and focus on your studies instead of fighting a losing battle.

If you aren't willing to allow a judgement against you, it sounds like it's time to file BK. If you settle for an amount you'd pay a BK attorney, you will still have the other debts with no guaranty the other creditors won't sue.

[HHM]

Also, to save money (but not necessarily time). If all you're looking for is some standard pleadings, go to a law library. Granted, it may take some hunting around since you are not an attorney or law professor, you may not know what you are looking for; but they will have books with sample discovery requests for all sorts of matters.

[bcohen]

Thank you for your responses. I realize that the case is a loser, and that bankruptcy is the end result. However, I am trying to delay filing until mid-December, when the semester is finished. I just don't want the stress of protracted litigation, and dealing with a possible judgment to impact my grades this semester. Also, I want time to spend down the money I made at my summer job on living expenses, so that when I do file BK, it will be "no asset" and these people won't get diddly squat. So from that perspective, attempting to extend the time to file the response, then filing an answer, and then attempting to defeat the (likely) motion for summary judgment is a good strategy. Even if it reaches the point of judgment before mid-December (which should be unlikely if I play my cards right), I plan on filing ASAP once the semester is over.