What must a creditor do before filing a lawsuit?

In Washington State, does a creditor have to notify you in paper if they plan on initiating a civil lawsuit to collect on a debt?

I have some collection agency called "Tri Financial" and also goes by "Prism Resolution" trying to collect on a five year old debt from U.S. Bank. I have no problems paying it, but the payments have to be smaller than what they're asking for.

The agency said that they're willing to "settle out of court", but they have to report back to U.S. Bank with what option I choose, and they mentioned how U.S. Bank is willing to take it to civil court for a lawsuit if I do not pay it.

I'm not too familiar with the debt collection process, aside from the fact the junk debt collectors use a lot of B.S. schemes to try and inflict scare tactics into the debtor so they pay.

My question is, will the bank have to notify me in writing if they decide to file a lawsuit? How does this work, if it did end up coming down to it?

I can't speak to Washington law, but I almost had to sue someone in small claims court. I did not have to notify them until after I filed. Then, I would have had to get someone to serve the notice. I had the paperwork filled out, gave them one last call before I left for the courthouse, and they asked me to come by so they could give me my $1700. Guess they knew it was a loser and didn't want to have to pay my court costs.

I don't think they have to notify you until after they file.

eye95 said:

I can't speak to Washington law, but I almost had to sue someone in small claims court. I did not have to notify them until after I filed. Then, I would have had to get someone to serve the notice. I had the paperwork filled out, gave them one last call before I left for the courthouse, and they asked me to come by so they could give me my $1700. Guess they knew it was a loser and didn't want to have to pay my court costs.

I don't think they have to notify you until after they file.

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By that time, is it too late to pay them?

Again, I can't speak definitely for Washington law, but I assume it is similar.

After I filed the suit, I could've dropped it at any time. Of course, I would have asked them to also reimburse me the court costs before I'd drop it.

Be careful, Aaron.

There have been two articles recently in major media about law firms going after the debtors. Its become a big business in this depression, seemingly. And, the paperwork is not always in order. Apparently there is some rubber-stamping going on by some judges, especially if the debtor doesn't show, or doesn't have an attorney.

Citizen said:

Be careful, Aaron.

There have been two articles recently in major media about law firms going after the debtors. Its become a big business in this depression, seemingly. And, the paperwork is not always in order. Apparently there is some rubber-stamping going on by some judges, especially if the debtor doesn't show, or doesn't have an attorney.

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I know a lot of law firms also act as collection agencies. Although, I don't believe you're entitled to an attorney in a small claims court. At least in Washington.

Even if they won't allow an attorney to speak for the parties in small claims court, they cannot stop folks from using the services of an attorney in filling out the paperwork and preparing for the presentation of the case.

It just usually is not worth it for small claims cases when the recovery is limited to 3K to 10K, depending upon the State.

I used one of the attorneys at the local JAG office for advice. It was gloriously FREE.

Aaron1124 said:

I know a lot of law firms also act as collection agencies. Although, I don't believe you're entitled to an attorney in a small claims court. At least in Washington.

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There may be free assistance from local consumer advocacy groups. Maybe they won't stand beside you in court, but might review paperwork and make suggestions.

Aaron1124 said:

I don't believe you're entitled to an attorney in a small claims court.

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One always has the right to have an attorney present as well as to represent them in all matters, including small claims court.

Well, perhaps not "all" matters. An attorney can't legally represent you during the consumation of your marriage...

I should have said "all legal matters."

since9 said:

One always has the right to have an attorney present as well as to represent them in all matters, including small claims court.

Well, perhaps not "all" matters. An attorney can't legally represent you during the consumation of your marriage...

I should have said "all legal matters."

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Not true, in some courts you must seek permission from a judge, to have an attorney in small claims court.

" The Parties Present Their Cases Themselves: Attorneys and paralegals are excluded from appearing or participating with the plaintiff or defendant in a small claims suit unless the judge grants permission. You may consult an attorney before you go to court or after." (emphasis in original)

EDIT: fix misprint

To answer you question about notification. You will be notified when the process server shows up and your door and hands you a copy of the filed lawsuit. Anything before then is just a courtesy from whoever if filing. The one that you actually owe will be filing, not any collection agency to answer that question. As for the amount of payments and working out some kind of deal the collection agency usually has some or even a lot of leeway on what to accept. They also use a lot of threats and so legal and some even illegal. No matter what it works this way:

The company turns over the debt to a collection agency to get whatever they can out of you. If they are able to get anything from you then they get a cut of it.

It is usually up to the collection agency to decide how much they can get from you and what to settle for. Sometimes they will even settle for less than the full amount if they think that it is all they are going to get no matter what.

Once they settle with you they report back to the company and if the agency has accepted your offer then your account is now with the agency and not the company. For instance you settle with the agency for $5,000 on a $10,000 debt then the company cannot go after you for the other $5,000 and the agency is responsible for the $5,000 less their cut to the company.

If the agency decides they cannot get anything from you then they return it to the company and the company decides to turn it over to another collection agency, write it off as a bad debt or file suit against you.

A company cannot write something off as a bad bebt unless they have made good faith to collect it. Turning it over to a collection agency satifies that so that they can write it off. The agency only gets a cut of whatever they collect so that is why they are so agressive.

I hope my rambling helps.

before agreeing to anything check out this
http://www.budhibbs.com/
also research the statute of limitations on this debt
HTH

ron

Thanks for the info, everyone. After careful research, it appears the "lawsuit" threat is merely a threat. Seems they're more lenient than they like to act. What I'd like to know is how my debt is $955.00. I'm assuming that includes collection fees, and "processing charges" that they added on to it.

It probably does. But, if they don't sue, all of that is negotiable. You should try to come to an understanding about what the debt is and a plan to pay it. Make sure that any agreement includes there being no derogatory information in your credit record. Run the agreement by a lawyer before you sign it.

If you owe less than $1000 it's doubtful that you will be sued. Filing fees are just one part of the "expense" that they must go through to come after you. If you are sued, they have to sue you in your county. For your ~$950 debt, it will cost them about $50-$100 to file, then they have to pay for a process server, that probably costs another $50 assuming you are easy to find. Then they have to pay someone for the time it takes to prep for the trial. lets say they pay a paralegal $20 an hour and they spend half their work day on your case, that's $80. Follow me here, lets assume the cheapest estimates I've made. we're at $180 in overhead. Now we have to fly them to you, I'll low-ball it and say that costs $150 at a prearranged rate with an airline, rent them a car for three days, Thats probably about $150 after the fill up at turn in, get them a hotel room for 2 nights, thats probably going to be another $150, we have to feed them for three days, $90. plus their salary for the three days they are "on the road," thats $480 right there.

so lets do the math, Adding up everything their over head costs are going to be something like $1200 just to get your ~$950. They could ask for the $2100 in costs to be added to the judgement, but unless they can prove that you took on the debt with no intention of repaying, the judge probably wont give it to them. The most they would likely get is the filing fee and the process server's fee, and that's not enough to make it worth it. Trust me, you're not going to be sued. You'll be annoyed day and night by collectors, but after a while they are going to conclude that the debt is unrecoverable and just charge you off.

My suggestion is to contact the original creditor and ask them to give you an offer to settle. You'll get the best offer if you can pay them in one lump sum, but if you have to split the settlement into installments, you'll pay more. Make sure you get the settlement offer in writing, signed and on their letter head, and also be sure to get them to agree to remove any reflection of the debt from your credit file as a condition of the payment. This is one thing I can not stress enough... NEVER EVER EVER LET THEM HAVE ELECTRONIC ACCESS TO YOUR CHECKING ACCOUNT. if they insist on electronic payment ask them to give you their account and routing info and YOU transfer the funds to them from your bank. A cashiers check or money order is also a good method if they agree.

Or just ignore them, I've done that as sometimes too.

Many of the costs associated with filing and pressing a small claims lawsuit are recoverable with the damages. Please don't assume that they won't sue. If someone owed me less than $1000 and wouldn't pay, I'd sue. The amount would have to be really small to make it not worth my while.

If you owe the money, make a settlement of the amount, make an agreement on a timetable to pay it, and pay it. That is simply the right thing to do. Don't assume that you will not be sued.

The consequence of being sued is that a world of collection methods are opened up to the person winning the judgment. (These methods, and whether further court action is required to implement them, varies from jurisdiction to jurisdiction). If you indeed owe the money, don't let it come to this. If the debt is unjust, by all means, fight it.