You may have had a credit card several years ago that, at some point, stopped sending you bills and/or monthly statements. Perhaps one day, after months of consecutive non-payment, you received a statement showing a balance of 0 dollars and a paragraph stating that the credit card (Discover, Capital One, etc) had “charged off” your account.
You likely forgot all about the card, and figured they credit card company had finally “given up” since you no longer received calls or statements in the mail from them.
And guess what- you are correct!
The bad news is that they don’t just “cut their losses” and forget about these delinquent accounts. Instead, they sell the accounts (and the right to collect the unpaid balance) to what are know as “bad debt buyers.” These bad debt buyers are not collection agencies per se, as they do not “represent” the original creditors such as Discover, Capital One, etc. Rather, they now own the account in their own right, and thus own the right to sue to collect on your unpaid balance, just as if they themselves were the original creditor. Typically, the case caption will identify the original creditor, such as “Cavalry SPV I, as assignee of FIA CARD SERVIVCES, INC”, or “MIDLAND FUNDING LLC current assignee, original creditor CITIBANK N.A”.
This “assignment of debt” is perfectly legal in NJ, and in most other states as well. Typically, the debt buyers pay as little as a tenth of a cent on the dollar for these bad debts. Sadly, what they paid for the debt is of no legal relevance in your NJ Special Civil part collections case. Whether they paid 99.9% of what you owed on your account, or a single penny, they have the same rights as the original creditor to seek the unpaid balance and usually whatever interest/late charges had been tacked on by the original creditor prior to the charge-off. The bad or “zombie” debt market is growing every day, and sadly the NJ government is taking no action whatsoever to curb the collectors. Reform is badly needed.
For example, New Jersey has a 6 year Statute of Limitations on contract lawsuits (such as credit card debt). I see a lot of cases lately where the account was charged off in 2010 to 2011, so if you had a credit card account that was “charged off” in this time period, you are ripe for a suit being filed against you, even though it seems “so long ago” and you may have long ago thrown away those old statements and forgotten you even had the card.
In my opinion, New Jersey is a VERY collector-friendly state & court system. 6 years is quite a long statute of limitation period for an old debt. Pennsylvania, by way of comparison. has a 4 year statute of limitations in these cases. NJ is also one of the the only states that permit wage garnishment by a private creditor. In NJ, if a private creditor obtains a judgment against you, they may apply to garnish 10% of your gross wages if you earn more than $217.50 per week at your job, until the judgment is paid in full. They can also obtain a “writ of levy” and have the judgment taken from your checking or savings account by the sheriff’s dept. If you own property, they may obtain a DJ (Docketed Judgment) which is a lien recorded at the state level against real estate (such as your home) that you own in New Jersey. When you attempt to sell your property, the creditor’s lien will have to be paid off prior to or at your real estate closing.
Here’s a link to the website for Midland Funding, LLC:
Other large debt collectors include New Century Financial Services, Inc:
Usually a New Century Financial Services case will be filed by the firm of Pressler & Pressler, located at 7 Entin Road in Pasipanny, NJ. Another big debt buyer who files a lot of NJ Special Civil Part lawsuits is Cavalry SPV:
My firm has extensive experience in defending cases against all 3 of these debt buyers, as well as smaller collection firms/agencies. I aggressively defend these cases, and have succeeded at getting many cases settled for a fraction of what is demanded in the Complaint, and sometimes had cases dismissed outright either by motion or at trial. I’ve defended debt collection cases against Hayt, Hayt & Landau, Scachter Portnoy, Apothaker & Associates PC, Pressler & Pressler, and many other debt collection firms.
Here is a brief list of “dos and don’ts” if you are sued by Midland Funding LLC, New Century Financial Services Inc, Cavalry SPV, or any other collector in the NJ Special Civil Part:
DO try to retain an NJ Debt Defense attorney to represent you. NJ Special Civil Part rules and procedures are complicated and can change often, and the “boilerplate” anwer and motion forms offered online by the NJ Judiciary website do not thoroughly cover every unique case/situation. No Court staff or court employees can give you legal advice or opinions about how to defend your case., or an opinion as to the outcome of your case.
DON’T just ignore the Complaint. This is the 100% worst decision you will ever make. I REPEAT: DO NOT IGNORE THE COMPLAINT! In the NJ Special Civil Part, if the Answer and the $15.00 filing fee for same is not received from defendant (you) in 35 days, the Court will automatically enter a default against you. For example, if you try to file your Answer on the 36th day, the Court staff will not accept it unless you file a Motion to Vacate Default. These motions are tricky and a headache to go through, as you can bet the Plaintiff will oppose your motion vigorously. So MAKE SURE THE ANSWER GETS FILED ON TIME!
DO assert all of your “affirmative defenses” in a separate document attached to your Answer. “Affirmative defenses” are defenses which can be deemed waived at trial if not asserted early on in your case.
DON’T get angry, lose your temper, and call up to threaten or scream at the debt collector or the debt collector’s attorney. Understand that these folks do this 40 hours a week, year in and year out. They receive hundreds of angry calls a month. Although it may feel good to “vent” and “give them a piece of your mind,” it isn’t going to phase them one bit. They’ve heard it all before. Try to relax and get all of your old statements/billing records, etc together instead. This will help you prepare a defense to your case, and be of great value to your defense attorney if you retain one. Also collect and print out any prior email communications with the original creditor or prior debt collectors who handled the account.
DON’T panic. There may be defenses available of which you are not aware, possibly such that the entire case will get dismissed, or possibly settle for a small fraction of what is being demanded in the Complaint. Remember, as the plaintiff, the debt buyer such as Midland, New Century, or Cavalry SPV has to prove that they are entitled to the money. They must produce a valid assignment (or chain of assignment if the debt has been assigned multiple times), account statements showing how the interest rate/late charges are calculated, and other documentation. A skilled and experienced NJ Debt Defense attorney can often challenge the legal sufficiency of these documents, as well as make the collections firm work VERY hard to earn their $$$. Understand that collections is a volume business, and the plaintiff’s lawyers are often unable to take every contested case to trial.
Although every matter is different, and legal results thus cannot be predicted or guaranteed, my firm often saves clients 3 to 5 times my legal fee, and sometimes even more.
Call me today at 908-782-5313 for a free consultation about your case.
NOTHING IN THIS POST CONSTITUTES LEGAL ADVICE. ALSO, BE ADVISED THAT CONTACTING OUR FIRM THROUGH THE “CONTACT US” FEATURE DOES NOT CREATE AN ATTORNEY-CLIENT RELATIONSHIP.