I’ve blogged previously about the Dell Financial Services computer account cases. Usually the actual plaintiff in these cases is not Dell Financial Services, but rather a “junk debt” buyer such as Midland Funding LLC, Portfolio Recovery Associates, Absolute Resolutions, Cavarly SPV I, LLC etc. which purchased (via an assignment of account) your old Dell account for pennies on the dollar. Lately in early 2016, I’ve seen a large new batch of these Dell cases being filed, so I thought I’d take a moment to write updated article on the Dell Financial Services lawsuit cases and my experience with these matters:
First off, it is perfectly legal for the original creditor such as Dell Financial Services to sell your old Dell account for as little as a tenth of a cent on the dollar. And nearly every credit card or finance agreement drafted in the last 30 years gives the creditor the absolute right to sell/transfer the account to another company without your consent. Typically the account is sold as a pool of accounts via a written Assignment of Debt, which is basically a bill of sale. Also, the amount the debt buyer paid for your account is not a defense nor at all relevant to the case. They stand in the shoes of the original creditor so far as the outstanding balance is concerned.
As always, the absolute biggest mistake you can make when served with a Complaint from a large New Jersey collections firm such as Pressler & Pressler, Foster Garbus, Rubin & Rothman, Apothaker Scian, Morgan Bornstein & Morgan, Schachter Portnoy, Zager Fuchs, Faloni & Associates etc is to ignore it. DO NOT IGNORE THE COMPLAINT!
If you do not answer a NJ Special Civil Part complaint within 35 days from the date you receive it, the Court will automatically enter a default against you. This closes off your time & opportunity to answer the Complaint and fight the case on the merits. (Unless you file a successful Motion to Vacate Default Judgment pursuant to NJ Court Rule 4:50-1, which is discussed here and in other posts of mine).
Basically, on day #36 after you’ve received the Complaint, the Court will no longer accept your Answer and the plaintiff’s attorney can merely send the Court a statement of the amount they claim you owe. The Court will then enter this amount as a default judgment against you. (Quick Note- you can always determine if you case is a NJ Special Civil Part case if the docket number begins with the two letters “DC.” Also, the last two digits of the docket number represent the year the lawsuit was filed, so for example a docket number of DC-04378-15 means its a Special Civil case filed in year 2015).
From there, once the judgment is entered by the Court, the collection law firm can (and will) begin investigating you and try to locate any bank accounts you have, or where you own property or where you work. They can then file papers with the Court to levy (seize) funds from your bank account, place a docketed judgment against your home, or notify your employer to being garnishing up to 10% of your gross wages if you make more than $217.50 per week.
The second worst thing you can do is try to handle a NJ Special Civil case yourself without an experienced debt defense attorney. Going it alone against the NJ Collections firms is the textbook definition of “penny wise and pound foolish.” Remember, these collections firms do this as a professional career every day of their lives. As a defendant, this is likely not only your very first case, but also your very first experience with the Court system. That’s a bad combination and not a recipe for success.
For example, in the Dell Financial Services computer cases, an obscure exemption to the standard 6-year statute of limitations exists under NJ law. That’s because the Dell computer accounts are not considered “open ended credit accounts” but rather a “sale of goods on an installment plan,” which is governed by a separate body of law called the Uniform Commercial Code or “UCC” for short. Under the UCC, there is a 4 year Statute of Limitations for actions on the sale of goods, such as a Dell computer. [And since Dell computers are now basically obsolete antiques, a lot of these cases are well beyond 4 years since a payment was made].
My office routinely files Motions for Summary Judgment if the evidence shows that the last payment on a Dell Financial Services account was made more than 4 years before the date the Complaint (lawsuit) was filed. Often times I have had plaintiff’s attorneys simply dismiss the case altogether upon receipt of my motion papers. That’s because if I succeed on the Motion, the law firm may be liable under the FDCPA (Fair Debt Collections Practices Act, a federal law applicable to all 50 states) for suing on a time-barred debt, which carries statutory damages and attorneys fees under the FDCPA. Rather than risk that FDCPA lawsuit, they will typically offer a mutual releases of claims for all parties to sign, and quickly drop the case without collecting a cent from you.
Also, do not fear if you have (as many people do) thrown out or misplaced your old Dell Financial Services account statements. My office sends a Demand for Document Production upon the plaintiff’s attorney typically a few days after I file the Answer, along with a list of interrogatory questions which also must be answered under oath by a representative of the debt buyer. This forces the junk debt buyer to “put all their cards on the table” and produce whatever documents they have. If they cannot produce any documents at all (which is more common than you think), the case can typically be dismissed for plaintiff’s failure to provide discovery.
As this article points out, there are many factors and issues surrounding the controversial area of junk debt cases in NJ Special Civil Part. I’ve saved my clients hundreds of thousands of dollars over the years by fighting these cases aggressively and making life miserable for the debt collectors. Call me today at 908-782-5313 for a free discussion of YOUR case.
Author: Scott Bullock, Esq, NY & NJ Attorney, phone number 908-782-5313