Well the first step is to whine… well no, not really.  I’m not saying I didn’t let an expletive or two out after hearing that we lost, but I’m not not saying it either.

So after getting over the sting of losing a case that should have genuinely been won, what is the next step?

Well the next step is not to ignore it, and at least my client understood that.  In Pennsylvania, a magistrate’s decision is only final if the losing party does not decide to appeal the decision.  If the decision is appealed, the case is reviewed de novo (as if the first case never happened) at the Court of Common Pleas level, or as my client put it, “Big Boy Court.”

This is not to disparage the position of District Justice nor this particular judge’s decision (no matter how wrong it actually was), in my experience with District Justices, they have neither the time or capacity to understand every case that goes in front of them.

Once a District Justice has rendered his or her decision, the parties are notified in the mail of the result of that decision and are given thirty days to file an appeal.  The cost to file an appeal in Berks County is $215.50 (each county is different) and the appeal must be filed in 30 days.

The appeal is essentially a generic document that starts the process all over again, and because the hearing before the Magistrate is not a matter of record, your opposition is given twenty days to file their complaint or they could be subject to what is called a judgment non pros.  A judgment non pros basically says that you did not file your complaint so the Magistrate’s decision is overturned and you lost your case.

For the plaintiff all is not lost, unless the case is dismissed with prejudice, they can file the case again, but since they have already expended the money necessary to file the first case and have nothing to show for it, chances are they will go away.

So what should we do in this particular case.  Without giving information that would reveal my client’s identity (I would never violate privilege like that) here is the story.

My client, Steve (the name is changed to protect the innocent) is being sued by Discover (the name is not changed because we know Discover is a slimy company) for a credit card.  The balance they claim owed is $9500.  By all rights, they shouldn’t have even filed at the District Court level because the Magistrate is capped at $8000 in damages, however due to some sneaky maneuvering, Discover still managed to get a judgment for $9500.

Discover claims that Steve last paid this card in June 2010, but it is possible this card was taken out in his name by someone else, it is also possible that this is card from way in the past that his significant other (my father would have called it living in sin) had been using and paying.  Steve is one of those clients who can honestly say he doesn’t remember having an account.

We have what appears to be a potential statute of limitations case here.  The statute of limitations in Pennsylvania is four years on debt, but the statute starts at the date of last activity (payment).  You’re probably thinking, four years from 2010 gets you into 2013, why a statute of limitations issue.  The reason is that Discover says that the last payment was made in June 2010, it doesn’t mean they can prove it.  They had no canceled check, no payment confirmation, nothing but the integrity of the bank not to make a mistake or be deliberately underhanded.  Yeah me too, I’m not giving them the benefit of the doubt on this one.  Produce a canceled check or it didn’t happen.  Opposing counsel actually had the nerve to argue that these payments posting helped my client because it lowered his balance, I brought up the statute of limitation argument.

Opposing counsel also had the nerve to bring up the Fair Credit Reporting Act which requires a person to dispute something on their credit card within 60 days of receiving the statement, yet Discover did not have proof of mailing.

In any event, my strategy is going to be to file the appeal on day 29 to burn more of the statute of limitations.  If Discover loses the case, the statute of limitations will still be from the last legitimate payment date, furthermore by filing the appeal on day 29, there is a better chance that this appeal gets ignored and judgment non pros is entered.  By day 20, the winner at the magistrate level is usually pretty secure in their victory and may be counting their money in their head.  In my experience, a complaint in an appeal is more likely to be filed with a later appeal filing.

So in a few weeks, we will be filing our appeal and I am expecting Discover Card to put up a fight, but they’d better be better than they were Friday in Perkasie, because none of the crap they got away with in front of the magistrate is going to fly in Big Boy Court.

Sadly, 50% of marriages end in divorce.  That means 1 out of every 2 marriages will end in failure.  So even though discussing divorce is as fun as rehashing the 1993 Mets season a game an inning at a time and seems to last as long as the last Jane Austin film I was forced to watch (the last thing I wanted to hear was this is the end of Act 1), it is important to know what a divorce decree can and cannot do regarding debt.

The most important thing to know is that a divorce decree cannot, on its own, change a contract.  If Jack and Diane had a credit card that they were jointly responsible for and when they divorced, Diane was to be responsible for paying that debt, Jack is still responsible for it contractually.  Divorce cannot change the terms of a contract with a non-related party! Think about it from a fairness perspective.  Suppose rather than Citibank lending Jack and Diane $20,000, it was their friend Fred.  Fred knew that Jack had a good job and Diane had always been good for the money, so he made a loan that made them both responsible.  Would it be fair to Fred if a divorce decree could cut his rights to collect that debt in half?  Of course not, and I dare say that banks would not make loans based on two incomes if a divorce decree could change their contractual rights.

So now Jack and Diane are divorced.  Jack has the kids and is moving on with his life.  Diane however is now realizing all that Jack contributed to her lifestyle and is hitting a cash crunch.  It happens, it doesn’t make you a bad person! Diane stops paying the Citibank bill.  It won’t take long before Jack, who has gotten his life back in order, starts getting collections calls from Citibank… unless Jack has changed his phone number, which is common in divorce.

Now Citibank doesn’t have good contact information from Jack and he doesn’t find out that Diane has stopped paying on her bill until a lawsuit is filed against him.

So you’re probably thinking, how do I avoid this?  One of the smartest things you can do is keep an eye on your credit report.  If you are a joint borrower, the card will appear on your credit report.  You will be able to see if the bill is being paid on time.  You should also keep a record of all accounts that your ex-spouse is supposed to be paying and check them on-line! Just about every credit card company has on-line access, it is more cost effective than having phone jockeys handling the phone calls or even an IVR giving electronic information.  By going on-line you can quickly see if your ex is doing what he/she is supposed to be doing.

Of course, Jack hasn’t done any of these things and now he is in pickle because he’s being sued for a debt he thought was gone because his divorce lawyer told him that he is no longer responsible for the debt.  Chances are if your ex isn’t paying one bill, they aren’t paying any of them! If you find yourself in this position, you need to speak to a competent professional who can help.  More than half of the people I see do not need bankruptcy, they just need to find a way out of the weeds.  If this is you, I’d be happy to help, call 610-400-3093 for a free consultation.  One think I tell my clients is Control the situation rather than have the situation control you!

As far as family law, I don’t do that, however if you are in the Lehigh Valley area and need a good family law attorney, I’d be happy to refer you to one.  Call 610-400-3093 for the referral.  Just remember that just because the divorce decree says you don’t have to pay it doesn’t mean you won’t eventually have to pay it.

So does this mean my creditor can no longer harm me once four years has past?  Like most things in law, the answer is not exactly.

Let’s start with what the creditor cannot do.  The creditor can no longer successfully sue you for a judgment nor can they file a valid proof of claim for debt you owe them in a Chapter 13 bankruptcy case.  A debt this old is also called “time barred. ”

Now we get to what the creditor can do. 

A creditor can still send you a collection letter requesting payment.  You can send a letter asking for anything.  I could send you a letter asking for a pink hippo.  Just because I ask for it in the letter doesn’t mean you have to comply.  Even so, there is nothing overtly illegal in requesting you pay a debt, even if they no longer can sue you for the balance.

A creditor can also attempt to collect the debt using phone calls.  The Fair Debt Collection Practices Act (FDCPA) allows collectors to make contact once per day.

There is nothing barring the collector from attempting to collect a time-barred debt over the phone, however if they threaten to sue you they are violating the FDCPA because it is a thread to do something they aren’t able to do legally.  This could be classified as an idle threat at best. 

If you allow them, a debt collector will drive you nuts trying to collect an invalid debt, and if you make a payment to them to get them off your phone, you may inadvertently start the statute of limitations all over again.

You don’t have to put up with a debt collector’s constant phone calls!

Rather than give in to one of these snakes in the grass, ask them for a mailing address and send them a letter telling them to stop calling.  Its called a cease communication letter.  Send it certified, then if they call again they have violated the FDCPA.  Instead of collecting from you, they may wind up receiving a heavy penalty instead.

If its been more than four years since you paid a debt or you used a credit card and a debt collector comes calling, don’t give them a thing, just send a cease communication letter and remind them that they are SOL.  Their debt is beyond the statute of limitations and they can’t touch you.

While a credit card lawsuit is a symptom of a larger financial problem, this type of a lawsuit can cause sleepless nights and difficult days as you fight to get your mind off of it.

So what can you do about it?  You could hire a lawyer to defend you from these companies, but if you had the money for an attorney, you could have paid your debt.  At the same time you don’t want the credit card company getting a judgment against you in court.

So what can you do?  I suppose you could go to a loan shark and borrow the money to pay off the credit card company, but the mob is even less forgiving than the credit card company is.

Maybe.

Creditors can be relentless at collecting debts and I’ve heard of instances where their people have threatened to do bodily harm against debtors.

Are credit card companies really anything more than government licensed loan sharks?

It doesn’t matter, because you can fight back against this type of lawsuit, especially in Pennsylvania where creditors seem to go about getting a judgment.

The first step is to answer the complaint.  Most complaints are filed in the district court and will be heard in front of a magistrate, so make sure you file your intent to defend.

The second step is to check your records for any possible proof of payment or correspondence from the party that is now suing you.  If you have proof of payment, bring it with you, if you do not, that doesn’t mean you are sunk.

The third step is to actually show up.  Most of the time, the creditor doesn’t come to court, and if they don’t, you get a judgment in your favor.  If they do arrive, make them prove their case.

Don’t be their best witness.  Most likely, the creditor will send an attorney rather than go himself.  Make sure the attorney follows the rules of evidence.  The attorney is not allowed to testify in the case, but the attorney may enter statements into evidence under rule 902(9) of the Pennsylvania rules of evidence.

It’s not your job to bring this to the attorney’s attention.  If the attorney tries to testify, make sure to speak up and ask the magistrate whether or not the attorney is testifying.  If the magistrate knows what she is doing, she will ask the attorney to explain what he is doing.

The attorney may not know this rule of evidence, and if they don’t, it may be over.  If somehow the statements get into evidence, the magistrate or the attorney can ask you if these bills are yours.

You are under oath, you are not allowed to lie.  You are not required to improve your memory or the truth.  Chances are you don’t remember everything you charged on your credit card and you can say “I did have the account but I can’t tell you if the charges on those statements are mine.”

Then the magistrate is required to render her verdict.  Most of the time you get the decision on the spot, but sometimes they will send the result in the mail in five days.  That happens more often in urban courtrooms where violence has been known to happen.

The bottom line on defending credit card lawsuits in Pennsylvania is that it is a crap-shoot, but you significantly improve your odds if you don’t become the plaintiff’s best witness!