Definitions

 

The purpose of this page is to give you information about certain terms and words that are commonly used when you have been sued in Alabama by a debt collector or a debt buyer.

Some of these terms will make sense — others, perhaps not so much. But if you have been sued in Alabama, you need to have some understanding of what is going on and learning the meaning of words used can be helpful.

Do keep in mind that there will be exceptions and circumstances where the information listed here may not be accurate.  This is not legal advice but is intended to give you a general understanding so that you can ask the right questions of a lawyer or to give you some insight as you begin your own research of the issues that you are facing.

Most of the topics also have a video that explains the meaning — you can simply click on the links below and you will be taken to a video that hope will be helpful.

If you have questions or suggestions about topics that can be added, please leave us a comment and we can look into adding to our collection of definitions as we hope to make this a useful place for learning.

Answer To A Lawsuit

This is your official response to the lawsuit.  You admit or deny what is alleged in the Complaint (see below).

You can also raise “affirmative defenses” where you say, in essence, even if I am guilty, I still win because . . . .

It may be because the lawsuit is brought after the Statute of Limitations (see below) has expired — this allows you normally to sue the debt collector.

It may be because you already settled with the debt buyer — again if this is the case you normally will have a lawsuit against the collector for suing you as you do not owe the money.  Here is an example of LVNV suing an Alabama consumer who had settled the debt with LVNV.  That was not a smart move by LVNV.

Another thing to note about your answer — when you deny or dispute the debt, if the debt collector updates your credit report, it must show it as being “disputed” or it has normally violated the law.

There are other affirmative defenses — bankruptcy, arbitration, etc. but hopefully this gives you an idea about your Answer.

Complaint

The Complaint is what starts the lawsuit.  It begins the process.

This will tell you who is suing you.

You will find out what court you have been sued in (Small Claims, District, or Circuit — see below for more information) and what county (Jefferson, Shelby, Tuscaloosa, etc).

It will tell you what you are being sued for in terms of dollars.

It should also tell you the legal theory that you are being sued under — Stated Account (see below), Open Account (see below), etc.

Consent Judgment

This is where you agree, or “consent,” to have a judgment entered against you.  Thus why it is called a “Consent Judgment” in Alabama.

Normally you will face the collection lawyer trying to talk you into this — they will say it will let you avoid a trial and you can make payments.

The problem is it is a real judgment.

This means 12% interest a year.

This means garnishments of bank accounts and wages.

This means severely harming your credit report by having a judgment on there.

You might can tell — we don’t think much of Consent Judgments.

Debt Buyer/Debt Collector

A Debt Buyer is a company that buys up (or supposedly buys up) bad debt, including your debt.  Or so they allege.

A Debt Buyer is a form or a type of Debt Collector.

Examples of Debt Buyers include: Asset Acceptance, Cavalry Portfolio, LVNV, Midland Funding or Midland Credit Management,  Unifund, etc.

A Debt Collector is a broader term that includes collectors that do not (allegedly) own the debt.

Debt Collectors received the loan or debt after it was in default so this is not the original creditor.

The significance of being a “Debt Collector” (remember a Debt Buyer is also a Debt Collector) is that normally the Fair Debt Collection Practices Act will apply.

This can be a traditional collection agency.

A collection law firm (Zarzaur & Schwartz, Holloway & Moxley, Ingram & Associates, Clowd & Tidwell,  Nadler, Nathan & Nathan, etc) that files lawsuits on behalf of Debt Buyers.  Collection lawfirms do not own the debt, although sometimes the lawyers own Debt Buyers that the collection lawfirms represent.

Sometimes we do find that collection agencies, that do not own the debt, will file suit pretending to be Debt Buyers.  We have seen this with Cavalry and Unifund, among others.  This happens because the companies have multiple companies where one company will buy the debt and then assign it to another for collection.  The names will be slightly different. But this is done for a reason and often it means the company suing you has no basis to do so and, in fact, may be violating the Fair Debt Collection Practices Act.

Dismissal With Prejudice

This is a good thing.

It means the case is over.

For good.

Unless you settled with the Debt Buyer (see above), this means that you completely won your case.

It has some wonderful implications.

The Debt Buyer can never sue you again.  If it does, you can sue it.

The Debt Buyer can not report this on your credit report.  If it does, you can sue the Debt Buyer.

The Debt Buyer cannot sell or transfer or assign the account to any Debt Buyer or Debt Collector.

Bottom line — this is a Terms of Service.

Dismissal Without Prejudice

One outcome is that the case (the lawsuit or the Complaint) will be dismissed. That’s the good news.

The bad news, however, is that this is not a true victory for you.

The Debt Buyer (see above) can sue you again (for a total of two lawsuits).

It can start or continue collection calls or letters or credit reporting against you.

It can sell the debt to another Debt Buyer or assign it to a Debt Collector.

So, it is a victory but often times a less than satisfying victory.

Normally we do not agree to these and ask the judge to leave the trial date on as we want a full victory in our favor or a Dismissal With Prejudice (see above).

District Court

This is a court in Alabama which hears claims up to $10,000.

Normally, it is the same judge and the same courtroom as the Small Claims court (see below).

The rules of evidence apply just the same as in a lawsuit that we file against a Debt Buyer for violating the Fair Debt Collection Practices Act (FDCPA) or that we file against a trucking company for harming someone on the roads.

You normally, however, will get a much quicker trial date than in a case where we sue a Debt Buyer or a trucking company, etc.  Maybe 30-45 days after you Answer (see above) the lawsuit you will be standing in court with the Debt Buyer defending yourself or your lawyer will.

You will file your Answer with the District Court Clerk at the courthouse where you are sued.

Remember you can find out which courthouse you were sued in (normally the county where you live) by looking at the Complaint (see above) or the Statement of Claims (see beow).

Open Account

An Open Account is a debt where there is no repayment schedule.

A couple of examples.

A car loan is not an Open Account because you know the length of the loan (48 or 60 months) and the exact amount of the payment every month.

But a credit card is an Open Account because you have the ability to charge (i.e. to borrow) and there is no timetable to pay it back other than making the minimum payment.

The significance of this lies primarily in the Statute of Limitations (see below) which is three (3) years in Alabama.

Small Claims Court

This is a part of the District Court (see above).  Normally the same judge and the same courtroom at your county courthouse.

The idea of Small Claims court is that normal people without lawyers can resolve small ($3500 or less) claims that they have against each other.

You get to trial very quickly — in Jefferson County our judges set your case for trial in about 30 days after you have filed your Answer (see above).

Like the District Court, Small Claims has been flooded with these Debt Buyer (see above) lawsuits.

The good news is the Small Claims judges understand the law as it relates to collection cases and we have found most of the judges are very fair in these cases.

You have 14 days to Answer the lawsuit or the Debt Buyer will request a default judgment against you.

No discovery (depositions or written questions to you) is allowed in Small Claims court.

We do want to point out that a few Debt Buyers and their lawyers seem to conveniently forget this detail and they will send you discovery — primarily items called “Requests for Admissions” which must be answered.  This is improper and they know it but that does not stop them from doing this.

In summary, Small Claims is set up to quickly and fairly dispense justice and even with the pressure and abuse by Debt Buyers, it still works very well.

Stated Account

This is also called an account stated by some courts and lawyers. Here is the basic idea.

You borrow money with no set time to pay it back.  Then the place you borrowed money from, the creditor, sends you a letter which “states” the amount owed and the terms of paying it back.

This will show the amount you borrowed and the amount you have already paid. You then agree to this by not objecting.

Now the account — the debt — has been “stated” and the creditor will only have to prove that the statement was sent to you and you did not object.

The critical thing, for Statute of Limitations (see below) purposes is this type of legal theory or legal claim is six (6) years instead of three (3) years for an Open Account (see above).

The problem is this theory does not fit with credit card accounts.

It is designed for when you buy products or services over time and then occasionally make payments.  Maybe you use a CPA and then every quarter you get an invoice that shows the charges and payments.  That is an account stated.

The Alabama Supreme Court talks about once the account is stated, then it is a new debt.

This can’t be the case in the credit card context like the Debt Buyers (see above) want it to be. They claim every time Capital One or Chase or Bank of America sends you a monthly billing, this creates a whole new contract.

These credit card companies would be shocked to hear this as this would create all sorts of liability for them under the Truth in Lending Act.

So, to avoid this, the Debt Buyers say, “Well, right before we sued you we sent you a one page document our lawyer made up that has a title of ‘Statement of Account’ on top of it that shows the amount you owe and you did not object.  Therefore, we can now sue you under a Stated Account theory.”

We find this to be unpersuasive and a twisting of what this law means and what it is designed for.

Regardless of the abusive and improper way that Debt Buyers use this law, we hope this gives you some understanding of it as you will almost always see this in every collection lawsuit filed in Alabama against a consumer.

Statement Of Claims

This is what some Debt Buyers (see above) call the Complaint (see above) — it lists the legal theory or theories against you and should give you the amount you are being sued for and who is suing you.

It will also list the court that you have been sued in.

Statute of Limitations

This is the time period for the Debt Buyer (see above) to file suit against you.

If it files the lawsuit after this time period expires, then it should lose its case against you as you have an affirmative defense for your Answer (see above).

You also will likely have a suit you can bring against the Debt Buyer for suing you after the statute of limitations has expired.

So, what is the statute of limitations in Alabama?

We say it is three (3) years, which is the time period for suit on an “Open Account” (see above).  Open Account is the normal description of a credit card, which is by far the most common type of Debt Buyer lawsuit brought against Alabama consumers.

But the Debt Buyers say in their Complaints and Statements of Claims (see above) that they are actually suing for a “Stated Account” (see above).  This is sometimes called an “account stated.”

This has a six year (6) statute of limitation in Alabama.

Besides this difference of opinion, we sometimes have to look to the state which controls the credit card agreement.

After all, the Debt Buyer claims to have bought the debt that it is suing over and normally that debt will state that the laws of Virginia, or Deleware, or some other state control.

So we have to look and see what the laws are of that state.

Normally, however, the three year statute of limitation for Open Account will have passed but suit will be brought before the six year statute of limitations expires.

Subpoena/Testifying

This is where the debt buyer forces you to testify at trial.  A subpoena means you have to show up at the court on the date and time of the subpoena.

What if you don’t?  Well.  Let’s just say bad things will happen.

You need to show up if you have been subpoenaed.

Now, keep in mind that if you are not represented by a lawyer, normally you will need to show up on the day of trial or you will lose when the judge enters a “default judgment” (see above) against you for not showing up to trial.

If you have an attorney, he or she can tell you if they want you to be at trial to testify.  Normally we do not need our clients to testify as you can’t know whether or not the debt buyer really owns the debt.

Trial

This is where the judge will decide, or in rare cases a jury if you are in Circuit Court, whether you owe the debt that the Debt Buyer claims you owe.

This is the time for proof — not allegations. Debt Buyers (see above) hate this because now they have to actually produce evidence to support their claim.  Unless you just agree that they should win….

The Debt Buyer, as the Plaintiff, will go first.

It will present its evidence and call its witnesses, including you if you are in the courtroom.

Note — if you do not have a lawyer defending you, then you will need to be at court.  If you do have a lawyer, your lawyer may or may not want you to be at court.  We rarely have our clients at court.

After the Debt Buyer presents its evidence, then you can present your evidence.

The judge will then make a ruling.

Normally, at least in Jefferson and Shelby Counties, the District Court (and Small Claims) judges will make their rulings immediately after the trial.

So normally you will know whether you won or lost right there on the spot.

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