I have a small retail store that is being sued over an unpaid bill of $2,500. I received the petition on 9/11/17, and it says I have 15 days to respond from the date I received. I had received a notice from a law firm in New York state earlier this year about this, and I sent that firm a certified/return receipt letter asking them to prove that the bill was true, and that they were authorized to collect, using a template I found on the US CFPB website. I didn’t hear back from anyone until receiving this petition. I have the funds to pay it, but $2,500 still hurts. Should I just pay it, since it is such a small amount compared to what I might end up with in attorney’s fees, etc? Also, should I pay the plantiff (the collection agency), or can I call the original creditor and arrange payment with them in exchange for getting this out of the courts?
First things first. The suit was filed in a Louisiana district court, right?
Yes, filed in 19th judicial district court in EBR.
Let’s look at a few aspects of this:
Credit. Many people assume that they should pay off a creditor at this point to save their credit. Actually, once things get to this point it is usually too late to save a cratered credit rating. Also, most LLCs in this situation no longer are that much concerned about credit ratings.
The outlook at trial. Unless you have a technical defense (which almost always takes a lawyer to find), the odds are pretty good that you will lose at trial. Usually a witness testifies that the accounting of the creditor is correct and unless you can prove otherwise in cross examination, that will pretty much be the end of the trial. You are probably right in suspecting that the costs and fees involved will make this a lose-lose situation.
Negotiation. They don’t want the expense of trial either. The know that most small companies that get into this situation will likely go bankrupt. If they are unsecured, they would get nothing in a bankruptcy. So, there is an ideal opportunity to negotiate directly with the company -probably not with the collector. Although, some debt collectors actually purchase a portfolio of debt for pennies on the dollar. If that is the case, you might be able to get the debt way down.
I would add to this that you should spend the money for an hour of a lawyer’s time to sit down and go over the paperwork. If there is a technical defense (what Lex was talking about), that would likely show up in that hour. I would say it would be 2-3 hundred dollars well spent.
Thanks, I’m going to call around and find a lawyer to meet with for an hour like you suggest. I still don’t understand why they didn’t have to respond back to me after I sent the certified letter, before going to court.
That is supposed to be sent within 30 days of first finding out about the debt.
Even if that was done, it is not a legal defense to the debt in most courts. It would be more within the scope of a complaint against them with the CFPB.