Blogs
You were sued on a collection lawsuit and managed to file a written response with the Clerk of the Court within 30 days. Congratulations, you have stopped the entry of a default judgement.
But now what? What is your plan of action after filing a response to the lawsuit?
The next phase is to get answers, especially if you do not agree with the creditor’s claim.
- They say you owe a large medical debt, but didn’t health insurance pay a large portion of the bill?
- Did the hospital forget to file a medical insurance claim?
- Did the credit card lender give you credit for all the payments you made?
- What is the interest rate on the contract?
- Was the contract written or verbal?
Collection agencies don’t like to answer questions. They are focused on filing lawsuits, obtaining judgments by default, and garnishing paychecks.
They don’t answer questions about why you owe the money, unless you make them provide anwers.
INTERROGATORIES:
Any party may serve upon any other party written interrogatories to be answered by the party served. Nebraska Trial Rule §6-333
Interrogatories are written questions you can make the other side answer. There is no special format you must use, but there are some guidelines to follow to make the process work:
- Mail the written questions to the attorney representing the collection agency.
- In the memo of the letter, write the work Interrogatories and reference court Rule 33.
- Advise the other side that they have 30 days to respond to the Interrogatories.
- Ask specific questions.
- Ask one question at a time.
- Number each question.
- Ask for a list of all persons having knowledge of the lawsuit, their address and phone numbers.
- Ask for a list of the persons they will call as witnesses at trial.
- Ask for a list of all documents they will introduce at trial.
- Request a list of all charges on the account.
- Request a list of all payments made on the account.
Lawsuits are your opportunity to finally get answers. Make them answer questions.
Image courtesy of Flickr and womencandoit
If you bothered to file a written response to a lawsuit with the Clerk of the Court, what is the next step?
What happens after you respond to a lawsuit?
Discovery:
The next step in litigation is called “discovery.” It is your opportunity (and the creditor’s opportunity) to get answers to questions. Unfortunately, this tends to be the most powerful tool in the debt defense arsenal that most people are clueless about using.
Discovery is powerful. It includes these legal tools:
- Interrogatories. These are written questions you can make the creditor answer.
- Motion to Produce Documents. You can demand a creditor provide all documents relevant to your case.
- Requests for Admission. You can demand a creditor admit or deny specific facts. (Example, please admit or deny you received check #313 in the amount of $414 on or about April 1, 2018).
- Depositions. A deposition is testimony you can obtain from anyone with knowledge of the case that is usually recorded on video or written down by a court reporter.
All of the court rules available to someone sued on debt can be found in Article 3 of our Nebraska court rules.
In the next blog posts we will explore each of these powerful tools you have at your disposal to get the facts straight.
High volume collection attorneys base their entire practice on the fact that few defendants fight back. If defendants fought back and demanded proof of their debt, the entire collection field would collapse.
Over 95% of judgments are obtained by default when defendants fail to respond to the lawsuit. Of those that do bother to file a response, few are equipped to take the next step.
It’s time to take the next step. Demand answers. Demand documents. Ask questions. Interview the other side.
When you make the other side work, that’s when cases get dismissed or settled. Roll up your sleeves and get to work.
I read this comment from another bankruptcy attorney today:
“Help me understand why the home value (Z)estimates from a company that lost nearly $1 billion of its own money by relying on those (Z)estimates to play in the house flipping market are reliable.”
Home values provided by Zillow are important in bankruptcy cases, even if those values tend to be inflated.
The first thing I do when speaking to a prospective client who owns a home is to type their address into a Google search. Up pops a list of home valuations, and Zillow is almost at the top of the list.
Why do we search the Zillow value? Because only $60,000 of a home’s equity is protected in a Nebraska bankruptcy case, and it is extremely important to get an accurate valuation of a client’s home.
County assessor values tend to be low. Clients tend to underestimate their home’s value. So it is very important that a bankruptcy attorney look at outside sources.
We look at the county assessor’s webpages, Zillow, Realtor.com, and other valuation sites to get an idea of a home’s value.
What you should know is that the bankruptcy trustee also looks at these valuations as well.
If a Chapter 7 Trustee sees a Zillow value that is substantially higher than the value listed on the bankruptcy schedules, problems will arise. The Trustee may have a real estate agent inspect the home to see if it is worthwhile to sell the home.
Chapter 7 Trustees are paid a commission to uncover undervalued real estate and to sell homes if more than $60,000 of equity exists. That’s why we cannot ignore those Zillow valuations (“Zestimates”).
Problems with Zillow Values:
- Damage to homes. Zillow does not know if your home has a cracked foundation or a leaky roof.
- Deferred Maintenance: Zillow does not see if you have kept the home up to date with regular maintenance.
- Dissimilar Neighborhoods. Perhaps your home is next to a fancy neighborhood, so the sales price of those homes tends to artificially inflate the Zillow value.
Are Zillow values accurate? Sometimes yes and sometimes no. But they are always relevant and must be addressed.
Explain Why Zillow is Wrong:
If a Zillow value overstates a home’s value, the bankruptcy schedules must address that issue. The home description should list the Zillow value and then explain why it should be ignored. (“Zillow value is inaccurate due to crack in foundation and leaky roof.”)
Online valuations are part of the new bankruptcy landscape. It’s a factor we cannot ignore.
Image courtesy Flickr and ajay_suresh
"Jim was a tremendous help in sorting through a complex corporate structure and personal finance situation. Not only did he help with 3 separate bankruptcy filings, but he advised and appeared as needed in state court litigation and kept us calm during a nearly 5 year-long process and a very emotional time. We are so grateful for his counsel and support and the successful outcomes he achieved for us."
"Jim was a tremendous help in sorting through a complex corporate structure and personal finance situation. Not only did he help with 3 separate bankruptcy filings, but he advised and appeared as needed in state court litigation and kept us calm during a nearly 5 year-long process and a very emotional time. We are so grateful for his counsel and support and the successful outcomes he achieved for us."
HouseDigest.com has an excellent article about What You Need To Know About Buying A Home After Bankruptcy. The article can be found at https://www.housedigest.com/1179558/what-you-need-to-know-about-buying-a-home-after-bankruptcy/
Jim Shenwick, Esq has helped many bankruptcy filers rehabilitate their credit after a bankruptcy filing so they can purchase houses or lease automobiles. Jim Shenwick, Esq [email protected] 917 363 3391
HouseDigest.com has an excellent article about What You Need To Know About Buying A Home After Bankruptcy. The article can be found at https://www.housedigest.com/1179558/what-you-need-to-know-about-buying-a-home-after-bankruptcy/
Jim Shenwick, Esq has helped many bankruptcy filers rehabilitate their credit after a bankruptcy filing so they can purchase houses or lease automobiles. Jim Shenwick, Esq [email protected] 917 363 3391
An email from a client (edited to preserve confidentiality):
“Good morning. On October 31, 2022, [my husband] had to have surgery to remove his gallbladder. The hospital is requiring payments of approximately $400 a month on the $5,049.97, a sum I am unable to accommodate with our budget. My husband’s income makes us ineligible for an adjusted payment plan. The representative offered to help us apply for a loan facilitated by the hospital through a local bank, but I informed her that I can’t consider any loan without speaking to you. What, if any, actions should be taken in regards to these bills as relates to our bankruptcy?”
This seems to be a new trend with hospitals. They help customers to get loans to pay the medical debts.
I told my client the loan helps the hospital, not them. A loan involves interest, late fees, etc. How does this help my client?
My client is in the middle of chapter 13. I informed them that the hospital could send the account to collection and they may be sued, but their wages could not be garnished until the bankruptcy was over.
Push back, I told them. Tell them the court will not approve the loan. This is not like getting a car loan, something you need for work. This just changes the name of the creditor from Hospital to Bank.
I told the client to review their budget and pay what they can afford. Just make payments and don’t worry about pleasing the hospital.
“The hospital is requiring payments of approximately $400 a month.” Requiring? How are they “requiring” this? This is just old-fashioned arm twisting. My client is in Chapter 13. Post-petition wages are considered to be property of the bankruptcy estate and cannot be garnished until the case is completed.
Creditors are always demanding full payment or monthly payments that are not affordable. They give the false impression that they will not accept smaller payments. Don’t believe them.
Bill collectors accept every payment you send them. The hospital demands $400 per month. Can’t afford that? Send them $200. Keep sending the payment. They will accept every dime you send them.
Image courtesy of Flickr and dreamingofariz.
Please click the link to schedule a telephone call with me. https://calendly.com/james-shenwick/15min
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.