With debt buyers still aggressively pursuing debts, assigned judgments are still prevalent in debt-collection law. This refers to when creditors "assign" or sell unpaid accounts to third parties rather than collecting themselves. The debt buyer then sues for judgment to recover via collection methods like bank levies, wage garnishment, or property liens.
Luckily, assigned judgments also provide opportunities to challenge deficient practices in the assignment process. While not a guarantee, various procedural, jurisdictional, evidentiary, and other defenses may help vacate the judgment or reduce settlement liability.
Procedural Defenses
- Verify the proper acknowledgment format required for recording legal instruments like deeds (See: CPLR §5019(c)).
- Ensure the assignment is prepared by counsel with incoming attorney data so you can seek to vacate any default. Corporations cannot appear without counsel (CPLR §321(a)).
- Require a certificate of conformity for out-of-state acknowledgments to confirm validity.
What is a Certificate of Conformity?
Under New York Civil Practice Law and Rules (CPLR), a certificate of conformity is a legal document used to authenticate the notarization of a statement or affidavit taken outside of New York State. This certificate is necessary when submitting notarized documents to a New York court to ensure that the notarization was performed according to New York standards.
The certificate of conformity aims to bridge the gap between differing notarial laws across states. It verifies that the out-of-state notarization is compliant with New York's notarial requirements, essentially "conforming" the acknowledgment to New York's legal standards.
Jurisdictional Challenges to Assigned Judgments
- Confirm the plaintiff is registered to operate in NY as a foreign corporation; otherwise, they lack standing to sue in local courts (BCL Art. 13).
- Argue assignment has revoked the plaintiff's account ownership rights, especially if the originating creditor is defunct. Debt buyers struggle to prove valid claims of purchase if their evidence is not solid.
Evidentiary Issues
- Debt buyers must give notice of any assignment per Chase Bank v. Cardello, but frequently neglect this, risking evidentiary voids.
- Hammer the plaintiff to validate the documentation trail if they lack your original account agreement or credible evidence trail.
Navigating the Pandemic's Impact
The COVID-19 pandemic has brought about significant procedural changes in court systems, including adaptations for virtual hearings and altered filing procedures. Being aware of these changes is essential for a timely and effective legal response.
The main takeaway is that while assigned judgments present real concerns, the underlying assignments may have noticeable defects for an attorney to leverage in constructing a defense. Don't let intimidation or tight finances deter you from contesting an erroneous judgment. Consult a lawyer to understand your options. With the right legal strategy, there are almost always opportunities to defeat sloppy and abusive collection practices.
Steps to Overturn a Default Judgment in New York
Understanding the Process
To overturn a default judgment in New York, a defendant needs to apply to the court that originally issued the judgment. This can be a district court, civil court, or the Supreme Court in Brooklyn, Queens, Richmond, New York, Nassau, or Suffolk counties.
Initiating the Application: Order to Show Cause
- Creating the Order to Show Cause: This legal document outlines why the defendant believes the judgment should be vacated. It includes an affidavit (a sworn statement) detailing the supporting facts.
- Attorney’s Contribution: If an attorney prepares it, the order will also have legal arguments justifying the request to vacate the judgment.
Judicial Review and Actions
- Submission to a Judge: The order is presented to a judge who decides how it should be served to the plaintiff and their attorney, often via certified mail or overnight delivery.
- Setting a Return Date: The judge sets a return date by which the plaintiff must respond. Some courts require in-person appearances on this date.
Special Procedures
- Temporary Restraining Order (TRO): The court order often includes a TRO request to halt the plaintiff from enforcing the judgment while the court reviews the case. This step is crucial if there’s an ongoing wage garnishment or bank account restraint.
- Traverse Hearing: If there’s a dispute over how the summons was served, the court might order a traverse hearing. Here, the plaintiff’s process server must testify about the summons service, and the defendant can present their testimony and witnesses.
Court’s Decision
- Outcomes Based on Service Validity:
- If the court finds the service invalid, the case may be dismissed. The plaintiff can start a new lawsuit, but the defendant might use the statute of limitations as a defense.
- If the service was valid, but the defendant didn’t receive the summons and has a valid defense, they can answer and defend against the action.
Conclusion: Empowering Yourself in the Face of Assigned Judgments
The landscape of debt collection, characterized by the prevalent use of assigned judgments, poses significant challenges but also offers unique opportunities for defense. Understanding the intricacies of procedural, jurisdictional, and evidentiary defenses provides a strategic advantage in contesting these judgments.
Key Takeaways:
- Procedural Know-How: Familiarity with the specific legal procedures and requirements, such as obtaining a certificate of conformity for out-of-state acknowledgments and ensuring proper legal representation, is essential.
- Jurisdictional Awareness: Challenge the legal standing of debt buyers, especially if they lack proper registration or operational authorization in New York.
- Evidentiary Vigilance: Be critical of the evidence presented by debt buyers, as they often fall short in proving the legitimacy of debt assignments.
- Pandemic Adaptations: Stay updated with the evolving court procedures influenced by the COVID-19 pandemic, as these can impact the approach and timeline of legal actions.
- Actionable Steps: Utilize the 'Order to Show Cause' effectively, considering the nuances of the legal process, and be prepared for potential hearings, such as a traverse hearing.
Empowerment Through Knowledge
Your defense against assigned judgments isn't just about understanding the legal loopholes; it's about empowering yourself with knowledge and the right legal support. An erroneous judgment doesn't have to be the end of the road. With a well-informed strategy and competent legal representation, you stand a strong chance of overcoming aggressive debt collection practices.
The journey through a debt lawsuit can be daunting, but knowing your rights and the available legal avenues can turn the tide in your favor. Consult with a knowledgeable attorney to explore your options and forge a path toward a favorable outcome. Remember, knowledge is your most potent weapon in the legal battlefield against assigned judgments.
