How to Vacate A Default Judgment Over A Debt

Cross posted from Loan Lawyers

The vast majority of people who are sued by a debt buyer or debt collector never respond to the lawsuit in court. In fact, studies show that up to 90% of consumers facing a debt collection lawsuit never respond at all.

People do not respond to the lawsuit for several reasons. First, and most commonly, the consumer may not know that he or she was sued. Alternatively, the consumer may have missed the deadline to respond to the lawsuit, or the consumer may have been too overwhelmed by the lawsuit to file a response.

Consumers who fail to respond to a debt collection lawsuit for whatever reason will often receive a default judgment against them. Default judgments mean that no defense was entered in the case, so by default, the creditor wins.

If a default judgment has been entered against you, you still have options to fight the case. In many instances, a consumer can enter a motion to vacate the default judgment, which will allow the consumer’s attorney to fight the claim as if the judgment was never entered.

Consumers should not be intimidated by a default judgment. Even though a motion to vacate a judgment is directly challenging a judge’s ruling, these decisions are challenged all the time, often successfully. It is important to challenge a wrongful ruling even if it seems pointless because a default judgment can lead to wage garnishment, levies on bank accounts, and liens on personal property.

In order to vacate a default judgment, the consumer must show that he or she had good cause or a reasonable excuse for failing to respond to the case, and that there is a meritorious defense to the creditor’s claims. Good cause usually means that the consumer never received notice of the case or notice that a default judgment would be entered. Or, if the consumer did get notice, that notice may have been improperly served. Alternatively, the consumer may be able to give the court a reasonable excuse for failing to respond; for instance, the consumer may have been hospitalized with a lengthy illness during the case and could not leave the hospital to find a lawyer.

If there is good cause or a reasonable excuse for failing to respond, the court will then look to see if the consumer has a meritorious defense to the case. The court will not reopen a judgment that the consumer has no hope of challenging. However, there are often many worthy defenses to a debt collection lawsuit, even if the consumer believes that he or she likely owes the debt.

Consumers may have many available defenses to fight a default judgment. For example, the creditor may have failed to follow correct procedure, or may have made a mistake in the amount that you owe. Additionally, the creditor may have waited too long to attempt to collect the debt, or the consumer may have already discharged the debt through a settlement with another company or in a bankruptcy case.

In order to successfully vacate the judgment, the consumer must file his or her motion within a reasonable time after he or she should have received notice of the judgment. In most cases, a consumer who failed to respond due to lack of notice, surprise, or excusable neglect must still file a motion to vacate within a year of the judgment.

If a creditor received a default judgment against you for an outstanding debt, you still have options if you act quickly. At Loan Lawyers, our attorneys can review your claim and your creditor’s lawsuit and can help you come up with a claim to fight back. To schedule your free consultation and learn more about what Loan Lawyers can do for you, contact us today by calling (888) FIGHT-13 (344-4813).