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txtxcal · Jan 19, 2009, 05:25 PM

I have been sued in Small Claims Court by a debt collector. I filed an answer and then received a pretrial conference order. I would like to file a motion to dismiss because debt collectors can not sue in small claims court in Texas. I would like to know if I can file my motion now or must I wait for the pretrial conference?

JudyKayTee · Jan 20, 2009, 08:56 AM

Originally Posted by txtxcal

I have been sued in Small Claims Court by a debt collector. I filed an answer and then received a pretrial conference order. I would like to file a motion to dismiss because debt collectors can not sue in small claims court in Texas. I would like to know if I can file my motion now or must I wait for the pretrial conference?

If the law says a debt collector cannot sue in Small Claims in Texas, raise that defense now. Why spend time and energy going to a pretrial conference - ?

If you have it, would you post that law? I've never seen it before - but I'm not in Texas!

EDIT: I found it - the law is: "Some entities, however, may not use small claims court. Banks and other institutions that are in the business of lending money for interest cannot file a suit in small claims court. A collection agency also cannot sue in small claims court."

this8384 · Jan 20, 2009, 08:59 AM

Agree with Judy... if debt collectors can't file in small claims, then what's the purpose of having that division of court? Do you have a direct law or statute you can post here because I've never heard of that either and half my family lives down there.

JudyKayTee · Jan 20, 2009, 09:56 AM

Originally Posted by this8384

Agree with Judy...if debt collectors can't file in small claims, then what's the purpose of having that division of court? Do you have a direct law or statute you can post here because I've never heard of that either and half my family lives down there.

This gets confusing - I keep reading the Statute. It appears that a Debt Collection Agency cannot sue on behalf of a third party but CAN sue if the Agency owns the debt, for example, has purchased it.

Any Attorneys in Texas out there?

this8384 · Jan 20, 2009, 09:59 AM

So let's hypothesize:
Let's say I owe Capital One $4,000 and have defaulted on payment; Capital One turns over the debt to ABC Collectors. ABC Collectors cannot legally sue me unless they have purchased the debt from Capitol One; however, Capital One can sue me in small claims... is that correct?

JudyKayTee · Jan 20, 2009, 10:02 AM

Originally Posted by this8384

So let's hypothesize:
Let's say I owe Capital One $4,000 and have defaulted on payment; Capital One turns over the debt to ABC Collectors. ABC Collectors cannot legally sue me unless they have purchased the debt from Capitol One; however, Capital One can sue me in small claims....is that correct?

That's how I'm reading Texas law. ABC (what a clever name!) is a third party.

And, yes, Capital One can sue directly.

this8384 · Jan 20, 2009, 10:06 AM

Well, now that we've successfully shut out everyone else from this thread, let's hope the OP comes back to clarify :)

txtxcal · Jan 20, 2009, 10:57 AM

I based my opinion that a debt collector can not sue me in small claims court upon The State of Texas Statutes, Government Code, Chapter 28, Section 28.003.

txtxcal · Jan 20, 2009, 11:07 AM

The way I read the statute, neither Capital One or ABC can sue me either since they are engaged in the business of lending money at interest. (28.003 (b) (2).

this8384 · Jan 20, 2009, 11:19 AM

If I can ask, who is suing you? And are you 100% positive that they haven't purchased the debt? This is what I found:

Sec. 28.003. JURISDICTION. (a) The small claims court has concurrent jurisdiction with the justice court in actions by any person for the recovery of money in which the amount involved, exclusive of costs, does not exceed $10,000.

(b) An action may not be brought in small claims court by:

(1) an assignee of the claim or other person seeking to bring an action on an assigned claim;

(2) a person primarily engaged in the business of lending money at interest; or

(3) a collection agency or collection agent.

this8384 · Jan 20, 2009, 11:20 AM

Originally Posted by txtxcal

The way I read the statute, neither Capital One or ABC can sue me either since they are engaged in the business of lending money at interest. (28.003 (b) (2).

No, ABC would be able to sue you if they purchased the debt from Capital One.

txtxcal · Jan 20, 2009, 11:32 AM

I was sued by Arrow Financial Services, L.L.C. in Niles, Il. According to their affidavit, they did purchase the debt. But it seems to me that they would still fall into one of the categories under 28.003 (b).

this8384 · Jan 20, 2009, 11:32 AM

Also, I'm not sure that Capital One would be considered to be "lending money at interest." I take that more to mean places that offer things like title loans, paycheck advance, etc. I could be mistaken, though.

this8384 · Jan 20, 2009, 11:33 AM

Originally Posted by txtxcal

I was sued by Arrow Financial Services, L.L.C. in Niles, Il. According to their affidavit, they did purchase the debt. But it seems to me that they would still fall into one of the categories under 28.003 (b).

How so? They didn't lend you the money; they bought a debt which you didn't pay. I think they may have a case against you.

txtxcal · Jan 20, 2009, 11:41 AM

This 8384,

I understand what you are saying but I'm not sure I agree. However, I'm not a lawyer so I'm sure not going to argue the point. It seems to me that I've got nothing to lose by filing the motion to dismiss. What do you think?

this8384 · Jan 20, 2009, 11:48 AM

You can try it but I wouldn't put too much hope into. Never hurts to try, right? :)

txtxcal · Jan 20, 2009, 11:52 AM

Arrow Financial Services LLC is part of the Sallie Mae (NYSE: SLM) family of companies and a nationally recognized leader in the receivables management industry with over $16 billion in consumer debt under management. We offer a full range of recovery solutions across a variety of asset classes including credit cards, student loans, utility, telecommunication, retail and automotive. Our team specializes in balancing courteous and professional customer service with the goal of maximizing recovery on managed accounts. Arrow's unique combination of experience, reputation and world class analytical capability sets us apart from others in our industry.

IMPORTANT INFORMATION REQUIRED BY LAW: This agency is engaged in the collection of debts. This communication is an attempt to collect a debt and any information obtained will be used for that purpose.

They sure sound like a collection agency to me.

txtxcal · Jan 20, 2009, 11:58 AM

This 8384,

I appreciate your feedback. Obviously I don't have much money or I would have hired a lawyer to do this. However, I did send you a small amount through Paypal.

Thanks again.

this8384 · Jan 20, 2009, 12:06 PM

Originally Posted by txtxcal

this 8384,

I appreciate your feedback. Obviously I don't have much money or I would have hired a lawyer to do this. However, I did send you a small amount through Paypal.

Thanks again.

Thank you! That wasn't necessary but I very much appreciate it :)

ScottGem · Jan 20, 2009, 12:09 PM

I'm going to jump in here. The way I interpret 28.003 is this:

1) A third party assigned the collection of a debt cannot use small claims court. This means if The original lender contracted with ABC Collections to recover the amount, they can't use small claims.

2) An INDIVIDUAL lending money can't use Small Claims, but I don't believe that applies to an institution. The keyword is person. If this applied to a bank it would have said person or organization.

3) This goes back to (1). Not sure why they would have such a redundant clause. It MIGHT be interpreted to mean an agency who buys debt for the purpose of collections, but I don't think so.

But really, do you want to try to invoke this? Lets say Arrow cannot use Small Claims to collect. So you get the suit dismissed. So Arrow turns around and sues you in Civil Court. Frankly, I would rather it stay in Small Claims as the judge is likely to be more consumer friendly.