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Small Claims Court

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?

Quote:

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."

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.

Quote:

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?

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?

Quote:

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.

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

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.

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).

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.

Quote:

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.

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).

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.

Quote:

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.

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?

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

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.

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.

Quote:

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 :)

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.

Quote:

Originally Posted by ScottGem

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 beleive 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.

Very true. Although I've found some debt collectors to be extremely shady; they'll try anything and everything to get their money, whether it's legal or not.

ScottGem,

I appreciate your feedback. Apparently, the law is not as clear cut as I thought it was. The bottom line for me is that they are never going to get a penny from me. I am pretty much judgement proof. My only income is social security and I have no savings to speak of. So I will fight this suit any way I can. My hope is that the plaintiff will realize this and drop the suit. If not, then I'm am now studying how to proceed with Discovery.

Thanks again for your feedback.

Frankly, if you are judgement proof I would not bother fighting it. Or at least not fighting it so hard. Inability to pay is NOT a legal defense. Therefore, if your only defense is that you can't afford to pay, then they WILL get a judgement, they just won't be able to do anything with it.

Quote:

Originally Posted by ScottGem

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 beleive 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.

I looked at the Statute and then case law - it seems to go both ways. Third parties cannot take action, a collection agency is not a third party, a variety of decisions. There seems to be a very thin line and not a clear explanation of "collection agency."

As I said right at the beginning I still think rather than allowing a default Judgment I would at least file a response, possibly a Motion, citing the law and asking for a decision. Maybe the collection company is just flexing, maybe not, but why let them go ahead if they are prohibited by Law - ?

But, again, how much time and energy does OP want to spend?

I certainly won't let them have a default judgement. Besides, I am retired and have enough time on my hands to study law and civil procedure. I'm not a lawyer but I am enjoying playing one in real life.

Quote:

Originally Posted by txtxcal

I certainly won't let them have a default judgement. Besides, I am retired and have enough time on my hands to study law and civil procedure. I'm not a lawyer but I am enjoying playing one in real life.

Then send your letter or file your response/motion, whatever the Court requires - always copy to the "other side," of course.

And if you could come back and let us know how this plays out, I would be very grateful. This one is a puzzle for those of us not in Texas!

I filed my Motion to Dismiss on February 2 and have not heard anything yet. In the meantime, the plaintiff sent me a request for admissions and a request for production of documents. I can handle that but I'm wondering if there's some way I can find out what's happening with my motion.

What is probably going to happen is the court will collect motions and rule on them at the hearing.

As for what the plaintiff sent you, did they send you verificatiuon of the debt? Did you request it? If they haven't verified the debt, then you respond to their inquiries that you can't respoind until they veirfy.

That's what I did. I answered all their questions with either a denial or "Insufficient Information".

Just to clarify: you did send a request for verification of debt? Or you simply responded with "insufficient information"?

Quote:

Originally Posted by this8384

Just to clarify: you did send a request for verification of debt? Or you simply responded with "insufficient information"?

You beat me to it - was it simply an answer or an answer and defense/request for info?

No, I did not send a request for verification. What are the ramifications of that?

Quote:

Originally Posted by txtxcal

No, I did not send a request for verification. What are the ramifications of that?

My plan was to request this information after the pre-trial conference. My understanding is that this is when the formal discovery period begins. If my motion to dismiss is granted, I won't have to bother with the requests for disclosure. If not, I would be given time to complete my discovery.

You should request verification of debt immediately. If they cannot prove it, then the case will be dismissed automatically. It's much easier than going to a pre-trial, having your dismissal denied, having a trial scheduled, THEN requesting verification and filing for dismissal again in the incident the creditor can't verify the debt.

Should I put my request in the "Request for Disclosure" format?

That I'm not sure of. I would think you'd be able to send a letter directly to them requesting verification of debt. Tell them that you want the document(s) that have your signature on them. Send it certified, so you'll have proof they received the letter.

Would sending them a letter now speed up the process? I'm really not interested in speeding things up. In case I lose, I may consider filing for bankruptcy. But I did that 7 years ago and I'm not eligible to file again until December of this year.

If it were me personally, I'd rather speed it up and get it done and over with. Dragging it out isn't going to help anything; if you can file for bankruptcy, it doesn't really matter if the trial is finished or not.

I think I said this earlier, but Small Claims courts are more informal. There is no need to to submit things in specific forms and formats. A simple letter that says you need verification of the debt to include copies of original contracts, payment scheduled and their right to collect will suffice.

Quote:

Originally Posted by ScottGem

I think I said this earlier, but Small Claims courts are more informal. There is no need to to submit things in specific forms and formats. A simple letter that says you need verification of the debt to include copies of original contracts, payment scheduled and their right to collect will suffice.

I received Plaintiffs response to my motion to dismiss today. They claim that their suit was filed in Justice Court, not Small Claims Court. The title of the citation I received from the court read "Justice Court/Small Claims". Can anyone explain this to me?