The Collections Process
I want to talk about the Collection Process
If you understand the process you will not be deceived by what a collecting agent may say.
These are the general steps. It may not be the same in all cases.
Step 1 - Initial Contact
Usually in the form of a written notice or phone call from the creditor themselves
Generally requests payment within a certain period of time
If no response, go to
Step 2 - Referral for Collection
The original holder of the account will assign it to a collecting agent
The collecting agent will follow up with letters and/or phone calls
Generally more aggressive in collection technique
Generally ask for larger amounts
If no response, go to
Step 3 - Initiate Court Action
If an attorney is involved you may or may not receive a collection letter.
If you receive a letter, contact the Attorney
They are often more reasonable in setting up payment plans than collection agencies.
The Attorney will prepare a Summons and Complaint.
The Summons is a legal notice required by the Due Process provisions of the US Constitution that says that no property can be taken from you and your rights
cannot be infringed by another person without "notice" and the opportunity for a hearing.
Opportunity may mean that you must request the hearing yourself.
I gets lots of people who think a person can't get a judgement against them without having a court hearing that they have been invited to. This is wrong.
The Complaint is the document that sets out why the Creditor thinks you owe them money.
If the amount is under $5,000 the Creditor could have one of his own employees handle the case in Small Claims Court [another possibility for a Show].
In this case they will prepare a one page Summons and Complaint called a Small Claims Affidavit.
Step 4 - Service of Process
Normally a Sherif or Constable will come to your door to hand you the papers. They will note on your copy the date of service.
Note 1: you do not have to accept or receive the papers to be served. All the Sherif must do is say that he has papers to give you.
Note 2: you do not have to be served personally. The papers can be left at your normal place of residence with anyone 14 years of age or older.
Note 3: even if you were not properly served, if the sherif has left documents with someone you need to respond. You must affirmatively defend yourself or you will
be assumed to have been served. You can file a Motion to Quash Service if it was not done properly.
Note 4: under the new rules you may be served by First Class Mail, Return Receipt Requested (Certified Mail).
Note 5: do not ignore Certified Mail. It will cost you money and you may lose an opportunity to defend yourself. It could be an important notice that you need to be
Step 5 - Responsive Pleadings
If you receive a Summons and Complaint you will have 20 days to respond. Even if you receive a 10 Day Summons
There are 2 types of Summons, 10 Day and 20 Day.
A 20 Day Summons means the creditor has already paid the court filing fee.
A 10 Day Summons means the creditor has 10 Days after you have been served to pay the Court Filing Fee and File the original of the Summons and Complaint.
You must respond in writing. A phone call is not sufficient.
You must prepare a document called an Answer.
There are a number of rules about how it should be prepared.
These rules are found in the Utah Rules of Civil Procedure
A copy can be found in every City Library
You must file the original of that document with the Court
You must mail a copy of the document to the Attorney.
You must file a mailing certificate (that you mailed a copy to the attorney) with the Court.
If you receive a Small Claims Affidavit you do not need to respond in writing, but you must appear at the hearing if you wish to defend yourself.
If you properly respond the Litigation Process Begins
This is where the parties do Discovery, file Motions, have Pre-Trial Conferences, and ultimately may go to Trial.
If you do not properly respond to a Summons and Complaint or do not appear at your Small Claims hearing.
Step 6 - Default Judgment
The Attorney or opposing Party can request that a Default Judgment be entered against you.
Note: a Judgment becomes a Lien on any Real Property that you own in the County where a judgment is entered. If you ever sell the home this lien must be paid in
full with interest. If you file bankruptcy the lien may survive. If the creditor wants to they can actually foreclose on the home.
Once a party has a Judgment against you they can go on to the next step.
Step 7 - Collection of Debt
Which is to actually seize property from you to pay off the Debt.
This is done in a number of ways:
Garnishment of Bank Accounts - can take entire amount in account.
Garnishment of Wages - can take 25% above minimum wage.
Taxes and Support obligations can take more.
Execution of Property - sale of property by a Sherif.
So if a Collector says, "If I don't have a check by 5 pm today I'll garnish your bank account", you'll know if they are lying.