How to handle a collector’s robo lawsuit
Robo lawsuits sound like something a screenwriter might have concocted for a futuristic science fiction movie 20 years ago.
But they are very real and very troubling, if you're a target.
These are lawsuits made easy by automated software. Some debt collectors have reportedly been cranking out these lawsuits and sending them by the thousands to people in debt.
That's all fine, of course, unless you're not actually in debt.
Sometimes at the point someone receives a lawsuit, they've paid off their account. And there have been plenty of instances in which the wrong person with a similar or identical name is targeted.
Robo lawsuits are mostly associated with foreclosures, but that's been changing with the advent of software from companies like Commercial Legal Software, which allows a debt collector to send out collection letters, summonses and lawsuits.
Owe a ton of money on credit card debt, and you just may find yourself on the receiving end of a robo lawsuit.
So, what should you do if you're the target of a robo lawsuit? Our 4-step plan shows you how to accept the situation and confront it head on.
Step 1. Don't panic.
A robo lawsuit is no different than any other lawsuit in that you absolutely can't ignore it, and if you're the target of one, it doesn't mean you don't owe the money your creditor says you do. Odds are, you do.
But if an attorney can prove a mortgage company or bank has mishandled your paperwork and not done its due diligence, that could be the loophole that allows you to avoid foreclosure.
The obvious question: How do I know if I have a letter issued by a software program? The answer: You won't be able to tell.
Mitchell Stein, a partner in the litigation department at Silver & Freedman in Los Angeles, says there are no telltale signs to look for, and ultimately it doesn't matter. Robo lawsuit or not, you're being sued.
Step 2. If you can afford to, get an attorney.
Sure, you're in debt, and the last thing you can do right now is pay for a pricey attorney, but a lawyer will tell you that you can't afford not to.
"I would not risk my home or roof over my head as a layman," says Stein. "I would absolutely hire a lawyer to help save my home. It's penny-wise and pound-foolish to do anything otherwise."
A real estate attorney will know the ins and outs of negotiating with a mortgage company far more than a typical homeowner.
Step 3. Show up in court.
Even if you feel you can't afford to hire a lawyer, just show up.
"They're not expecting you to show up, and so just by being there, you've gone a long way to help your case," says Ted Connolly, a Boston-based bankruptcy lawyer for the firm Edwards Angell Palmer & Dodge and the coauthor of The Road Out of Debt. "Judges are sympathetic -- they'll listen to you."
Connolly adds that, due to the nature of these robo lawsuits, there's a good chance the company suing you won't be there. If that's the case, you will look even better in the judge's eyes.
Step 4. Create a paper trail.
Whether you go to an attorney or show up in court on your own, you need to gather all of the envelopes you haven't been opening, start opening them and compile a record. Before you go to court, you need to fully understand what you owe.
"You have to be prepared to talk about what's going on, and the more you know, the more prepared and better off you'll be," says Connolly. "You should have a strategy with how you can deal with it now and a payment plan."
And, of course, if you can't conceive a payment plan that allows you to pay off your debt, you may want to consider going to a different court altogether -- bankruptcy court.