After the shock of getting sued by Midland Funding has worn off a bit you naturally start thinking of how you are going to deal with this sudden intrusion into your life. Really there are only three options: you can fight the case and make Midland Funding prove their case at trial; you can settle – meaning that you can pay Midland Funding an amount less than what they are asking for; or third you could file for bankruptcy and wipe the debt out completely.
I guess there is a forth option – doing nothing. But I highly recommend that you consider one of the three prior options (unless you like having your wages garnished or your bank accounts levied). When I meet with clients I always go over a few different factors that should influence which route you take. The first factor is how much is Midland Funding suing you for?
How Much is Midland Funding Really Suing Me For?
The first factor you need to look at is how much is this whole lawsuit over. You can see this by looking at the Complaint you were recently served with. On the last page there will be something called the “prayer for relief”. This is the part of the Complaint where the plaintiff outlines (usually with bullet points) what they are asking for. You will see a specific dollar amount there. But take notice! Many times Midland Funding will provide the specific charge-off amount but will then ask for “pre-judgment interest at the rate of 25% from October 2006” – or what ever the actual interest rate and charge-off date is.
This will make a HUGE difference in the amount that they are seeking. I have viewed the transcripts of many trials where clients have represented themselves and they are shocked at the end of the trial to have a judge enter judgment for $20,000 when they only got sued for $10,000.
Understanding how much you risk to lose at trial is a key factor in knowing whether to dig in your heels or look at different options.
Fight or Settle?
Once we know how much Midland Funding is asking for I generally ask clients if they have the ability to settle the debt. Most debts will settle between 35% and 65% of what is owed. For whatever reason Midland Funding often plays hardball on settlement amounts – which is strange because in most cases they pay about 4 cents on the dollar for the debt; anything over that is profit. If you are being sued for $1,000 and can afford a settlement of $600 then settlement may not be a bad option. If you are being sued for $20,000 but don’t have $10,000-$13,000 then the decision is a little easier because settlement really isn’t an option.
Sometimes we will take a “wait-and-see” approach. Once you file your Answer to the Midland Funding lawsuit, Midland Funding is going to be required to provide you with copies of all of their “evidence” against you. Once we have all of those documents I can better advise you on how strong your case is and whether you should continue to fight or look at settlement or bankruptcy.
No question about it. Bankruptcy will eliminate your Midland Funding lawsuit. It is the nuclear option on dealing with debt. But does your situation warrant a bankruptcy filing? A question I often pose to client is this – let’s say we fight your Midland Funding case and win – will it simply be replaced by three others? If so, then maybe bankruptcy is a good option. If you are dealing with a lot of debt fighting my result in you winning the battle but there is a much bigger war to be fought that may be better fought in bankruptcy court. Not only that but it will be less expensive than fighting your creditors one at a time.
Everybody’s situation is different and no one route will solve everyone’s problems. Midland Funding cases are winnable, but sometimes we just have re-define what “winning” is for your specific situation.