Which is more wrong? Mistakenly filing a lawsuit after the statute of limitations has expired because you relied on information from a third-party collection agency or ignoring a default judgment for nearly a decade before doing something about it? A state Appeals Court in New Jersey has ruled the former is a bigger issue than the latter in affirming a lower court’s ruling that a debt buyer should not have been able to file a lawsuit to collect on an unpaid debt because the statute of limitations had expired.
A copy of the ruling in the case of LVNV Funding v. Joseph DeAngelo can be accessed by clicking here.
The defendant obtained a car loan in 2001. He stopped making payments soon after when he claims he found out the vehicle was defective. There was evidence that a modification agreement on the loan was entered into in 2003, but no evidence that payments were ever made. The plaintiff asserted that two payments were made in 2008 and one was attempted in 2009 but returned because of insufficient funds. The collection agency that was working with the account went out of business in 2014 so there are no other records or “more persuasive evidence.” The defendant testified he did not make the payments and a judge found the plaintiff to be “believable” in this area even though there were “major issues with the [d]efendant’s credibility in some areas.”
The defendant ultimately filed a lawsuit in 2009 and was granted a default judgment. It was not able to execute on the judgment until 2017, at which point the defendant went to the court to seek relief.
A state court judge determined that the four-year statute of limitations in New Jersey had expired when the collection suit was filed and that the plaintiff had violated the Fair Debt Collection Practices Act. The plaintiff appealed the decision.
“Courts must often choose the weightier of two competing equitable
rights; at times they may even have to choose the least blameworthy of two
competing wrongs,” the Appeals Court wrote. “This case seems to fall in the latter category.”
Even though the defendant’s lack of response was “inexcusable” and even though he waited eight years to do something about the default judgment and lied about his identity, the state court judge determined that violating a federal law was a bigger issue than the behavior of the defendant, and the Appeals Court said there was no reason to disagree.
