First time in small claims lawsuit - loaned $7,000 and ghosted

[Taxing Matters]

quite possible. he told me he would probably have to file for bankruptcy but i would have no way of officially confirming that other than I have attempted to search for it on PACER if I'm doing it correctly.

I used to be a revenue officer for the IRS before becoming a lawyer. The revenue officers are the IRS personnel that do things like seizing houses, cars, etc to collect unpaid federal taxes, among other civil enforcement action. I heard taxpayers tell me all the time "hey, I'm just about to file for bankruptcy" to try to get me to back off. Ninety percent of them never filed for bankruptcy. So when you are collecting money, don't pay any attention to those kinds of statements. Just keep collecting as best you can. Either he files bankruptcy or he doesn't. If he does (which I doubt given the little you've said about his circumstances) then when you get notice of it, you stop collecting and put in your proof of claim and see if you ever get anything. If doesn't, which is the more likely situation, you've not wasted time sitting around to see if he files bankruptcy. Moreover, if he filed bankruptcy and got served with your complaint, his bankruptcy lawyer would tell him to file a motion with the court to stay the proceedings pending the outcome of the bankruptcy. That he hasn't done that tells me there's no active bankruptcy action going on.

But you cannot be confident that your defendant(s) won’t file for bankruptcy in the future, after you get a judgment. That is a risk you take.

Quite right. And all the more reason to get the judgment now rather than later. It's the collectors who get to the debtors first that have the best chance of getting paid. Among other things, if you file a lien for your judgement, the order of liens determines order of payout when secured/liened assets are sold in bankruptcy and often outside bankruptcy too. Don't wait around for some other creditor to get in line before you do.

 

[quincy]

Given his purported financial situation, the debtor might not be able to afford a bankruptcy attorney (although I suppose his employed wife might). It sounds to me as if the debtor is just using bankruptcy right now as an idle threat, to stave off collection attempts. Not that he might not file later.

 

[SmallClaimsHelp]

@quincy thanks so much for your perspective. This genuinely helps.

My suspicion is they only texted me because they were delivered the notice and have chosen not to respond. no idea why else "suddenly" they would have cursed at me 10 days before their scheduled yearing.

When i talked to the person at the court they said they may never respond and could just show up or not show up but as long as it is confirmed that is their residence, i've done all that i can.

I'd have no ceratin way of knowing they still live there other than what i confirmed again on the county site and that is the mailing address they gave me when they were begging me to help them for a couple of weeks to get by while the loan came in since his wife was still working etc and they were getting a cashout refi on the house to pay me back with (ostensibly).

i did put a nice packet together of all the evidence and screen shots of all messages where the agreement was struck with long numbers / transaction numbers, dates, highlights, etc that i understand the judge will already have and will bring that document with me to the trial.

Knowing it's only 20 minutes im not sure they even look at it before hand etc but it is available to them and i am prepared to offer my summary of what they committed to in writing regarding this loan.

 

[SmallClaimsHelp]

I used to be a revenue officer for the IRS before becoming a lawyer. The revenue officers are the IRS personnel that do things like seizing houses, cars, etc to collect unpaid federal taxes, among other civil enforcement action. I heard taxpayers tell me all the time "hey, I'm just about to file for bankruptcy" to try to get me to back off. Ninety percent of them never filed for bankruptcy. So when you are collecting money, don't pay any attention to those kinds of statements. Just keep collecting as best you can. Either he files bankruptcy or he doesn't. If he does (which I doubt given the little you've said about his circumstances) then when you get notice of it, you stop collecting and put in your proof of claim and see if you ever get anything. If doesn't, which is the more likely situation, you've not wasted time sitting around to see if he files bankruptcy. Moreover, if he filed bankruptcy and got served with your complaint, his bankruptcy lawyer would tell him to file a motion with the court to stay the proceedings pending the outcome of the bankruptcy. That he hasn't done that tells me there's no active bankruptcy action going on.



Quite right. And all the more reason to get the judgment now rather than later. It's the collectors who get to the debtors first that have the best chance of getting paid. Among other things, if you file a lien for your judgement, the order of liens determines order of payout when secured/liened assets are sold in bankruptcy and often outside bankruptcy too. Don't wait around for some other creditor to get in line before you do.

thank you very much for taking the time to respond and offer your opinion. i appreciate it.

 

[SmallClaimsHelp]

Given his purported financial situation, the debtor might not be able to afford a bankruptcy attorney (although I suppose his employed wife might). It sounds to me as if the debtor is just using bankruptcy right now as an idle threat, to stave off collection attempts. Not that he might not file later.

agreed. i nedver understood why they would have to file bankruptcy given that his wife is employed in a good paying job as a pharmacist (not that people with good paying jobs etc dont have to file BK of course). He was flaiming 12 months ago that he was on the verge of bankruptcy so the whole thing may have been an elaborate scam. people do interesting things but seems a lot of effort for a few thousand dollars but i have the time and won't let this theft go without them being made aware by the law in whichever way possible that they have stolen this money from my family.

 

[quincy]

agreed. i nedver understood why they would have to file bankruptcy given that his wife is employed in a good paying job as a pharmacist (not that people with good paying jobs etc dont have to file BK of course). He was flaiming 12 months ago that he was on the verge of bankruptcy so the whole thing may have been an elaborate scam. people do interesting things but seems a lot of effort for a few thousand dollars but i have the time and won't let this theft go without them being made aware by the law in whichever way possible that they have stolen this money from my family.

I appreciate the thanks, SmallClaimsHelp, so thank you.

One bit of advice: There was no theft. You knowingly and willingly loaned the fellow money. Instead of theft, you should say there has been a breach of contract. Your debtor failed to meet the terms of your loan agreement; he failed to pay as agreed. You are seeking in court the money due you under the terms of your loan agreement.

I hope your lawsuit is a successful one and that you are able to collect what is owed without too much additional aggravation from the debtor.

 

[Taxing Matters]

I appreciate the thanks, SmallClaimsHelp, so thank you.

One bit of advice: There was no theft. You knowingly and willingly loaned the fellow money. Instead of theft, you should say there has been a breach of contract. Your debtor failed to meet the terms of your loan agreement; he failed to pay as agreed. You are seeking in court the money due you under the terms of your loan agreement.

True. But I'll add one other wrinkle. If he borrowed the money but never had the intention to repay at the time you made the agreement then that's fraud and that generally would increase how much you can win. Moreover, debts due to fraud are not dischargeable in bankruptcy. The problem is proving the intent. You'd need some evidence indicating that he never planned to repay you and in a lot of cases the lender just doesn't have anything to prove it.

 

[quincy]

True. But I'll add one other wrinkle. If he borrowed the money but never had the intention to repay at the time you made the agreement then that's fraud and that generally would increase how much you can win. Moreover, debts due to fraud are not dischargeable in bankruptcy. The problem is proving the intent. You'd need some evidence indicating that he never planned to repay you and in a lot of cases the lender just doesn't have anything to prove it.

Proving intent to defraud, when there are text messages outlining a loan agreement, would be extremely difficult - especially with the follow up messages saying that the bank loan upon which the debtor was counting to repay the loan, fell through.

 

[Taxing Matters]

Proving intent to defraud, when there are text messages outlining a loan agreement, would be extremely difficult - especially with the follow up messages saying that the bank loan upon which the debtor was counting to repay the loan, fell through.

I agree it's difficult, especially since the person alleging the fraud has the burden of proof, and often at the higher standard of clear and convincing evidence rather than the usual preponderance of the evidence burden that applies to most issues in civil cases. But I point out the possibility nevertheless in case the OP does come up with evidence that does indicate fraud and that the claims that the lender's own claims that the financing the lender expected never came through. While that is not likely now if the OP doesn't have it now, it does sometimes happens that a creditor stumbles on such evidence somewhere along the way and the OP should know the importance of it.

 

[quincy]

I agree it's difficult, especially since the person alleging the fraud has the burden of proof, and often at the higher standard of clear and convincing evidence rather than the usual preponderance of the evidence burden that applies to most issues in civil cases. But I point out the possibility nevertheless in case the OP does come up with evidence that does indicate fraud and that the claims that the lender's own claims that the financing the lender expected never came through. While that is not likely now if the OP doesn't have it now, it does sometimes happens that a creditor stumbles on such evidence somewhere along the way and the OP should know the importance of it.

It’s always good to be armed with too much information rather than too little.

 

[Litigator22]

thank you very much for taking the time to respond and offer your opinion. i appreciate it.

Water under the bridge I suppose, but seemingly you are unaware that instead of filing your claim in Ohio you could have taken advantage of Texas's Long Arm Statute. Meaning that you could have filed your lawsuit and sought to have its merits adjudicated in your hometown and not in the defendants! *

It's true that before any Texas judgment would be entitled full faith and credit in Ohio, it would first need to be submitted for approval and affirmation by that state. Moreover, before granted sanction on all fours same as a judgment issued by an Ohio court the named debtor would have the opportunity to challenge the Texas court's province in assuming jurisdiction over his person. But that is a complicated process, and it would seem most unusual if it were within his personal capabilities or financial wherewithal.
___________________________

[*] "CIVIL PRACTICE AND REMEDIES CODE - TITLE 2. TRIAL, JUDGMENT, AND APPEAL - SUBTITLE B. TRIAL MATTERS - SUBCHAPTER C. LONG-ARM JURISDICTION IN SUIT ON BUSINESS TRANSACTION OR TORT

Sec. 17.042. ACTS CONSTITUTING BUSINESS IN THIS STATE. In addition to other acts that may constitute doing business, a nonresident does business in this state if the nonresident:

(1) contracts by mail or otherwise with a Texas resident and either party is to perform the contract in whole or in part in this state; " (Emphasis added)
________________

See: Moki Mac., etc. vs. Drugg, et al. 221 S. W. 3rd 569 (2007); Winnsboro, etc. vs. Santander, etc. In the Court of Appeals Fifth District of Texas at Dallas - NO. 05-17-00895 (2001)

 

[quincy]

Water under the bridge I suppose, but seemingly you are unaware that instead of filing your claim in Ohio you could have taken advantage of Texas's Long Arm Statute. Meaning that you could have filed your lawsuit and sought to have its merits adjudicated in your hometown and not in the defendants! *

It's true that before any Texas judgment would be entitled full faith and credit in Ohio, it would first need to be submitted for approval and affirmation by that state. Moreover, before granted sanction on all fours same as a judgment issued by an Ohio court the named debtor would have the opportunity to challenge the Texas court's province in assuming jurisdiction over his person. But that is a complicated process, and it would seem most unusual if it were within his personal capabilities or financial wherewithal.
___________________________

[*] "CIVIL PRACTICE AND REMEDIES CODE - TITLE 2. TRIAL, JUDGMENT, AND APPEAL - SUBTITLE B. TRIAL MATTERS - SUBCHAPTER C. LONG-ARM JURISDICTION IN SUIT ON BUSINESS TRANSACTION OR TORT

Sec. 17.042. ACTS CONSTITUTING BUSINESS IN THIS STATE. In addition to other acts that may constitute doing business, a nonresident does business in this state if the nonresident:

(1) contracts by mail or otherwise with a Texas resident and either party is to perform the contract in whole or in part in this state; " (Emphasis added)
________________

See: Moki Mac., etc. vs. Drugg, et al. 221 S. W. 3rd 569 (2007); Winnsboro, etc. vs. Santander, etc. In the Court of Appeals Fifth District of Texas at Dallas - NO. 05-17-00895 (2001)

The fact that SmallClaimsHelp potentially could file in either Texas or Ohio was discussed fully in the previous thread posted on SmallClaimsHelp’s collection on the overdue loan. I did not link to the previous thread because the questions asked here are not helped by what was addressed before.

SmallClaimsHelp decided to file in Ohio, home state of his debtor - and there are good reasons for him handling this as he has.

 

[Litigator22]

. . . SmallClaimsHelp decided to file in Ohio, home state of his debtor - and there are good reasons for him handling this as he has.

Justifying a creditor's decision to file for collection and opting to attend trial in a venue several states removed from that of the creditor's home state when both forums are empowered with the means of assuming personal jurisdiction over the debtor seems beneath discussion.

Now on this issue of "proof' of service (of process)" and since you appear to be acting as his proxy . . .

Before the OP ventures off to Ohio would it not be prudent of him to first verify that a proper return of service entry appears on the clerk's "appearance docket"? *

That, rather than relying solely on his assumption that "the debtor has received the courthouse's communications, and your acknowledgement, "sounds like service was made"?
____________________________

[*] (Ohio Civ. R. 4.1(A)(2)

 

[quincy]

Justifying a creditor's decision to file for collection and opting to attend trial in a venue several states removed from that of the creditor's home state when both forums are empowered with the means of assuming personal jurisdiction over the debtor seems beneath discussion.

Now on this issue of "proof' of service (of process)" and since you appear to be acting as his proxy . . .

Before the OP ventures off to Ohio would it not be prudent of him to first verify that a proper return of service entry appears on the clerk's "appearance docket"? *

That, rather than relying solely on his assumption that "the debtor has received the courthouse's communications, and your acknowledgement, "sounds like service was made"?
____________________________

[*] (Ohio Civ. R. 4.1(A)(2)

Absolutely he should check before his flight to make sure all is set for the hearing. I advised that earlier. The Court told SmallClaimsHelp that the certified mailing sent by the Court to the defendant apparently was received.

 

[SmallClaimsHelp]

I called the courthouse again today. They said they still have not received word from the defendant or th post office. as i understand it, it is a very antiquated process.

1) send certified mail via usps - This was done almost 5 weeks ago on2/9/2023

2) if no response, send regular USPS

3) if doesnt come back "return to sender" they assume they still live there and are just refusing to respond.

To date, no response form defendant and no response from USPS they couldnt deliver.

I suspect what is likely to happen is i will fly to Ohio and defendant won't show up, defendant won't have responded and USPS wont have confirmed to courthouse they can not deliver.

In that case, the trip i think is wasted and we have to try to schedule another date.

Do i understand all this correctly? I will be making the trip regardless as they could always show up in person so i have to be there.

Also, should i reach out to the defendant tonight or tomorrow to let them know I'll be seeing them in court this week? Their last response to me 10-14 days ago was to basically f-off (their first response to me since April 2022).