Debt Collection in the Maine Courts
- What is this information about?
- Is there anything I can do to avoid being sued on a debt?
- What if I owe the debt and have no legal defense?
- Have you been sued?
- What happens if I’m sued in Small Claims Court?
- What happens if I’m sued in District Court or Superior Court?
- How do I draft and file court papers?
Get sample Answer and Discovery forms
- What happens next in Distric Court?
- What happens if I go to court and lose the case?
- What if I can’t afford to pay the judgment?
- What is a "disclosure"?
- How will I know if there is going to be a disclosure hearing?
- What if I don’t obey the subpoena?
- How do I get ready for the disclosure hearing?
- What happens at court?
- What if I make a deal with the creditor’s attorney?
- What will happen if we go to a hearing before the Judge?
- What can the judge order once the hearing is over?
- Is any of my income or property safe from the creditor?
- What happens if I don’t go to my disclosure hearing?
- What if I fail to pay after I’ve been ordered to in a disclosure hearing?
- More information
What is this information about?
If you owe someone money, that person may try to collect it from you by taking you to court. This guide will help you understand the court process and the rights you have. You are the debtor. The person who you owe money to is the creditor.
The creditor may not be the person you made the deal with. Often creditors sell their debt accounts to debt buyers. Then the debt buyers try to collect on the debts. Sometimes the first debt buyer sells an account to as second debt buyer, and so forth.
This guide covers regular unsecured consumer debt, such as fuel bills and credit card debts. It does not cover:
child support debt
fines or taxes owed to the government
* A secured debt is one where you put some property up as collateral to secure a loan, such as a car loan or home mortgage.
Is there anything I can do to avoid being sued on a debt?
If you get a 30-day demand letter, you may want to send a letter back to the creditor. Do this before the end of the 30 days. This could prevent a law suit.
In your letter:
- State why you believe that you don't owe the debt, if that is the case
- Try to convince the creditor to stop because your income and assets are exempt from collection (see lists of exempt property and earnings)
- Consider making a lump sum settlement offer or payment arrangement, if you do not dispute the debt and you are able to pay
Also, you have the right to ask for:
- the amount of the debt
- the name of the creditor to whom the debt is owed
- verification that the debt exists
- the name and address of the original creditor, if different from the current creditor
If the demand letter does not provide this information, ask for it.
Finally, in your letter, explain any legal defenses that you think you may have. Read more about legal defenses. If the creditor's lawyer agrees with your defenses, he may decide not to sue you.
Here is a sample letter disputing the debt and asking for "validation" of the debt. You can use this as a model, adding to it any other legal defenses you may have, such as an expired "statute of limitations," or that you are "collection proof" due to your low income and minimal assets.
What if I owe the debt and have no legal defense?
Lump sum payment
If you don't dispute the debt and you are able to offer a lump sum payment, be ready to prove your income and expenses. The creditor needs to be convinced that you are offering the most that you can afford to pay. Make an agreement only if you can afford it. Be proactive and realistic.
The creditor may want you to sign an agreement. Review the agreement carefully and get answers to any questions you have before signing it. Once you make payment, be sure to get a written statement from the creditor that the debt has been settled in full. Keep the statement in case someone else tries to collect on the same debt in the future.
Be aware that if a debt has already been reported to a credit bureau, you may have to pay income taxes on the amount of the debt that was “written off” by the creditor.
Weekly or monthly payments
If you don't dispute a debt and you want to offer weekly or monthly payments, again be ready to prove your income and expenses. Offer only what you can realistically afford.
If you agree to payments, the creditor may still want to get a court judgment against you, to assure your future payments. He will want a signed agreement. He may suggest that you accept service on a court complaint (rather than having you served by a sheriff). Part of the deal will be that you agree to court judgment for the amount of the debt. Again, review carefully all documents you are asked to sign. Get answers to all questions you have before signing them.
If you agree to a court judgment, be aware that the creditor will most likely file a lien against any real estate you own.
After making your final payment, get a written statement from the creditor that the debt has been paid in full. Make sure that the creditor removes any lien it has filed against your property. Keep these documents in case someone else tries to collect the same debt in the future.
Are you “collection proof”?
Again, if you do not dispute the debt, but your income and assets are all exempt from collection, show this to the creditor. He will probably want verifying documents. If the creditor is aware of this, he may not bother to sue you.
Reminder: Creditors often sell accounts they can't collect on. So you may still be contacted by a different debt buyer later on.
Have you been sued?
If you didn't settle your debt by now, you may be sued. There are 2 ways a creditor can do this:
- Small Claims Court (within the District Court), or
- Standard Complaint and Summons in District Court
Read about these two procedures below.
What happens if I’m sued in Small Claims Court?
The Clerks of the District Courts can provide you with a free brochure on Small Claims Court. It explains how Small Claims work and your appeal rights. Basically, this is a simplified court process. Small Claims are limited to $6,000.00. Read the Court’s brochure to learn more about the Small Claims process. You can be summonsed to Small Claims Court by mail or by sheriff service.
If you get a Small Claims summons, go to court on the day listed on the summons or the notice you receive from the court clerk. You will probably be required to go to a mediation session before any hearing before a judge. The mediation as an opportunity to reach an agreement if possible. But don't agree to payments that you can't make. If you are unable to reach an agreement during mediation, you will have a hearing before the judge. The hearing may be that day or at a later date. When your case is called, tell the judge your side of the story. Bring all papers, photos or exhibits you may need to support your story. You should also bring any important first-hand witnesses.
Read more here about some common defenses where the company suing you is not the company you borrowed the money from (or, in a credit card case, not the credit card company you signed up with).
If you dispute the debt, or the amount of the debt, go to the court hearing. If you don’t go, you will lose the case. However, it is not a crime if you don’t go.
If you go to court and lose, you have the right to appeal. The appeal process is explained in the brochure you got from the clerk. Most people find this hard to do without a lawyer.
To learn more about possible legal defenses and filing written responses, read more below. In Small Claims Court, you are not required to file an answer (or a discovery request). However, you may want to do this to stress to the court the seriousness of your claims. You can file these papers up until the time of the court hearing date.
What happens if I’m sued in regular District Court, instead of Small Claims Court?
The second way you can be sued on a debt is through a standard complaint and summons. This is a written statement by the creditor explaining why and how much you owe.
When you are sued by this method, you must file a written answer within 20 days of the day the Complaint and Summons are delivered to you (most often by deputy sheriff). If you do not file a written answer within 20 days, you will likely lose the case by default.
Again, if you dispute all or part of the debt, you must file a written answer with the Court and mail a copy to the Plaintiff or his lawyer within 20 days of the date you received the Complaint and Summons.
Try to get a lawyer’s advice if you are sued in this way and believe that you don’t owe some or all of the money that is being demanded or have other legal defenses.
You may be eligible for free legal services through the Volunteer Lawyers Project: 1-800-442-4293 or 774-4348 (within Portland calling area).
If your case reaches a court hearing, the procedures will be similar to those described above under Small Claims. However the hearing is more formal. The court will follow the standard rules of procedure and evidence.
How do I draft and file court papers?
Read all of the information in this guide. This will help you to understand what happens in a debt collection case.
If you are being sued in District Court you must file an Answer to the Complaint within 20 days. (Small Claims Court does not require an Answer, but you can file one if you choose.)
First, copy the information at the top of the page (court location, case number, Plaintiff and Defendant) from the Complaint you received.
Second, answer each numbered paragraph in the complaint with one of these responses:
- I admit that the statement is true,
- I deny the statement, or
- I do not have enough information to know whether the statement is true or false.
Third, add “Affirmative Defenses,” if you have any. These are legal reasons that you think might bar the Plaintiff from getting a court judgment against you. Two common Affirmative Defenses are:
- The Plaintiff does not have “legal standing.” This issue comes up when the person or company suing you is not the same party that you made the agreement with. (Read about creditors and debt buyers). By raising this defense, you are asking the court to examine whether the Plaintiff is the party who has the legal right to collect on the debt. The Plaintiff has the burden of proving this.
- Statute of Limitations. The Plaintiff/Creditor has a deadline for suing you on the debt. In a typical consumer debt case, this is usually 6 years from the time you stopped making regular payments. If the creditor does not sue you within that time, then he is too late.
You may have other legal arguments. Include any legal arguments you have as "Affirmative Defenses" or "Counterclaims" (your legal claims against the Plaintiff/Creditor). The Maine Attorney General posts information about the Maine and federal Unfair Trade Practices Acts here. More about the federal Fair Debt Collection Practices Act here and Maine's Fair Debt Collection Practices Act here.
Fourth, date and sign your Answer, list your contact information and certify that you sent a copy to the Plaintiff's lawyer (or to the Plaintiff, if he doesn't have a lawyer). See more about filing court papers.
Or you can use this Sample Answer as a model form. Follow the outline above. At steps two and three, check the boxes that apply to your case - or that you think may apply to your case. Add any additional affirmative defenses or counterclaims that apply.
You may want to include with your Answer a Notification of Discovery Service. This is a legal procedure for getting answers to the questions you have, such as:
- Do I really owe the amount they say I owe?
- How did the Plaintiff become the owner of my debt? Does he have “standing” to sue me?
You may refer to our Sample Discovery Request. The Plaintiff must respond to your requests in writing before the court hears the case. This may help you to better understand the details and your possible legal defenses.
How to File and Serve court documents.
To "file" your Answer and Discovery Request, or letter, mail it to the Court or hand it to the Court Clerk. You must also "serve," or send a copy to, the lawyer for the investor at the same time. Usually that lawyer's name and address is in the bottom left corner of the Summons or on the last page of the Complaint. Keep copies for your own file.
What happens next in District Court?
Again, it will be difficult for most people to do this without a lawyer. But the most important thing is to read everything you get from the Court and from the Plaintiff's lawyer. If it says you must do something by a certain date, you need to do that before the deadline. Otherwise, the Court will probably "default" you and you will lose. Most likely, you will go through several court procedures leading up to a trial. This includes drafting and filing papers and attending court meetings. Again, do the best you can to respond to every notice and document you receive. And show up when the court schedules a meeting or hearing.
If at some point, the Plaintiff's lawyer indicates that they are giving up on pursuing the case, be sure to ask the judge to issue an order saying "dismissed with prejudice." If you get a simple dismissal - which means you win - it will not prevent this creditor, or another creditor who "buys your debt," from suing you again on the same debt. To put the matter to rest forever, the dismissal must be "dismissal with prejudice."
What happens if I go to court and lose the case?
If the court rules against you, there will be a judgment entered against you. This is a formal finding that you owe a certain sum of money to the person or company that sued you. You have appeal rights. If you want to appeal, you must do this within 21 days of the entry of judgment. You should seek a lawyer’s advice immediately. If no appeal is taken, the judgment becomes “final” and is enforceable for a period of 20 years.
What if I can’t afford to pay the judgment?
Many people cannot afford to pay their bills. If you truly cannot afford to pay, you may be “collection proof.” The judgment is considered “uncollectable.” You cannot be punished, fined or jailed if you truly cannot afford to pay your debts.
However, the creditor has the right to find out if you can afford to pay. A creditor who has obtained a judgment against you can subpoena you to appear at a disclosure hearing. At this hearing the judge will decide if you can afford to pay the debt. This process is explained below.
What is a “disclosure?”
Once the creditor has a judgment against you for money you owe, the law gives the creditor certain ways to collect the money from you. Sometimes the creditor must take you to court to find out what property and income you have. This is called a disclosure hearing. At the end of the disclosure hearing, the judge will decide whether you have anything the law allows the creditor to take.
How will I know if there is going to be a disclosure hearing?
You will probably get a disclosure subpoena. Usually the a deputy sheriff delivers the subpoena. The subpoena will tell you the date, time and location of the disclosure hearing. To obey the subpoena, you must appear in court on time. You cannot obey the subpoena by calling the clerk or the judge.
If there is a very good reason why you cannot go to the hearing at the time it is scheduled, you may be able to get the hearing postponed. This is called a continuance. If you have a very good reason, call the creditor's lawyer and ask for a "continuance by agreeement." If the creditor's lawyer agrees, put your agreement in writing, signed by both of you, and file it with the court prior to the hearing. If you don't do this, the court can decide the case against you because you did not show up. If you cannot agree, send a written explanation to the clerk of the court, and send a copy to the creditor's lawyer. Explain why you are asking for a continuance. Do this as early as possible. If you delay in sending a letter to the clerk, you may not know whether the continuance was approved by the judge until the date of the hearing. If the judge denies your request and you do not appear, you may be subject to certain penalties (see below).
What if I don’t obey the subpoena?
If you do not obey the subpoena, the judge can order the sheriff to “arrest” you for up to three hours and bring you into court for the disclosure hearing. If the three hours runs out before you have had your hearing, the court will release you if you promise to come to a hearing at a certain time in the future. If you do not show up at the time you promised, you can be found in contempt of court and be punished by fines or imprisonment.
Note: In small claims cases, the judge may set up a date for a disclosure hearing in the original court judgment. This means there will be no subpoena, but all other rules apply.
How do I get ready for the disclosure hearing?
Before you go to court, make a list of all your income and expenses and all your assets and debts. This is to make sure you don’t forget any of them when you get to the hearing. Take the list to court with you. If the subpoena ordered you to bring certain documents, bring them. It is important that the judge know what all your debts and expenses are, as well as your resources. Otherwise, you may be ordered to pay more than you are really able to afford.
What happens at court?
Get to the courthouse on time . Go into the courtroom and sit down so you are ready when the judge calls your name. When the judge calls your name, stand up and answer. If the creditor or his lawyer does not answer when called by the judge, ask the judge to "terminate" the disclosure hearing. If the creditor does not appear, you cannot be served with another subpoena for at least six months (unless the court finds good reason for the creditor's failure to appear). Your debt does not go away, but the disclosure is postponed.
When you get to court, the creditor’s lawyer may try to negotiate a payment arrangement with you. The court will probably advise you to meet with the creditor's lawyer outside the courtroom. If you talk if over, you may be able to agree on payments that you can afford. However, do not agree to a payment arrangement just because you are afraid of having a hearing.
The hearing before the judge will address the same issues as the creditor's lawyer discussed with you. If you reach an agreement with the lawyer before a hearing, the agreement will usually be reflected in an “affidavit and agreement.” You and the lawyer sign the agreement. Then the judge will use this to draft a payment order.
Do not agree to payments that are more than you can realistically afford. You can alway get a hearing before the judge if the lawyer is requesting payments which you believe are too high for you make.
What if I make a deal with the creditor’s attorney?
If you enter into a payment agreement with the creditor's lawyer, don’t leave the courtroom until the judge knows what the agreement is. Go with the creditor’s lawyer to tell the judge the agreement, and make sure the judge's order reflects your agreement. You will probably get a copy of the judge's order while you are there. Read it, and make sure it is correct before you leave.
If you don’t follow a court order, the creditor's lawyer can ask that your employer make payments directly to the creditor out of your paycheck. You can also, after another hearing, be found in contempt of court.
What will happen if we go to a hearing before the judge?
At a court hearing the creditor’s lawyer will ask you what property you own, how much money you make, and what your expenses are. You are under oath and you must tell the truth. If the creditor’s lawyer does not ask about your expenses and debts, you should explain these when the judge asks if you have anything more to say. If they don’t, you should tell them anyway. Use the list of expenses and debts which you wrote down before coming to the hearing. This will help the judge to see how much you can afford to pay the creditor.
What can the judge order once the hearing is over?
When the disclosure hearing is over, wait and see what the judge will say. If the judge decides that you have no ability to pay anything at this time, the judge will say so. The hearing will then be “terminated.” If that happens, the creditor will not be able to request another disclosure hearing on the same debt for another six months. However, your debt does not go away.
If the judge decides you are able to make payments to the creditor, several kinds of orders can be entered. they include the following:
1) You can be ordered to pay cash. If the judge decides you can pay the debt in one payment, you will be ordered to do so. If the judge decides you do not have the ability to pay the debt in one payment, you can be ordered to pay installments. This means that you would have to pay a certain amount every week or every month, or whatever time period the judge orders.
2) The judge can order you to turn over something you own to the creditor. The creditor would sell what you turned over, take the money you owe, and return any leftover funds to you. If the judge orders you to turn property over to the creditor, make sure that you tell the judge what the property is worth. If you do not know, ask the judge to order an appraisal. Someone who knows what that kind of property is worth will look at your property and decide what it is worth. This will give you an idea of how much the property should be worth at a sale.
3) The judge can order that a lien be placed on property you own. This means that the creditor will have a claim to part of your property until you pay back what you owe. If someone has a lien on your property, you may not sell it without the consent of the creditor. The creditor may have already put a lien against your property - based on the earlier court order saying that you owe debt.
Is any of my income or property safe from the creditor?
Yes. Maine law recognizes that there are certain basic things a person needs in order to live. Some property and income cannot be taken from you unless you agree.
Important Note: These rules may not apply if you have put your property up as “collateral” to secure a loan, such as a car loan or a home mortgage. Also remember, from the above note, that these rules do not apply to certain types of debt, such as child support.
Some sources of property are totally exempt from debt collections (unless you have put the property up as collateral). “Equity” means the amount of the value of your property which is available to you, after accounting for any existing liens.
These items are exempt:
- Equity in your home up to $47,500. This exemption increases to $95,000 if:
- a minor dependant lives with you, or
- you or are at least 60 years old or disabled, or
- you have a dependant who is at least 60 years old or disabled.
If you don’t own a home, you can apply this exemption to a burial plot.
- Equity in one vehicle up to $5,000.
- Equity in “tools of the trade” of up to $5,000.
- Your clothing up to $200 in value for each item.
- Equity in household furniture, appliances, and other household goods up to $200 for each item.
- Jewelry up to $750 in total value, and your wedding and engagement rings.
- Life insurance contracts (and up to $4000 in any accrued dividends, interest, or loan value in such contracts).
- Certain farm equipment if you are a farmer.
- A fishing boat if you fish commercially.
- Certain amounts of heating fuel and cord wood.
- Your furnace, heating stoves and one cook stove.
- Prescribed health aids.
- A supply of food, seed, and gardening tools.
- You may also claim a $400.00 exemption on any property whether or not otherwise exempt.
- If you have not used all of your homestead exemption (see paragraph a.), you may use up to $6,000.00 of the unused portion to protect your clothing, household goods, tools of trade, or personal injury award.
From your weekly income or paycheck, this amount is protected from debt collection:
- $290.00 (40 hours x $7.25, the federal minimum wage),
- 3/4 of your take home pay,
whichever is more.
Important Note: Don't forget warning at the top of this page. Different rules apply to some special categories of debt such as child support.
Exempt Sources of Income
These sources of income are exempt from debt collection:
- Social Security & SSI
- Veterans Benefits
- Worker’s Compensation
- Maine State Retirement Benefits
- Unemployment Compensation
- Alimony or support necessary for support of debtor or dependents
- Other forms of public aid
- Earned Income Tax Credit and Additional Child Tax Credit
Some other kinds of income are exempt, such as: income from certain pension funds and retirement plans, certain life insurance payments, and certain types of damage awards. Seek legal advice if you have questions.
Important Note: If your exempt property, income, or earnings are taken by order of the court, seek legal advice immediately. You can call Pine Tree Legal Assistance or the Volunteer Lawyers Project for help.
What happens if I don’t go to my disclosure hearing?
First of all, you should go unless you have a compelling reason, such as being hospitalized. You must go in person. You cannot send your spouse or anyone else in your place. If you fail to go to your disclosure hearing:
- You may be summonsed for contempt.
- Your employer may be ordered to withhold a part of your paycheck to pay the debt.
- A civil order for arrest may be issued so that you will be brought to court by a deputy sheriff. You can be ordered to pay the sheriff’s costs. And, if you fail to appear after being released on bond with promise to appear, you can be charged with a Class E crime.
What if I fail to pay after I’ve been ordered to in a disclosure hearing?
If you don’t follow a disclosure order to pay a debt, you may be summonsed for civil contempt of court.
At the contempt hearing, you will be given a chance to tell the judge the reasons you haven’t paid. If the judge finds you have a good reason for not paying (such as you were laid off from work or you were ill or injured), he can dismiss the contempt motion.
However, if the judge finds you do not have a good reason, the judge has the authority to jail you or impose a fine. The purpose of the punishment, however, is only to force you to pay. If you can come up with the money that you owe under the order, you should be released from jail or the fine rescinded. You should seek the advice of a lawyer if this happens.
Also, if you miss two or more payments under an “installment order,” the court may order your employer to withhold some of your wages and to send that money to the creditor. (See exemptions above.)
Note: This is only a brief summary of your rights. There are other methods creditors can use to collect a debt from you. If you have more questions, contact your nearest PTLA office.
The State of Maine Office of Consumer Credit Regulation publishes several booklets on related topics in their Downeaster Guide series:
Guide to Debt Collection & Repossession
Pocket Credit Guide
Consumer Guide to Cut-Rate Auto Financing
Guide to Credit Bureaus & Credit Reports
These booklets are free to Maine residents. Order by calling: 1-800-DEBT-LAW or get online versions of some of these publications.
The Office of Consumer Credit Protection may also be able to help you with specific problems and questions regarding consumer credit issues. Their online services include a sample letter to request a free credit report, and an online complaint form if you believe that a creditor, debt collector, credit bureau or other business regulated by the CCP may have violated the consumer credit laws.
Partially updated July 2013