Debt Collection in the Maine Courts
| 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.
| Note
This guide covers regular unsecured consumer
debt, such as fuel bills and credit card debts. It does not
cover:
* 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.
| 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.
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.
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.
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? |
If you are being sued on a debt, we recommend that you get a lawyer to help you in court.
But if you have tried and cannot get one, these Sample Answer
and Discovery pleadings may help you.
⇒Step 1
Read all of the information in this guide. This will help you to understand what happens in a
debt collection case.
⇒Step 2
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.) You can use
this Sample Answer as a model.
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. Ask us for more information on the Unfair Trade Practices Acts and
the Fair Debt Collection Practices Acts. Include any legal arguments you have as "Affirmative Defenses"
or "Counterclaims" (your legal claims against the Plaintiff/Creditor).
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.
⇒Step 3
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 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 prove that
you really cannot afford to pay any money on account of the judgment. 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.
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.
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.
|
Exempt property
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.
Exempt earnings
From your
weekly income or paycheck, this amount is protected from debt collection:
- $290.00 (40 hours x $7.25, the federal minimum wage),
or
- 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:
- TANF
- 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.
| 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.
Special thanks to Michael S. Haenn, Esq. for his help with updating this information.
Partially updated September, 2009
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Notice
© Pine Tree
Legal Assistance
July 2008
Sometimes the laws
change. We cannot promise that this information is always
up-to-date and correct. If the date above is not this year,
call us to see if there is an update.
We provide this
information as a public service. It is not legal advice.
By sending you this information, we are not acting as your lawyer.
Always consult a lawyer, if you can, before taking legal action.
Please review our full terms-of-use agreement
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