Served by DirecBiz? 5 Deadlines That Decide the Case

If DirecBiz has sued your business, the first thing to understand is that you have deadlines. Lots of deadlines. Too many deadlines. This guide shows you the consequences of five of the most important deadlines. Most lawsuits have a deadline for when the response papers must be filed. Miss it, and your case may be over before you know it. In other words, if you simply wait and do nothing, the odds of you losing your lawsuit are sky-high.

1. Answer the summons in time

You have a certain number of days to answer a summons; otherwise, there is a default. A default judgment can happen when a party doesn’t respond to a complaint in court. You lose without even telling your story.

Your business isn’t in New York? The court still may be. When you get sued, read the summons and look at where the case is filed to make sure you understand who and where you’re dealing with. If you are served with a summons in New York state, you usually have 20 days from when it was handed to you. If the summons was handed to someone else, or was “nail and mailed,” or was served through a state official, you have 30 days from when service is complete. The twist is that suitable-age and nail-and-mail service are not considered complete until 10 days after the proof of service is filed with the clerk.

Plaintiff’s lawyers often ask for a default judgment from the court the very day the deadline passes. Don’t rely on slack; respond before your time to appear is up. If no complaint was attached to the summons, serve a written demand for a copy within the time that you have to appear. The plaintiff must then serve it within 20 days of receiving the demand. If you missed the deadline, you may still have a small window of time. A New York court might extend the time to answer a lawsuit, or even accept a late answer, if you can show you had a reasonable excuse for the delay. Make it snappy; don’t count on this.

2. Challenge bad service

Bad service means the court may reject the lawsuit and you may have grounds for a defense called “lack of personal jurisdiction.” Simply ignoring the lawsuit won’t do it; you need to raise it in court. If you serve an answer in a New York state case, you have 60 days to make a motion for judgment objecting to improper service. Otherwise, you could lose the objection. The court can extend the 60-day time limit for good reason, such as undue hardship.

Another big deadline is the time to remove a case from state court to federal court. The notice of removal has to be filed within 30 days of receiving the complaint. This is a completely separate deadline from the state court deadline.

3. Check any confession of judgment

A confession of judgment is a way to skip a lawsuit and jump straight into judgment and enforcement. New York limited them against out-of-state businesses in 2019. A NY confession can only be filed within 3 years after the affidavit was signed, and only in a county where the business had a place of business. Check both.

4. Act fast on a bank freeze

A restraining notice to your bank can freeze a business account and stop you from using it. It can last for up to one year or until the judgment is fully paid or vacated. Once your account is frozen, your payroll and vendors don’t pause. You still have to pay them even if you aren’t allowed to take money out.

As for exemptions, the exemption rules apply only to individuals. The exemption form must usually be filed within 20 days after the exemption notice was postmarked. If it is filed and accepted, the bank usually releases the funds eight days later unless the creditor objects. Once money has gone to the creditor, good luck getting it back.

5. Undo a default judgment

A default judgment isn’t necessarily carved in stone. You can ask for a full or partial opening of the judgment through a motion. You must show the court that the default was excusable. But you must do this within one year of service of the judgment and written notice of its entry. Or there is an appeal as of right. There is a 30-day deadline after you are served with the judgment and written notice of its entry. Don’t delay; enforcement only piles up.

Many MCA Disputes End in Settlement

Many MCA disputes end in settlement, not in court. The lender may press for a lump sum and threaten legal action. Your leverage depends on the defenses you still have. If you miss critical deadlines, the case turns into a collection problem. Every matter has its own deadlines. Having a professional check things could go a long way. But delaying it could work against you.

A free contract review costs nothing and takes a day or two. Call (888) 837-7053, or send the agreements to Delancey Street for a straight read on your options.