Answering a Lendvo Complaint: What to Check First

Your Answer Is Due

If a lawsuit from Lendvo lands in your inbox or mailbox, the first thing to do is check the top of the papers you received. It will tell you which court the company chose, and when and how you were served. That will also tell you when your answer is due, usually between 20 and 30 days. Also check the plaintiff. Lendvo, a Virginia-based online lender to digital businesses, went out of business in May 2023, according to PitchBook. So whoever is suing may be an assignee.

Miss that deadline and the company suing can ask for a default judgment against you. With that, the bank levies, or the property seizure, can proceed. Check the deadline first, then the amount.

Precisely when your answer must arrive will depend on the court and the method of service. For a U.S. district court case, see the date you were served. Twenty-one days after that date is the deadline. Count it as the exact number of days, not “about” or “around.” With a waiver, the clock starts from the day the waiver request is sent, giving you either 60 days to respond if they sent it in the U.S. or 90 days if you’re overseas.

In New York state court, the clock starts at the moment the process server hands you the summons. That’s 20 days. Receive by other methods, and the deadline is 30 days after service is complete. If the case was filed in a Virginia circuit court, the rules require that you answer within 21 days.

Check the calculation. Don’t let the papers leave your sight without entering the deadline onto a calendar. No amount of defective service will automatically mean the claim against you dies.

Don’t treat your answer to a Virginia circuit court complaint as a general denial of the whole thing. You need to address the allegations in each numbered paragraph of the complaint and admit or deny the allegations.

The “forum” clause in a loan contract will say where the lender can sue. As with other contract provisions, it can be challenged.

In federal court: A lawyer must e-file unless barred by local rule. An individual files electronically only with a court order or a local rule. Start with the court clerk to learn what’s expected of you.

If your business is a corporation being sued in New York state court, you need a lawyer, unless the suit is before a small claims or commercial claims judge.

In a federal lawsuit, make your first filing and initial appearances count. If you don’t plead objections about personal jurisdiction, improper venue, insufficient process or improper service with your first filing, you’ve lost your chance to dispute them.

In Virginia state court, filing too late has worked for defendants in some circuits. In December 2023, a Fairfax County judge struck a demurrer and plea in bar that arrived late. There was no request to file it late. A green light for a belated plea in another circuit does not tell you it’s OK everywhere else. It’s at the judge’s discretion, and judges don’t always agree.

A Default Judgment

In federal court: The clerk can enter judgment if the claim is for a definite amount and you never answered. Otherwise, the plaintiff has to get the court’s OK.

If you don’t answer in time and a New York state court enters judgment against you, the plaintiff gets the right to freeze your bank account and go for the money there. And that may only be the beginning. The judgment may also give the plaintiff a way to put a lien on your property or garnish your salary. The garnishment of business income orders your customers to pay the creditor the money they owe you.

After a default judgment, you may ask the court to set it aside. Convince the court you missed a deadline because of excusable neglect, that you had a credible defense, and that you acted promptly. Your odds of success may depend on who is in the judge’s seat.

A creditor may not drain your bank accounts until a judgment is entered. That changes if the creditor has reason to suspect you’re hiding assets. In that case, the creditor may ask for a court order attaching your property. Transfer assets at a time of financial stress, and a judge may view it as a ”fraudulent transfer.” You can think you won, but the court can later order the money put back for the creditor to take.

The Note, Any Agreements You Signed

Along with the complaint, you’ll find the note, any agreements you signed, and an accounting of the payments you have and haven’t made. Look for an ”acceleration clause.” It lets the lender insist on payment of the full balance right away if you fall behind in payments. Then check whether the lender gave you the required notice of the default and a chance to make it up. Depending on the law and the language of the note, you may be able to challenge acceleration if it came without notice or following a small default that you corrected. Depending on the contract and the circumstances, a lender may have waived the terms of a default by continuing to accept late payments.

Get those documents in one place and make copies of everything. Keep copies of letters, emails and notes you make of phone conversations. If you signed a personal guarantee of the loan, it helps to have a copy of that too. The same goes for UCC filings with the state and any security agreement that went with the note.

Those documents also show the dates that matter: a Virginia suit on a written contract must be brought within five years after the claim accrues. Don’t take chances on an “assumed” start date. If you spot one that makes the complaint untimely, cite it in your answer. Clocks get complicated when there are installment payments, acceleration clauses, and partial payments in the picture.

As for other defenses, perhaps the lender breached the agreement (failed to fund as promised or changed the terms). It may also have failed to limit its losses after you defaulted. Another line of defense involves attacking an allegedly unconscionable term. Look closely for misrepresentations.

One defense that’s out of bounds in a business lending case in Virginia is a challenge over a high interest rate. It’s not a defense to a business loan of $5,000 or more. Also, don’t try to hide behind the federal Fair Debt Collection Practices Act (FDCPA). That law protects consumers, not commercial debtors.

If you signed on as a personal guarantor, the lender may go for you at the same time it pursues the business. Watch for your name on the court papers. They may look at personal real estate or bank accounts as a source to get what you owe them. If the note says the owners are jointly and severally liable, the lender can ask for the full amount from each owner. Once you pay up, turn to your fellow owners for what they owe you. A personal guarantee is a separate contract that survives if the business closes or files bankruptcy.

What happens after an answer is in depends on the court. The next steps will likely include written discovery, requests for documents and depositions. This is also when the lender’s attorney often makes a motion for summary judgment. Many courts also require both sides to agree to mediation before they get to trial.

Open talks toward a deal are an option at any stage of litigation. They may start before a lawyer mails the first papers or at the courthouse steps, preparing for trial. Settling up will not always wipe out the entire debt. But it could take a chunk off the balance and set a payment schedule. The lender’s openness to a deal depends on the evidence, the time and money it has, and your ability to pay. If the lender gives ground, be ready to sign mutual releases, agreement to the dismissal and a payment plan. Defending your case could turn out to be expensive. Then again, filing an answer and standing firm about where the law is on your side could get you the deal you want. You have to decide what’s better for you in the end.

The filing of a Chapter 11 bankruptcy can halt most collection efforts including lawsuits and levies. Subchapter V lets small businesses keep running while reworking debts. Even with these advantages, bankruptcy is not right for every case.

You may want to wait to talk to the plaintiff until you have a lawyer. Everything you say can be used against you, and an admission of liability could mean you have no defense left. The earlier a lawyer looks at your case, the more options there are.

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.