C2C Resources Collection Lawsuit: 6 Rights You Still Have

If you’re served with a lawsuit by C2C Resources, LLC, it’s not the end of the road. You still have options, and if you move quickly you can stay in control of your options: answer the lawsuit and make C2C Resources prove what they say you owe; know which laws apply and how to raise your defenses; settle on terms you can keep, instead of taking it in the neck and paying more than you need to; and stop the lawsuit by protecting your assets.

1. Answer the lawsuit

You have a limited amount of time to respond to the lawsuit, and if you miss that deadline you could lose by default. To give yourself the best chance of successfully beating the lawsuit, the first thing you should do is answer it with a formal, legal response filed in court. Default judgment can be dangerous because it can include interest, extra collection costs, attorneys’ fees and even allow garnishment. Answering a debt collection case does not automatically admit the debt, and the creditor must still prove the debt is valid.

Federal courts usually require an answer within 21 days after you’re served, but state courts set their own rules. In Georgia magistrate courts, for example, a defendant has 30 days after service of a claim.

2. Know which rules apply

C2C Resources is based in Atlanta. It’s also a business-to-business collection agency, so the debts it collects are usually related to goods or services sold to a business. Because of that, the Federal Fair Debt Collection Practices Act doesn’t usually apply, because it only covers “consumer” debts, defined as those related to personal, family or household purchases. C2C works an account for about 120 to 180 days, according to its website, before sending the case to a collection lawyer for possible legal action, and the lawyer does the filing.

3. Bring in a lawyer

In federal court, corporations must be represented by lawyers: they can’t just send someone from management to argue the case themselves. Even if a lawyer isn’t required, though, you have the right to have a lawyer if you want one.

4. Raise your defenses

The answer is where you raise defenses in a lawsuit, and time limitations are one of the most important. UCC Article 2, which governs the sale of goods, usually limits a creditor to 4 years to sue. And if the contract sets its own limitation, the limit can be shortened to 1 year but cannot be shortened beyond that.

If the debt is related to a cash advance for your business, you can argue it was a usurious loan, but courts usually look at three factors to decide if a debt is a loan, including whether a reconciliation provision was included in the contract. A merchant cash advance is not automatically a loan, and usury is only illegal on loans.

The other factors courts look at are whether the contract has a finite term or sets a specific time period to repay, and whether you would be in default if you filed bankruptcy. In Diesel Funding v Build Retail, the court ruled that the contract was a cash advance and not a loan, because payments were capped at a percentage of daily receivables and could be adjusted as sales changed. It was not finite, and bankruptcy was not a default. The court would not rule on whether the reconciliation procedure was illusory because the business owner had never used it.

5. Settle on terms you can keep

If you don’t think you can win or want to make a business decision that it’s better to settle and move on, you can settle your debt collection lawsuit. Just make sure the settlement is spelled out in writing and is clear about what your obligations are. If you have problems later, a stipulation of settlement is considered a contract and is enforced under the usual contract laws. In the same Diesel Funding case, the business owner and cash advance funder agreed on a $1,150,740.12 payoff. But the funder won a $1,476,330.68 judgment because the owner had made none of the promised payments. The settlement also allowed the funder to enter judgment “without further application to the court,” imposing fees equal to 20% of the outstanding balance, plus costs and interest.

6. Protect yourself and stop the case

If you run a business through an LLC, you ordinarily aren’t personally liable for the LLC’s debts unless you personally guarantee them. Check the contract - if you did not, the creditor can reach the LLC’s assets but not your house or savings.

Missed the deadline to answer? A Georgia magistrate court defendant can reopen a case within 15 days by filing an answer and paying costs. In federal court you can also file a motion to reopen a judgment for mistake, excusable neglect, newly discovered evidence, or fraud, but only within a reasonable time and no more than a year after the judgment.

Alternately, if you file any type of bankruptcy you trigger an automatic stay that protects against most kinds of collection efforts. Under Subchapter V of Chapter 11, a smaller company can file bankruptcy with up to $3,424,000 of total secured and unsecured debt. You should talk to an attorney and work with one to file.

Waiting and ignoring it only limits your options. Giving in and paying on C2C Resources’ terms may not end up being your best move. Responding on your terms with a lawyer to guide you will not only help you protect your assets, it may help you make a business decision that’s right for your future.

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.