6 Mistakes Business Owners Make When 1 West Capital LLC Sues

Getting served with a lawsuit from 1 West Capital LLC is stressful. Depending on your situation, you may have as little as 20 days to respond before the lender can ask for a default judgment, which is like losing without a fight. Plenty of people react to a lawsuit by tossing it aside, forgetting to check the response deadline, or blindly trusting that the balance is correct. People who screw up a lawsuit from 1 West Capital are usually making at least one of the six mistakes below.

1. Ignoring the papers

This is probably the worst mistake that could happen. Maybe it wasn’t clear that the legal papers were a lawsuit from a lender, or maybe it was obvious, but the thought was to just ignore it. Sometimes people ignore the lawsuit because they’re in denial that it really happened. It’s common to think that ignoring a lawsuit will make it disappear. Reading them matters, because the court papers will list important information like the name and address of the lender who’s suing, the name of the court filing the lawsuit, and the amount of money owed.

2. Guessing the deadline

Response deadlines depend on the court and on how you were served. They can run as short as 20 days if someone hands you the papers in New York, or 30 days if you were served another way there. Once a lawsuit’s filed, calling the lender doesn’t automatically extend the court deadline. Keeping in touch with the lender or servicer is good, but it’s not the same thing as actually filing an Answer to the lawsuit. In California, for example, once a default happens, the court may refuse the Answer and decide the case without you.

3. Not checking who is suing

Not figuring out who really is suing will get in the way of successfully handling the lawsuit. You need to make sure you’re dealing with the right company, but that’s not necessarily the same as dealing with whoever last sent the collection notices. Just because a law firm signed the lawsuit doesn’t mean that they are the actual entity suing you. The original company, 1 West Capital, filed for bankruptcy in July 2018. The business is now run by a liquidating trustee, with a portfolio of over $275 million in advances. Part of the role of liquidating trustee is to pursue legal claims. It can take a little digging to get this information.

4. Trusting their balance

A lot of people who look at the debt from 1 West Capital assume that the balance on the papers is correct. The problem with doing this is that lawsuits come from the lender, not from a neutral third party. When it comes to calculating the balance, the lender might not have added or deducted the right things to get the right amount. It’s important to review the balance using an accounting of everything that was actually paid to 1 West Capital to see what the balance really is.

When reviewing the balance, keep in mind that interest rates over 25% can be considered usury in New York, and it could be criminal usury. The borrower would need to raise a defense of usury in a response to the lawsuit. In 2021, New York’s highest court ruled that loans in excess of the criminal usury cap of 25% were void. Calling a loan an “advance” doesn’t decide if it’s really a loan.

5. Panicking over judgments

A lot of people who call an attorney for a consultation are convinced that the judgment is final and that the lender will come after their property. This can make people act without thinking because they’re afraid of what could happen. The first thing to do is to get a copy of the court record. A lawyer will need to review the judgment. An attorney might find that there are things that can be done, or a lawyer might say there’s nothing to be done to help. When you find out there is a judgment, ask your lawyer before moving bank accounts or any property around. Sometimes moving things can cause bigger problems and make things harder.

Where a judgment was filed also matters: since 2019, a confession of judgment can only be filed in the debtor’s home county in New York. This may make it harder for lenders like 1 West Capital to pursue borrowers who live elsewhere. When your account is frozen or you get a notice from your bank about it, get the original document for your records, because an actual UCC filing, notice, or bank restraint is different than an informal letter. Just because a lender demands something doesn’t mean their demand is valid.

6. Rushing a settlement

Many people expect to pay something, and they want to get a deal done to make the problem disappear. Without seeing the court papers or reviewing any proof from the lender, and not having a legal strategy, it’s hard to know what’s a good settlement and what isn’t. Get the settlement in writing before agreeing to anything. The payment plan should be clear about the total to be paid, how many payments there are, which owners or entities are settling, whether personal guarantees are released, how the case will end, and what happens if a payment is missed.

Having someone negotiating to settle the balance isn’t the same thing as having a lawyer respond to the complaint. Make sure the attorney has actually filed an appearance. A deal with 1 West Capital may not help for other companies who advanced money.

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.