Served by Sbfs: Which Documents to Pull Before You Respond

If you have been sued or “served” with the complaint in court, you are now a defendant. The first thing you should do is review the court summons you received. This court issued document requires that you respond or answer to the complaint in a certain number of days, and if you miss the deadline, then you could suffer a default judgment. Therefore, you need to take note of the deadline and either promptly respond on your own or get help from an attorney ASAP. With lawsuits moving so quickly nowadays, you should start collecting the following documents immediately in order to quickly evaluate your defenses:

• (1) a copy of the agreement,
• (2) a copy of any guarantees or confessions of judgment,
• (3) an account statement, and
• (4) any correspondence between you and the funder or debt collector regarding the advance, including the terms of the deal.

Although there may be many different names and LLC’s that are listed on your complaint, the parties generally work together. “SBFS” stands for “Small Business Financial Solutions, LLC”, which a bankruptcy plan tied to Rapid Finance. The name of the corporation, individual, or limited liability company listed on your paperwork for the agreement and the summons may differ from the name of the business or individual that holds your loan or is suing you. Further, the third party that sues you may not even have legal authority to enforce the agreement.

The Deadline to Answer

The length of time you have depends on the state where the lawsuit was filed and whether or not you were personally served or served by mail. For example, under some state laws, like those applicable in New York, the deadline to answer ranges from 20 days (served in-person) to 30 days (served by mail). In New York, responding before the deadline means you have to serve an answer, a notice of appearance, or a motion that extends your time to answer.

The day the court papers were served may also impact how many days you have to file your answer or response. Whether the papers came in the mail or in person (called “personal service”), by certified mail or regular mail, or by hand or posting, and whether they were signed by you or just left for you, may impact the calculation of the exact date the papers must be answered or responded to. Also take note of the date the server recorded or claimed service. If you were served by mail, then you should have the envelope.

When you receive the summons in a federal court action, you must respond to the complaint within 21 days. The 21 day deadline is measured from the date you were “served” with the complaint and summons. Although you may try to contact the funder’s attorney to stall and work out a payment arrangement, the creditor could still get a judgment against you when the deadline to answer arrives.

In Maryland, a plaintiff can file a lawsuit against a borrower in the District Court if the amount of the debt is $30,000 or less. To answer, you must file what is called a notice of intention to defend. The notice must be filed within 15 days from the date the summons was served. If you do not file the notice, the other side may obtain a default judgment. If the amount is more than $30,000, then the action is brought in the Maryland Circuit Court for that jurisdiction. In Circuit Court, the answer deadline is 30 days if the defendant is served inside Maryland, or 60 days if it is served outside Maryland but within the United States.

There is no harm in asking for an extension from the plaintiff’s attorney. To do so, contact the other side’s lawyer and ask for an extension of time to answer. If the creditor attorney agrees, you should get it in writing or have it filed in the court. You can file an extension request to answer to the court to ask for an extension of time. The reason for the request must be justifiable to the judge, or the extension may not be granted. If a settlement company or broker is helping to negotiate a settlement, and the creditor is still suing you, then make sure a licensed attorney has agreed to appear in the lawsuit or defend you if settlement talks fail. Negotiating and defending a case are two separate jobs.

CPLR 3012(d) allows New York courts to extend the time to answer or accept an untimely answer when a defendant offers a “reasonable excuse.” CPLR 2004 allows the court to extend time or accept an untimely response if the party making the request shows “good cause.” Ask for this before or after the deadline.

The court will grant the default judgment application if you don’t answer within the required time and if the plaintiff files the appropriate paperwork for the default with the court. In New York, when the amount of money due from the defendant is a fixed amount, the plaintiff may apply to the clerk to enter judgment against the defendant for the amount demanded plus costs and interest. The clerk may enter judgment only if the application is made within one year from the default. In New York State, if the creditor waits for more than one year after the default, then you can get the court to dismiss the complaint as abandoned unless the plaintiff shows to the court there is sufficient cause to go forward. If you do respond in federal court, you must present defenses of lack of personal jurisdiction, improper venue, or insufficiency of service either in your initial motion or your initial response. Otherwise you waive these defenses.

Payment Records

Your bank statements and payment records will provide you with the documents you need to confirm the amount financed. First, pull your bank statements to see whether or not you were paid for the full amount of the legal agreement. In addition, you should keep track of all payments that you made under the funding agreement. If you see amounts that don’t seem familiar, pull your payment records from that time period and cross-check with your online account statement history with funder or bank.

You should check to make sure your computerized records line up with your bank and funder’s records. If the amounts or the number of payments do not match the amounts or numbers listed on your records, then there may be some irregularities that you can raise in your defense. Make sure that any late fees and default penalties assessed are fair and accurate.

Gather all of your bank statements for the entire loan period and lay out all of the dates of payments, payment amounts, late fees, interest, and balance. There should be proper accounting for payments made, canceled payments, returned debits, and interest. If you see any returned or denied payments on your bank statements, highlight those items. You will need copies of bank statements, correspondence with funder regarding bounced payments, and a spreadsheet or calendar documenting attempts to get the matter resolved with funder.

As for the guarantee, if the funder takes the guarantor to court, then the guarantor becomes a co-defendant with the other companies listed in the lawsuit. It is important to first take note of who exactly signed the personal guarantee. The guaranty that you sign is likely a contract separate from the agreement. You need to look at the guaranty and the agreement and put them together to understand the nature of your obligation. Read it to see what conduct supposedly triggered it; a guaranty of performance is different than an unconditional payment guaranty. The business and the owner have different legal positions.

Admission or Denial of Specific Allegations

An answer to a complaint is an admission or denial of specific allegations in a complaint or petition. You should address each allegation in the complaint that is not disputed and respond with admissions. Each allegation that is disputed should be “denied.” Finally, you can include any “affirmative defenses,” which essentially are legal theories that challenge the complaint or excuse the debt. While you may file the answer yourself, there could be defenses you are not aware of. If you are sued in Maryland, in most cases you need a Maryland lawyer if you are defending a business in Circuit Court. However, in District Court, an officer may appear on small claims.

A good way to document disagreements over the amount due, ownership of the debts and agreement, or your inability to pay the funder is through email correspondence. For example, if you are trying to work out payments with the funder and they do not address your requests to reconcile the account, you should document this by keeping copies of all correspondence and requests. Further, if you are disagreeing about the balance due, then you should make sure you keep every email where you have asked for an accounting of the balance due. Negotiating with the debt collectors or funder is one thing, but it is another thing to get the promises in writing.

Check first if the agreement states that Maryland law applies. If so, then any commercial loan for more than $15,000 and not secured by residential property can have any interest rate. In the case of Small Business Financial Solutions, LLC v. Cavalry, LLC, a Maryland federal court dismissed a borrower’s usury claims regarding its $127,000 loan. In Maryland, the time limit for filing suit on a contract debt is generally 3 years from when the right to sue came into being. But there’s a contract “under seal”, which lasts for a full 12 years.

Finally, for a UCC filing, make a written demand after nothing remains owed. The secured party must file or send a termination statement within 20 days.

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.