Sued by Aj Equity Group LLC? 7 Steps to Take in the First 20 Days

If a summons and complaint from AJ Equity Group LLC just landed on your desk, the clock is already ticking on your response. The correct and most constructive thing to do is to take immediate action. If you fail to respond within the allotted time, AJ Equity Group could be granted a default judgment. What you do in the first 20 days, and the words you use in your response, can make or break your case.

1. Keep every page

A collection demand letter is not a lawsuit. A summons and complaint are a lawsuit. A judgment is another stage. If you get an email from your bank or processor that notifies you of a legal action, save it. You must keep every page of every piece of documentation you receive from AJ Equity Group and from the court. Save everything, including the envelope it came in, if possible. Write down exactly when you received the summons, complaint and notice from the plaintiff, as well as the actual document numbers and the steps you took in response. These notes may help you in your defense.

2. Find the court

Identify the court in which the case is pending, as well as the plaintiff and the attorney of record. Write down the index number of the court case, and check the actual documents to see what entity the lawsuit names: the corporation, the owner, another company altogether. An out-of-state business can still be sued in New York.

3. Work out your deadline

Look at the summons, complaint and notice from the plaintiff to determine when you must reply. If you are being sued in New York, you have just 20 days to respond to a lawsuit if you were personally handed the summons and complaint inside New York. If it was served by leaving it with another person or by being served by the Secretary of State, you have 30 days after service is complete. Do not assume you have 30 days. If you get the summons but not the complaint, you are allowed to demand it from the plaintiff’s attorney, and the plaintiff then has 20 days from your demand to serve the complaint on you. The court deadline will not stop simply because you call the funder or try to arrange financing, or you start negotiating a settlement. Certain objections, like bad service, can be lost if you do not raise them in a timely and proper manner. Act quickly.

4. Get a lawyer on record

To protect yourself and your business, the first step is to have a lawyer enter an appearance on your behalf, which will preserve your right to appear and contest the lawsuit. In New York, a corporation, as a distinct legal entity, generally must appear through a lawyer, and not through a non-lawyer officer or the owner of the corporation. A lawyer appears on your behalf by serving an answer, a notice of appearance, or a motion. Do not be confused into believing that your settlement negotiator is somehow also a lawyer who has filed an appearance or answered. It is not the same thing.

5. Pull your records together

Compile your records, documents and notes, and be sure to bring these to your attorney. Pull your bank statements, your communications with the funder or its representative, your agreement and any other correspondence. Look at what you signed, what you may have promised to do or not do, and when any payments were made.

Compare the funder’s claimed balance with the amount you were advanced, the amounts collected from sales, any returned debits, the fees charged by the funder, and any other item that should be on the account. Remember that the funder’s claim is not proof. Did revenue drop? Did you ask for a reconciliation? What did the funder say and do then? If the funder is suing you personally, find the personal guarantee and what supposedly triggered it. A mere word such as “advance” or “loan” does not decide anything.

6. Watch your bank accounts

Don’t freeze up if your account is frozen, if the processor is holding your payment, or if someone is demanding payment from your customers. First, get the actual document and determine if the funder has actually filed a UCC lien against you, or written your customers directly. Or did it send you a letter demanding payment? Each circumstance is different. Then consider how to respond, but resist the urge to pull your account or direct your customers elsewhere, without first getting advice from a professional.

7. Settle, fight, or both

You may be able to settle. You may prefer to fight, or perhaps fight while talking. You should weigh any offer against your defense, your cash flow and your other debts. Any deal looks good at first, but a low payment can still leave a big balance hanging over you. If you do decide to settle, have a lawyer review the proposed settlement agreement and explain it to you, just like any other contract. Do not agree to a plan you cannot meet. Make sure you understand what will happen if you miss a payment or do not keep your side of the bargain.

A written deal should say the total you will owe, and credit for money already taken. Be clear who is getting released (like personal guarantors). How do lawsuits end, and what court papers or filings will be made? Be sure you know what will happen with any bank restraints and UCC filings that have been made.

If You Already Missed the Deadline

If you already missed the deadline for answering or responding to a New York lawsuit, there are still things you can try. A New York court may accept a late answer only if a reasonable excuse is given. You can also try to reverse a default judgment by making a motion to vacate it within one year of the date of notice of entry. If the funder used arbitration instead of suing you, you have 90 days from when the award is delivered to ask the court to vacate (cancel) or modify it. If you file for bankruptcy, any pending lawsuits about debts you owe from before you filed will be put on hold, or “stayed.”

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.