Sued by Mayfair? 7 Steps to Take in the First 20 Days

If you have been sued by Mayfair, you need to take action, and fast. In the first days after being served, you need to take certain steps to protect yourself, your business and your future. Once service of process occurs, a short window opens within which you are able to reply and answer the creditor’s allegations. The good news is that there are seven important steps you can take in the first 20 days after the creditor has served you with the complaint and summons.

1. Save every paper

It is important to keep a copy of every paper you receive from your creditors. This includes every letter, default notice, demand for payment, summons, complaint and all correspondence between you and them. Make copies of any letters or documents you send to the creditor in return. Keep these papers in a safe place that is easy for you to find. Your response deadline and other critical information about the lawsuit are found within those documents. If you were served by mail, save the postmarked envelope. Also, make a note of the name of the person or process server who served you. This information may be useful if there is a dispute later about the details surrounding the service.

2. Identify the court

Figure out which court has issued the summons and complaint by looking at the first page. Knowing who is suing you is obviously important. When you get served with the lawsuit papers, make a list of every defendant named (this might include your business and you personally, for example, or other companies you own). Find out what the case or index number is, and look on the papers for whether it’s in state or federal court - there can be big differences in rules even between the two in the same state.

3. Pin down the deadline

Your court papers probably mention the deadline to respond, but don’t just assume it’s 30 days from the date you opened the envelope. The timing can vary from court to court, and even in the same court based on how you were served. In New York, for example, it could be as soon as 20 days after personal delivery to you in state. If you are served with a suit in New York, you may get the papers in a number of different ways, including by having them left with someone else, or delivered to a state official. In some of these cases, you have 30 days after service is complete to respond. Don’t let calls or settlement talks with the lender make you think you don’t have to meet the court deadline.

4. Bring in a lawyer

Call an attorney as soon as you know that Mayfair has sued you. If you decide to defend your lawsuit in New York, you’re almost certainly going to need an attorney. The general rule in New York is that a company that’s sued there has to be represented by a lawyer in court. This is not the same as hiring someone to negotiate with the creditor before suit, or after, outside of court. Talk to a few lawyers and find out whether there’s someone who’s able to take the case, and affordable to you. You might think you were served improperly, or you want to deny the debt altogether, but you’re going to need to make those objections quickly, and through the court in most cases. Some objections can be lost if they’re not raised properly.

5. Check their numbers

Read the lender’s complaint carefully. Gather up your copy of your contract with them, any amendments or guarantees, and your payment records and bank statements for the period covered. Compare those numbers with what their court papers claim is due. Make notes comparing the amount they say was advanced against the amounts you paid in and the fees charged to your account. The lender’s number is not automatically right.

Did your revenue change during the time you were dealing with the lender? If so, did you ask for an adjustment, and what was the response? A company’s decision to call an agreement an advance or a loan doesn’t make it so. In New York, corporations cannot claim the debt is too high under usury laws. The exception is for criminal usury, or knowingly charging over 25% a year on a loan. If you’re thinking about raising that defense, talk to a lawyer about it first.

6. Watch your bank accounts

Get the actual document that stopped the bank and find out what’s behind it - a UCC filing, a notice, a court restraint are all different things, and all get cleared up in different ways. Once there is a judgment, you could see a restraining notice at your bank or accounts that can freeze up to twice what you owe on the judgment. Always talk to a lawyer before you move or transfer assets.

If customers get a payment notice, look closely at who is sending it, what kind of “assignment” they claim, and when it happened. Remember that their letter does not by itself prove that every payment demand they make is due or accurate.

7. Weigh settlement against defense

If you’re deciding whether to settle, any offer you get should be compared with the defense you want to make, how much cash you have on hand, what else you owe and what your lawyer has to say. Keep in mind that a reduced settlement payment can still leave a balance due. It’s critical to get the offer you take in writing, too. Before you sign, check the written deal to make sure it names exactly which companies and owners are covered by it, whether your personal guarantee is released, how the lawsuit ends and what happens if you miss a payment.

If a judgment has already been entered against you, investigate the judgment quickly and carefully. If you defaulted without answering their court papers, bring in a lawyer to ask for a judge to vacate or open the judgment. Usually there is a one year time limit in New York from notice of entry on a judgment for that. The law in New York says a confession of judgment can only be filed in a county where the business resides, which means where it has a place of business. It’s always best to have a lawyer check that.

A deal with one funder does not settle everything. That means it’s really important to keep separate records for each advance you took, and for each settlement offer you get, and each lawsuit filed against you.

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.