Defending Collection Lawsuits

By Douglas A. Crowder
Copyright © 2012.  All Rights Reserved

CERTIFICATION.  The author has been approved by the State Bar of California as an MCLE Multiple Activity Provider. (Provider Number 13474.)  The author certifies that this activity conforms to the standards for approved education activities prescribed by the rules and regulations of the State Bar of California governing minimum continuing legal education.  This activity qualifies for one (1) hour of self-study MCLE credit, which can be earned by reading the following article and answering the accompanying test questions.
EDITOR’S NOTE:  This article was written in 2012.  The dollar amount of exemptions has been increased since then.  You should check the current versions of the code sections cited before relying on them.

The purpose of this article is to give pointers to an attorney representing a client served with a collection lawsuit.



When contacted regarding a collection (or any) lawsuit, one of the first things to do should be to ask the client when, where, and how he or she was served.  This is needed to determine (a) the deadline for responding to the lawsuit and (b) whether the service was valid.


In California, a summons may be served by personal delivery [CCP Sec. 415.10], or by leaving a copy at the person’s office, [CCP Sec. 415.20(a)] or at the person’s dwelling house, usual place of abode, or usual place of business, with a person over age 18, and thereafter mailing a copy to the person to be served.  [CCP Sec. 415.20(b)].

A summons may also be served by publication, if the plaintiff files a motion with the court stating that the defendant “cannot with reasonable diligence be served in another manner,” then obtains a court order authorizing service by publication. [CCP Sec. 415.50] The court obtains jurisdiction over a defendant when the summons is served on him. [CCP Sec. 410.50]  Unless a summons is served, the court lacks jurisdiction to enter a judgment.  A judgment entered without valid service of process is void, and can, upon the proper motion, be vacated. [CCP Sec. 473(d)]


If the case is filed in federal court, you can most likely get a copy of all documents filed from the PACER system.  If it was filed in state court (which is more likely), you can get some information from the county superior court website.  In Orange County, you can get a copy of any document filed with the court.  In Los Angeles County (at the time of this writing) you can only get a list of the documents filed, not copies of the actual documents.  In any event, you can determine whether a default judgment was taken against the client, or if there are any court dates pending.



Technically, the Complaint is the first document filed with the court.  CCP 411.10 provides:  “A civil action is commenced by filing a complaint with the court.”  However, the Summons is usually on the top of the stack of documents served, so it is addressed first.  CCP 412.20 requires that it contains, among other things:

(1) The title of the court in which the action is pending.

(2) The names of the parties to the action.

(3) A direction that the defendant file with the court a written pleading in response to the complaint within 30 days after summons is served on him or her.

(4) A notice that, unless the defendant so responds, his or her default will be entered upon application by the plaintiff, and the plaintiff may apply to the court for the relief demanded in the complaint, which could result in garnishment of wages, taking of money or property, or other relief.


The Complaint, normally attached right below the summons, must have (1) A statement of the facts constituting the cause of action, in ordinary and concise language, and (2) A demand for judgment for the relief to which the pleader claims to be entitled. If the recovery of money or damages is demanded, the amount demanded shall be stated.  [CCP Sec. 425.10]


Normally, along with the summons and complaint is served a document called “Notice of Order to Show Cause re Failure to Comply with Trial Court Delay Reduction Act.”  Most defendants, when reading this, are alarmed because they think this means that they are being ordered to appear on a certain date.  However, this order is directed to the plaintiff, not to the defendant.  The plaintiff is required to get the lawsuit served within a certain period of time, and is ordered to appear only if the lawsuit is not served prior to that date.  Typically these orders to show cause go off calendar when the plaintiff has filed the proof of service.


Often, a “Notice of Case Management Conference” will be served with the complaint.  This will be a hearing both parties will need to attend.


Essentially, the options are to (a) ignore the lawsuit, (b) file a bankruptcy, (c) settle the lawsuit or (d) defend it.  The first three are beyond the scope of this article, so it will be assumed that the client has chosen to defend the suit.  This raises more options.


In a collection (or any) lawsuit, there are several degrees of representation the attorney can provide.

First, an individual client has the right to self-representation (called “in Pro Per” or “Pro Se”).  However, if the client is a corporation or other entity, it can only appear by an attorney.  A non-attorney owner of a corporation cannot represent the corporation (except in small claims court) as that would be the unauthorized practice of law.  [Caressa Camille, Inc. v. Alcoholic Beverage Control Appeals Bd. (2002) 99 Cal.App.4th 1094, 1101-1103]

Second, an individual can do his or her own court appearances, but have an attorney prepare the documents and provide advice on how to handle hearings.

Third, the defendant can hire an attorney to represent the client fully, and make all court appearances.


There are at least four ways an attorney can charge for assisting a client in a collection lawsuit.

First, on an hourly basis.  For example, $250 per hour for whatever time the attorney spends.

Second, on a flat fee basis.  For example, $2,500 to take the case through trial.

Third, on a contingency basis, based on the result obtained or a percentage of the savings.  The attorney might charge, for example, 25% of the amount saved for the client.  If, for example, the lawsuit demands $10,000, and the attorney negotiates a settlement of $4,000, that is a savings to the client of $6,000, making the attorney’s fee $1,500.

Fourth, if the client decides to be In Pro Per with attorney assistance, on a per-item basis.  For example, a charge of $300 for each document prepared for the client.


Following are some, but by no means all, of the possible defenses to a collection lawsuit.


This refers to the time in which a creditor must file a lawsuit, or be forever barred from suing. The limitation period varies from state to state. In California, the statute of limitation for written contracts (which include most collection cases) is four years. [CCP Sec. 337]

Creditors do, however, occasionally sue on time barred debts. If that is the case, then the plaintiff’s lawsuit should be dismissed at or before trial.


Sometimes creditors sue parties who are not legally liable for the debt. For example, the owner of an incorporated business may not be personally liable for a bill incurred by the business unless the owner signed a personal guarantee for the bill. Similarly, one spouse may not be liable for credit card charges and other debts incurred by the other spouse.

Also, if a credit card is issued to Maria, and she orders a second card for her son Joe, who is then listed jointly on all the billing statements, Joe may not be liable for the credit card charges that Maria incurred, unless he signed a personal guarantee for those debts.


If the lawsuit actually goes to trial, the plaintiff has the burden of proof, and cannot get a judgment without adequate admissible evidence to prove the debt is owed. This will require at least one witness to testify under oath and be subject to cross-examination.

Generally, a witness can only testify about matters of his or her personal knowledge – what the witness actually observed – rather than what the witness heard another person say, which is called “hearsay.”

An exception to the hearsay rule allows business records to be admitted into evidence in certain circumstances Under California Evidence Code Sec. 1271, the following criteria must be met in order for a business record to be admitted:

(a)The writing was made in the regular course of a business.

(b)The writing was made at or near the time of the act, condition, or event.

(c)The custodian or other qualified witness testifies to its identity and the mode of its preparation; and

(d)The sources of information and method and time of preparation were such as to indicate its trustworthiness.

In some cases, a creditor may have all the billing statements, but may not have any witness who can testify as to how and when those records were made. In other cases, a creditor may not have any documentation at all to verify the debt. In either of these circumstances, the creditor should lose if the matter goes to trial.


(If you have been hired to do so.)  This is an optional step, but one I recommend.  Call the plaintiff’s attorney, introduce yourself, discuss settlement possibilities, and ask for an extension of time in which to answer.

You may find out during this step that the lawsuit can be settled in a range that your client is able and willing to pay.


If you have a good defense to the lawsuit, you may want to file a Demurrer, Motion to Quash Service, or another motion before filing an Answer.  Those are beyond the scope of this article.  If you have decided to file an Answer, do the following.


Technically called the “First Appearance Fee,” this is the fee the defendant must pay the court in order to defend the lawsuit.

This can be obtained from the superior court website of the county in which the suit was filed.  The amount of the filing fee depends on the amount sued for.  At the time of this writing, if the amount is under $10,000, the filing fee is $225.  If the amount is over $10,000, but less than $25,000, the fee is $370.  If the amount is over $25,000, the fee is $395.  Each defendant who appears must pay a separate filing fee.  For example, if both spouses are named as defendants, then each must pay a filing fee.

If your client is in Pro Per (or being represented on a Pro Bono basis) the client may be able to get the filing fee waived. The client will need to complete Judicial Council Form FW-001 and take it to the court.


Once you have determined that you are going to defend the lawsuit, the next step is to prepare the answer.  You can use the General Denial which is California Judicial Council Form PLD-050, or prepare your own answer, including whatever affirmative defenses you deem appropriate.


The Answer, and any subsequent document, must have attached to it a “Proof of Service,” showing how a copy of the document was delivered to the opposing attorney.  It can be done by personal delivery to his / her office, but the most common way is by mail.  The mailing can be done by anyone who is over age 18, and not a party to the lawsuit.  Whoever does the mailing must sign the “Proof of Service,” which gets filed with the court, either attached to the Answer, or as a separate document filed concurrently with the Answer.

Under CCP Sec. 1013a, the required information in a Proof of Service includes:

  1. The exact title of the document mailed.
  2. The name and residence or business address of the person making the service
  3. A statement that he or she is a resident of, or employed in, the county where the mailing, and is over the age of 18 years and not a party to the cause.
  4. The date and place of deposit in the mail
  5. The name and address of the person served as shown on the envelope,
  6. A statement that the envelope was sealed and deposited in the mail with the postage thereon fully prepaid.

There are at least two separate Judicial Council forms you can use for the Proof of Service — POS-030 and POS-040.   Or you can create your own form.

If your county superior court allows electronic filing, that will be more efficient.  Otherwise, you can hire a messenger service to deliver the documents to the court, or mail the documents.


In California state courts, usually the first hearing that the defendant must attend is called the Case Management Conference, which the court must hold within six months after the complaint is filed.  California Rules of Court, Rule 3.721.

The purpose of the Case Management Conference is for the court to find out from the parties when the case will be ready for trial, and if there are any motions that either party intends to file that could affect the trial date, or other matters that may be important.


Per California Rules of Court, Rule 3.724, no later than 30 days prior to the case management conference, the parties must meet and confer, in person or by telephone, to consider various issues, including (but not limited to):

(1)Resolving any discovery disputes and setting a discovery schedule.  (“Discovery” will be defined and described in the next chapter.)

(2)Identifying and, if possible, informally resolving any anticipated motions;

(3)Identifying the facts and issues in the case that are uncontested and may be the subject of stipulation;

(4)Identifying the facts and issues in the case that are in dispute;

(5)Determining whether the issues in the case can be narrowed by eliminating any claims or defenses by means of a motion or otherwise;

(6)Determining whether settlement is possible;

(7)Identifying the dates on which all parties and their attorneys are available or not available for trial, including the reasons for unavailability;

Normally, the plaintiff’s attorney will initiate the “meet and confer” discussion.  If the plaintiff does not do so, the defense attorney should initiate the contact.  The “meet and confer” discussion is seldom an in-person meeting, but is usually a phone call, or sometimes just a letter.


At least 15 days prior to the hearing, each party is required to file with the court, and serve on the other party, a Case Management Conference Statement.  The Judicial Council Form for this is CM-110 and can be obtained at


Usually, one of three things happens at the Case Management Conference:

  1. The court sets the case for trial.
  2. The court continues the matter for a future Case Management Conference or
  3. The court orders the case to mediation, with a date by which mediation must be completed, and an order to return for a further case management conference if the case does not settle.


In mediation the two parties meet with a Mediator, a neutral party whose purpose is to help the parties reach a settlement.  [See CCP Sec. 1775.1]  The mediator has no authority to decide which party is in the right, nor how much either party should pay, or to order either party to do anything.


If you are the defendant, it is likely that you will receive some DISCOVERY from the plaintiff.  The purpose of discovery is to find out what information, evidence or arguments the other side has.   The most common types of discovery are:

  1. INTERROGATORIES — written questions that you must respond to in writing.
  2. REQUEST FOR PRODUCTION OF DOCUMENTS – a request that you provide copies of various types of documents.
  3. REQUESTS FOR ADMISSION – requests that you admit or deny various statements.

It is likely that you will receive one envelope from the plaintiff’s attorney that includes each of these.

You must respond to these within a certain period of time – usually about 30 days – and you must state, under penalty of perjury, that your responses are true and correct to the best of your knowledge.

Some pointers when responding to discovery:

  1. Keep your responses simple and to the point. Don’t volunteer information that isn’t asked for.
  2. Begin your responses with an opening statement to the effect that your investigation into the facts is continuing and that you reserve the right to amend or supplement the discovery responses when further information is discovered.


Each party has the right to PROPOUND (meaning send or put forward) discovery to the other.  If you are the defendant, you have the right to send similar discovery requests to the plaintiff.

The easiest type of discovery for you to prepare is FORM INTERROGATORIES.  This document is a Judicial Council form in which all you need to do is check the questions that you want to ask.

There is also a Judicial Council form for REQUESTS FOR ADMISSION, to which you can attach the points you want the plaintiff to admit or deny.



Often, when a case is called for trial, the judge will make one last attempt to have the parties settle it before the trial starts.  Since each party has the right to go to trial if the party so chooses, a judge cannot force the parties to settle.  The judge can encourage the parties to settle, however.  In some cases, a judge may indicate to the parties how he / she is likely to rule if the case were to go to trial, and indicate what he / she thinks a fair settlement would be based on that.

Many cases do settle at this stage.  If not, then the trial starts.


Briefly, the procedure is as follows:

  1. The judge calls the case.
  2. The plaintiff’s attorney gives an opening statement. (Note: in simple cases, the plaintiff’s attorney will often waive an opening statement).
  3. Defendant’s attorney gives an opening statement.
  4. The plaintiff calls its first witness, and through questioning, obtains testimony.
  5. Defendant’s attorney can cross-examine the witness.
  6. The plaintiff continues calling witnesses until it has presented all the evidence it wants to, and then rests its case.
  7. Defendant can call witnesses or present his or her own testimony.
  8. After defendant has presented its testimony and evidence, the plaintiff may call rebuttal witnesses.
  9. After both sides have presented their evidence, each side can make a closing argument.
  10. The judge makes a decision – either right then, or indicates that he will make a written decision in a certain number of days. (If it is a jury trial, then the judge instructs the jury, and you wait for the verdict.)


When a case has gone to trial, the judge can normally only do one of two things:

  1. Grant a judgment to the plaintiff for whatever amount the judge determines that the plaintiff is entitled to.
  2. Deny a judgment to the plaintiff, and dismiss the lawsuit.

If you win, it’s time to celebrate.  If you lose, it’s not the end of the world.  The plaintiff still has to collect, which is dealt with in other chapters.


The foregoing has given a brief overview of what to expect during the course of the lawsuit.

To receive 1 hour of MCLE Credit, answer the test questions below, then hit Submit. Correct answers and a CLE certificate will be sent to you via email.

Test for Defending Collection Lawsuits
1. A valid method of service is to leave the summons and complaint in a conspicuous place in the shrubbery in front of the defendant’s house. *
2. If a defendant cannot be personally served, a summons can be served by leaving a copy at the defendant’s usual place of abode with a person over age 18, and thereafter mailing a copy to the person to be served. *
3. A plaintiff can always opt for service by publication if the plaintiff does not want to effect personal service on a defendant. *
4. A defendant must be served with a summons in order for the court to exercise jurisdiction over the defendant. *
5. It is a good idea to check the status of the case on the superior court’s online docket to determine if a default judgment has been taken, or if there are any court dates pending. *
6. A Summons states when the defendant must file a written response with the court in order to avoid a default judgment. *
7. If a complaint asks for money, it must state the amount requested. *
8. A corporation has the right to defend itself in a lawsuit without an attorney. *
9. In California, the statute of limitation for written contracts (which include most collection cases) is three years. *
10. Generally, a witness can testify about matters of his or her personal knowledge, as well as what he was told by his acquaintances. *
11. The business records exception to the hearsay rule allows business records to be admitted into evidence if the plaintiff is a bank or other big business. *
12. The “first appearance fee” must be paid by each defendant who appears and defends the lawsuit, unless a fee waiver is obtained. *
13. When the defendant files his answer in pro per, he can serve a copy of the answer on the plaintiff, and sign the proof of service. *
14. The court must hold a Case Management Conference within 6 months after the complaint is filed. *
15. The parties, or their attorneys if they are represented, must meet and confer no later than 30 days prior to the case management conference. *
16. At least 15 days prior to the hearing, each party is required to file with the court, and serve on the other party, a Case Management Conference Statement. *
17. The most likely results of a Case Management Conference are: 1. The court sets the case for trial. 2. The court continues the matter for a future Case Management Conference or 3. The court orders the case to mediation *
18. The court has the authority to order the parties to meet with a mediator, who can issue a judgment for either party. *
19. Interrogatories are verbal questions to which the defendant must respond verbally. *
20. The defendant has the right to serve discovery requests on the plaintiff. *

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