Facing a lawsuit for debt? Here's how to avoid going to court

New Mexico courts are launching a program statewide in September that uses technology to help people more quickly resolve lawsuits over consumer debt and avoid going to court.

“It’s called online dispute resolution (ODR),” said Barry Massey, Public Information Officer for the New Mexico Administrative Office of the Courts. “We think it is faster, cheaper and a more convenient alternative to the traditional in-court hearings or trials.”

The type of lawsuits eligible would include a hospital suing for unpaid medical bills or a bank seeking payment in court for a credit card debt, he said.

“There were about 31,000 of these cases filed statewide in a 12-month period from April 2018 to April 2019, in district and magistrate courts," he said.

In New Mexico, a plaintiff, the person pursuing a case, files in magistrate court if it is a civil case involving less than $10,000, and in district court, if it involves more, he explained.

“It all depends on the amount of debt in these cases that someone is trying to collect,” he said.

The process

The two parties to the suit negotiate through the system using their own email, but not like a casual exchanges of emails, more like a Turbo Tax form, Massey said.

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“It will give you a series of questions and you fill in blanks,” he said. “You can do it on your smart phone or your laptop, your i-Pad, whatever. Any place you have internet access, you could use this system any time of the day, 24/7. There is great flexibility for the parties.

“The person getting sued could do it at 10 p.m. after work and putting their kids to bed. The attorneys representing (the plaintiff) could handle it during their regular work hours. You don’t have to do it at the same time, there is no face-to-face meeting. The defendant doesn’t have to sit across the table from someone like an attorney and feel intimidated.”

Judge’s perspective

Providing a way for two parties in a debt case potentially to resolve the issue without going to court carries many advantages, said Chief Judge James M. Hudson, Division VI in the 5th Judicial District, which includes the counties of Lea, Eddy and Chaves, and 11 judicial divisions.

“From the perspective of the 5th Judicial District, one thing to keep in mind is just how big we are,” he said Monday. “With Chaves, Eddy and Lea County, the area is over 14,700 square miles, the equivalent of Connecticut and Massachusetts. You’re dealing with a tremendously big area and you are dealing with the kind of case that typically involves self-represented litigants.

“Providing a way for them to try to get something resolved without going to court, I think, can be potentially a great benefit to everyone, to them, to the people bringing the lawsuits and also the courts. We are getting things resolved quickly and in a way that then allows the courts to address other matters that are pending in front of them."

“I think this could be a really great tool as part of the judiciary’s effort to advance judicial excellence,” he said.

Looking at a one-year period from April 2018 to 2019, more than 5,200 cases of the eligible type were filed in the 5th Judicial District, he said, adding that’s nearly 20 cases per day.

“On an average in the 5th judicial district, each judge probably will open and close about 1,400 cases per year,” Hudson said.” You are trying to deal with that, but in a way that helps the people too. If we can do that, then we are doing our job better.”

Chief Judge Angie Schneider in the 12th Judicial District that covers the counties of Lincoln and Otero stressed that the program is optional and no one would be denied their right to appear before a judge.

But with time and public exposure, she hopes the ODR develops into a robust program that frees up the time of judges to more effectively discharge their duties. She pointed out that many cases, such as criminal charges, abuse and neglect cases and pretrial detention hearings have strict statutory timeframes involved, which often pushes civil consumer debt cases to the back.

"That is not just, it is not right for people. Their issues are as important as the other issues," she said. "The hope is it reduces that caseload a bit."

Another factor particularly in Lincoln County is that the district court is about an hour's trip away from many communities, she said.

"It can take an entire day away from work or your little children," Schneider said. "I see this all the time in court. Fifty dollars in gas might be two weeks of groceries. That is a lot of money for a lot of people and driving down to Carrizozo can be cost prohibitive.

"Hopefully this will provide better access to justice and judicial resolution. The trick is getting the word out. It also is incumbent on our clerks when a case is filed to let people know. The courts really need to continue to do this outreach so that people know what is available."

No additional costs beyond the settlement are associated with the ODR program, she said.

"And they have an option within the first two weeks to ask for a mediator and that is without cost as well," Schneider said.

"In a huge percentage of these collection actions the defendant represents themselves and they acknowledge right there in their response that they owe the money. They are just trying to figure out how to pay it back. This takes care of that and they don't waste their time coming to court. Being in a court room for most people causes a heck of a lot of anxiety and being alone is scary."

Something is needed

“One of the things happening in New Mexico and everywhere in courts, more and more people in these civil cases represent themselves,” Massey said. “We assume they can’t afford attorneys or live somewhere there are not many attorneys or no legal aid group to help them. For those kinds of folks, we hope this will help them navigate through the system more easily.

“You don’t have to go down to the courts. because there is no face-to-face meeting across the table with (an attorney) saying I’m going to make life difficult for you.”

The debt cases can lead to serious consequence for the person being sued, he pointed out.

“If they ignore (the case) and don’t file an answer, which is required, the creditor’s next step is to ask the court for a default judgment, meaning they win, because you didn’t respond,” Massey said. “Once that happens, the creditor can ask the court for an order requiring reductions from a person’s pay check to pay off the debt. You can imagine the damage to their credit rating.

“We’re hoping that fewer people will ignore these lawsuits if we make it easier. At least, they have a chance to work something out they consider fair.”

Origin of the system

“This technology is starting to make its way in the courts around the country,” Massey said. “There are a few courts in other states that have done pilot programs, but the best I can determine, we are the first state with an online dispute resolution program statewide for all of its courts for a specific type of civil case.”

Some courts around the Salt Lake area of Utah use the system for small claims cases, not just consumer debt. A court in Nevada that includes Las Vegas is using online dispute resolution for divorce cases, Massey said.

“It’s starting to get some traction,” he said. “It’s been in use. The real inspiration comes from the private sector, the electronics commerce companies like E-Bay and PayPal. They have used this sort of thing for many years to resolve issues between buyers and sellers that they broker. They offer this sort of thing, if a buyer is unhappy with something he just bought.”

Courts can be slow to embrace technology, he acknowledged.

“But what we know is the (court) process is confusing and (courts) can be intimidating,” Massey said. “Who wants to go to court? Nobody.

“This is a way we think to make us more user friendly. People certainly want to use technology in all their other business transactions, so why not in their dealings with the courts. It’s all voluntary. If one of the two parties doesn’t want to participate, then nothing is going to happen.”

Limitations

The online dispute resolution option only is available for a limited period at the beginning of a lawsuit, he noted.

“After a suit is filed, the first thing a defendant has to do is filed an answer,” Massey explained. “That’s one page saying (the defendant) got the lawsuit and denies the claim. That happens in these cases, regardless, but once that happens, then the case gets dumped into the ODR referral system for 30 days.”

The first step would be for the plaintiff who brought the case to receive an email saying here is the ODR and it is starting, make an offer to the other side, Massey outlined. If interested, the plaintiff fills out the form and hits transmit and the offer goes to the other side. The defendant answers some questions, and could submit a counter proposal or suggest a payment plan and accept the offer. That answer is sent back. The process could go on for a while, Massey said.

“If they needed help, they could ask for an online trained mediator,” he said. “Courts have long offered mediation person-to- person, with a third person helping out, and this is a variation trying to diffuse the situation.”

But if no resolution is reached or both sides do not take advantage of the ODR, the case would advance to the court and be handled in the normal way, he said.

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“If you can settle within that 30-day clock, then you don’t have to do anything,” he said.

“Nobody shows up in court. The program will prepare a settlement document that automatically will be filed by the computer system. The court clerk will file and do their part. The sides never have to appear before a judge.”

Success depends on both parties being willing to try it out and to be flexible, he said.

“We will offer the tool and see if people use it,” Massey said.

Reporter Dianne Stallings can be contacted at dstallings@ruidosonews.com.