Why “Doing Nothing” is the Worst Option.

In Business Tips, Business Transactions, Employment Law, Legal Compliance, Litigation & Lawsuits by Larry DonahueLeave a Comment

A closer look at Default Judgements.

If you are involved in a lawsuit, one of the things that you do not want to occur is to be defaulted out as a party in the case. When a party is defaulted by the clerk or the court, that party cannot defend itself in the case until the default is set aside by the court. If you are served with a complaint, you need to consult with an attorney right away.  Once you are served with a summons and complaint, you generally only have 30 days to file an answer and raise your defenses.

If you do not file the answer and defenses within the 30 day limit, that opens the door to a default being entered against you in the case. If you receive any communication that a party is requesting a default to be entered against you, you need to consult with an attorney as soon as possible. A litigation attorney will be able to act fast to put you in the best position to be able to prevent the default from being entered against you and preserving your defenses. The sooner you talk to an attorney, the better.

If you do not answer a summons and complaint the opposing side can ask the Clerk for entry of default and then ask the Court for a default judgment. A default judgment will give the opposing side all of the relief that they requested in their complaint. If the damages in the case are liquidated, which means that there is a specific amount of damages (e.g. promissory note collection, lease breach damages), then the plaintiff can proceed to request a default judgment from the court and then proceed to judgment execution against the defaulted party, without any defenses presented by the defendant.

Basically, by electing to not participate in the case, if you are the defaulted party, you are giving the plaintiff an easy path to obtaining a judgment against you. It is typically never recommended to allow for a default to be entered against you in a lawsuit. You never want to allow for a judgment to be entered against you, especially if you have defenses or counterclaims against the plaintiff. Even if you are discussing the dispute with the other side you will want to file an answer to the complaint with the Court to preserve your rights.

4 Steps to Follow Upon Receipt of a Summons and Complaint

1. Open and Read Your Mail. In New Mexico serving by certified mail is an acceptable form of service. If you receive something in the mail that looks like a lawsuit (e.g. Summons or Complaint). The day you receive the summons and complaint starts the clock ticking for filing an answer with the Court.

2. Act Immediately. You only get a short amount of time to respond to a lawsuit before the opposing side can seek a default judgment. If you are a company, you will need to have an attorney file the answer for you.

3. Gather Information. Anything you have regarding the allegations in the Complaint will be needed for your attorney to answer the Complaint and to evaluate your options.

4. Decide on a course of action. The sooner you consult with an attorney the more options may be available. For instance, early in a lawsuit there are more opportunities to arrive at settlement terms that will help you pay the money/judgment back without going out of business are available. Additionally, if you have gathered the information your attorney may be able to share the information with the opposing attorney to show them weaknesses in their case to negotiate a quick resolution.

Contact  Business Law Southwest today to discuss all of your business law issues. Business Law Southwest. Business law that makes business sense.

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