service may be had by posting on the defendant’s door, leaving it with anyone over 16 years of age or by regular mail, without showing actual receipt. Tex R.C.P.106. For corporate defendants, the process server must show and say on the return of the unserved citation that the registered agent cannot with due diligence be found at the registered office. The citation is returned to court and a new citation issued for service on the Secretary of State, who in turn forwards the citation to the corporation’s registered office. The citation served on the Secretary of State should be accompanied by a letter addressed to the Secretary of State requesting that the citation and petition be forwarded to the corporation at the registered office address. Tex.Bus. Corp.Act Art. 2.11 (Vernon 1980). See also Business Organizations Code, where applicable, at §5,253, which provides for the Secretary of State forwarding to “the most recent address of the entity on file with the Secretary of State.”
XIII. Answer Date and Default Judgments.
After the defendant is served, the defendant must answer the suit or the plaintiff will be eligible to request a default judgment. The answer is due in justice and small claims courts on or before 10:00 a.m. on the Monday next after the expiration of ten days after the date of service. Tex. R.Civ.P. 534. The answer may be oral in justice courts. Tex.R.Civ.P. 525. If the defendant fails to answer, a default judgment may be entered. In justice and small claims courts, the citation return must be on file three days, exclusive of the date of filing and the date of judgment, before a default can be entered. Tex.R.Civ.P. 536a. In justice and small claims courts, the court will often render judgment using its own form. A sample default judgment is included as Attachment 10. It will bear interest at the judgment rate; but if based on a contract, then the lesser of the two, the contract rate, or eighteen percent (18%). See Sections 304.002 & .003, Texas Fin. Code. For the current judgment rate of interest go to .
In the county courts, county courts-at-law, and district courts, the answer is due on or before 10:00 a.m. on the Monday next after the expiration of 20 days after the date of service. Tex.R.Civ.P. 45. In these courts, the citation return must be on file ten days, exclusive of the date of filing and the date of judgment, before a default judgment can be entered. Tex.R.Civ.P. 107. The plaintiff will need to prepare the proposed default judgment for presentation to the Court. Especially in the event of a default, it is important to review the citation return for accuracy before filing. Request the process server or constable to fax the return for your review before filing.
XIV. Motion for Summary Judgment.
Many debt collection suits are disposed of as default judgments. The second largest percentage are disposed of with motions for summary judgment. Debtors often file pro se answers – some as simple as a letter to the court. Suits on accounts answered with a general (not sworn) denial are subject to being disposed of by summary judgment. Since the answer can be amended, it is advisable to include two bases for summary judgment (1) that the denial is not sworn and (2) with affidavits supporting the plaintiff’s claim.
Motions for summary judgment will help ferret out those who file answers to buy time from those with genuine defenses and are also great discovery tools. Well drawn summary judgments often require the debtors’ attorneys to have serious talks with their clients about fees, resulting in serious settlement negotiations.
XV. Pre-judgment discovery.
Some debt collectors will serve written discovery with the petition. I consider it killing trees, in light of the large number of cases disposed of with agreed judgments, default judgments and summary judgments. But, that may just be a matter of style. Requests for Disclosure, Interrogatories, Requests for Production of Documents and, of course, Requests for Admissions may be helpful in bringing the case to a close with a summary judgment motion. Debtors may also decide to give in and start paying, rather than doing all the paper work.
XVI. Mediation and Settlement.
Tip:The purpose of a collections action is to put the most dollars to the client’s bottom line. Litigation costs, extensive property exemptions and the value of “bird in hand” are all a part of the cost benefit analysis.
Difficult cases that can’t be resolved with discovery and summary judgments should be mediated. It is an excellent opportunity to have a face to face with the debtor and learn the real basis for his resistance to paying a just and lawful debt. Free discovery can also take place on the ultimate collectability of the debt. Before every collection case I mediate, I ask the debtor’s attorney to either forward financial statements and tax returns before the mediation or bring them to the mediation. Therefore, if it’s a matter of inability to pay, rather than a real defense or just plain stubbornness, I can evaluate settlement in an informed manner.