As our readers know, the explosion in collection lawsuits against Alabama consumers is staggering. There is a lot of confusion about how lawsuits end when a debt buyer or collector dismisses the case. What is the difference between a dismissal with prejudice and a dismissal without prejudice? The short answer is a dismissal with prejudice is a complete victory and a dismissal without prejudice is a partial victory.
What is a dismissal?
A dismissal is when the lawsuit, which is when a complaint if filed by a debt buyer such as Palisades, Unifund, LVNV Funding, Midland Credit, etc., is put to an end by the court (normally small claims or district court). The plaintiff, in this case the junk debt buyer, can request the court to end the lawsuit by dismissing the allegations or dismissing the complaint. The case is over and there will be no further activity. No trial. No chance of a judgment being entered against you the consumer.
What is a dismissal without prejudice?
A dismissal without prejudice is still a dismissal so the case is over. This is a good thing as the case is finished. The reason we say it is not a complete victory is that the “without prejudice” means that the debt buyer can sue you again. The case is over but it doesn’t mean that the money is not owed – it just means the plaintiff was able to convince the court to drop the suit but it does not prevent or impact a second suit against you. Please note this can only be done once by a plaintiff – the second suit has to be dismissed with prejudice.
What is a dismissal with prejudice?
This is the complete victory that we are looking for in these cases. This means that whatever you were accused of – i.e. owing Palisades $3000, etc. – is NOT true. You do not owe the money. Suit can never be brought against you again. The case is over and can not be restarted (some minor exceptions apply but this is true enough for our purposes). Another critical effect of a dismissal with prejudice is that it allows you to give this information to the credit reporting agencies and request that the account be taken off your credit reports. If they won’t, then you can often sue the debt buyer and the credit reporting agencies for money damages.
Please note that if you settle the case with the debt buyer, it will often be dismissed with prejudice but that is different if it is the context of a settlement. Here, we are talking about when the debt buyer just dismisses the case with prejudice and there is no settlement.
Why would a debt scavenger dismiss a case with prejudice?
The primary reason is that normally debt buyers and collectors do not have any proof – much less sufficient proof – that you owe the debt to them. They normally don’t bring witnesses. They don’t bring legitimate documentary evidence. To be blunt what they do is file suits with no intention of proving the case. So if the lawyer from Zarzaur & Schwartz or Nathan and Nathan or Nadler & Associates knows the case is doomed, the lawyer may decide to just end it quickly rather than going through the trial with no chance of winning.
Some lawyers have waited until the morning of trial and when they realize they can’t win the case then they ask for a dismissal without prejudice so they can sue you again. We normally oppose this as it does not provide you with certainty. The downside is you could try the case and lose it so you have to know ahead of time the good and bad of whether to take the dismissal without prejudice.
If you have been sued in Alabama by a debt collector or debt buyer, please feel free to contact us for a free consultation.
Another resource for you is to join our Facebook Fan Page – Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.