Consumer Law

What Is An Offer Of Judgment And Why Did The Debt Collector Make One In My Case?

By M. Stan Herring

Sometimes Alabama consumers are faced with an "offer of judgment" in cases by debt collectors. An offer of judgment (OOJ) is made under Rule 68 of the Federal Rules of Civil Procedure. It means what it says - the defendant is offering to allow the plaintiff consumer to take a judgment against the defendant.

Odd, huh? The reason defendant debt collectors do this is to "stop the bleeding" by limiting the damages that the plaintiff can recover. It is similar to a normal settlement offer but it has one twist in favor of the collection agency - if you reject the offer and then get a judgment for less than the amount of the OOJ, you can be responsible for some of the costs and expenses the debt collector incurred after you rejected the OOJ.

Normally, an OOJ is not terribly important as if you lose the case you may be responsible for many of these costs anyway. Also, the OOJ is rarely enough to cover a reasonable jury verdict and the attorney's fees that are owed.

One great advantage of an OOJ is it is a judgment. You sued the debt collector and there is now a judgment against the debt collector. The collection agencies will try and say it is meaningless as it was done for settlement purposes - but it is a judgment. We had a defendant make an OOJ which we accepted - then the defendant sent us a release for our client to sign. We responded - "Its a judgment, not a settlement" so there was no release, no confidentiality, etc. Just a judgment which will always be on the record of the defendant.

So, if you get an OOJ, it needs to be examined but it should not be a cause for any alarm as long as you are being reasonable in what you expect a jury to return a verdict for in your favor.

Full post as published by Alabama Consumer Blog on May 06, 2008 (boomark / email).