Credit Cards

Being the recipient of a debt lawsuit can be really scary, as the prospect of losing the lawsuit and having to take the financial hit of paying up a debt as well as some added legal costs can be very devastating. There are many different instances where an individual or business can find themselves at the receiving end of one of these lawsuits, with common examples being them unable to pay a supplier, getting into serious debt with your credit cards, or failing to afford the debt obtained through a medical procedure. 

Dealing with a debt lawsuit is tricky, but it’s not impossible to win. To increase your chances of successfully defending yourself against such a lawsuit, here are a few steps you can follow to help yourself defend against a lawsuit. 

Reply to the Lawsuit or Debt Claim

The first thing that a recipient of a lawsuit must do is respond to it within the time limit given. Far too many people simply ignore the lawsuit when they receive it, which is a fatal mistake as doing so means that they lose access to a few defenses that could help them. Even if you feel that you haven’t got a leg to stand on and don’t have the funds to pay the debt that you owe, it’s always important to respond, because if you don’t then the collection agency will get a default judgment against you. 

Not responding means that the creditors making the claim will be able to take money from your bank account or implement wage garnishments against you, leaving you unable to defend yourself. Plus, not responding also means that the creditor can add attorney fees, court costs and other expenses, making your original debt even more expensive. 

For these reasons, it’s essential that you respond with an official answer, that a lawyer providing consumer defense for debt lawsuit can aid you with. When writing an answer, it is important that you don’t admit liability for the debt, and instead force the creditor to prove the debt and that you are in fact responsible for it. 

Be sure to reply within the time limit set by the summons as missing the time to response can have the same consequences of not responding at all, which could leave you unable to dispute the claim. 

Challenge the Company’s Legal Right to Sue

When you do respond to a debt lawsuit, a good first thing to do is challenge the right the plaintiff has to file the lawsuit and sue you. The reason for this is because by the time a debt has reached the point where it turns into a legal issue, a lot of the time that debt has been sold to third parties, potentially more than once. This means that the more a debt is sold, the bigger the paper trial and need for documentation, and if that person fails to have the documentation, then it means that they’re unable to sue you. This is because the entity that owns the debt and is pursing the lawsuit against you is legally required to show proof that they have the legal right to do so. 

The important thing with this issue is if you do not challenge this, it’s not always going to be checked by a judge. This means that your silence on this matter can be translated as an admission of responsibility for the debt. Although if you do ask for the documentation then the judge is more than likely to back your request. 

When you ask for the creditor to prove their right to sue you, they need to provide the following: 

  1. A credit agreement that is signed by you. 
  2. The documentation of the chain of custody of all the paperwork. This basically means that there needs to be proof that the paperwork is accurate and that it has come from the original creditor. 

If they fail to have either of these items, then they have no grounds to sue you and then the lawsuit will have to be thrown out by a judge. 

Push Back on Burden of Proof

When you get sent papers detailing that you are getting sued, the burden of proof of this rests heavily with the individual or organization suing you. This means that they need to prove that you are the one person genuinely responsible for the debt, that they have the right to sue you, and that you owe them a specific amount of money. 

Requesting proof of the amount that you owe a person can be a great way to defend yourself against a debt lawsuit. This is because if a collection agency is suing you for $2,000, for example, related to a credit card account, they need to be able to show that this is correct. So, you should ask for documentation that starts with the opening of your account and ends with your past activity on the account, with the goal of demanding that they account for every dollar they say you owe by showing that the balance was increased when you made purchases and that the balance was increased via fees and charges. Due to how accounts often change hands before a lawsuit occurs, it’s not uncommon for creditors to find it impossible to get this information in a timely manner, meaning that the lawsuit could be thrown out as a result, or that the amount you need to pay back is reduced. 

Point to the Statute of Limitations

A statute of limitations governs how much time creditors have to bring a lawsuit regarding a debt. The rules for this vary depending on the state you’re in as well as each situation, but usually the range falls between 4 and 6 years in the majority of cases. This time limit starts on the last day that a person was active on an account where debt is being claimed, with activity being defined as making a payment or drawing funds from that an account. 

As making a payment into these accounts can restart the clock, it’s important to seek advice to see if you should agree to make any payments of a debt as some collection agencies get robust about efforts to collect even a small sum to extend the time line so they can file a suit later.

Hire Your Own Attorney

If already faced with a debt that you may not want to pay, or even might not be able to pay, then adding on additional legal fees often sounds like a bad idea. However, speaking to an attorney will help you better understand your situation and your options, so that you have a better chance of defending against a debt collection lawsuit. Plus, sometimes these consultations are free, which should definitely be taken advantage of as they will help you to know what options you might have and understand if the benefits are worth the legal costs. Plus hearing the opinion of a third party who isn’t personally invested in the situation will help you get a good sense of perspective on the issue. 

Another benefit of speaking to an attorney is if they believe that that creditor has acted illegally against you they may take your case without asking for any compensation from you, due to how if they win, then the creditor will have to pay all the legal fees, even your lawyers. 

File a Countersuit if the Creditor Overstepped Regulations

Sometimes debt collectors can act in bad faith and fail to follow the regulations such as the Fair Debt Collection Practices Act. You’re going to need a lawyer to help you figure out if they have overstepped the regulations, but if your hunch is right then you may be able to seek compensation for any damages caused by the suit, and of course, throw the case out.