How to Win a Debt Collection Lawsuit

How Beat a Debt Collector in Court (Even if they Have Proof)

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If you're being sued by a debt collector, you may feel overwhelmed and unsure of what to do. However, it's important to remember that you have rights and there are steps you can take to defend yourself. In this article, we'll discuss how to win a debt collection lawsuit and what you need to know to protect yourself.

The first thing to do when you're sued by a debt collector is to respond to the lawsuit. This may involve filing a written response or appearing in court, depending on the specific situation. From there, you can begin to build your defense by challenging the debt collector's right to sue you, checking the statute of limitations, and considering other strategies such as compelling arbitration or negotiating a settlement.

It's important to remember that winning a debt collection lawsuit is not always easy, but with the right knowledge and preparation, you can increase your chances of success. By understanding your rights and taking proactive steps to defend yourself, you can protect your financial future and avoid the negative consequences of a debt collection lawsuit.

A Debt Collector is Suing me — Now What?

If you're being sued by a debt collector, don't panic! Collection agencies, debt buyers, and other collectors have made this their full-time focus and rely on consumers panicking or trying to forget the lawsuit happened. Ignoring the lawsuit is never a good option,  and it's absolutely critical that you assert your rights to protect yourself. Here are some essential steps and considerations to consider if you've been sued. We can help you deal with a debt collection lawsuit at LawLaw.

The Debt Collection Process

When you owe a debt, the creditor may try to collect it themselves or hire a debt collector to do it for them. If the debt collector is unsuccessful in collecting the debt, they may decide to file a lawsuit in court against you. Once the lawsuit is filed, you will receive a summons and complaint, which is a legal document that outlines the details of the lawsuit. Depending on where you live, you might be mailed the summons or a sheriff might hand deliver it to you. This will depend on your state's court and debt collection laws.

Never Ignore the Lawsuit

Remember to never ignore the lawsuit! You have anywhere from 20 to 30 days to respond when you've been sued for a debt. If you don't respond to the lawsuit, the debt collector may win the case by default without you even having a chance to present your situation in court. It's essential to respond by the deadline specified in the summons and complaint or else you risk what's called a "Default Judgment". If you don't have a lawyer, Law law can help you prepare the document you need to formally respond in court.

In this formal response, you can deny the allegations made by the debt collector or raise any affirmative defenses. An affirmative defense is a legal argument that may help you win the case, even if the allegations made by the debt collector are true. We'll discuss those a bit later in the article.

Being sued by a debt collector can be a stressful experience, but it's essential to take immediate action to protect your rights. Remember to never ignore the lawsuit and respond by the deadline specified in the summons and complaint. If you're unsure of what to do, consider seeking legal advice from a qualified attorney.

What a Debt Collector Will Have to Prove to Win

No matter whether a credit card company, original creditor, or debt collector, they all must meet certain requirements to successfully collect a debt, including proving that they own the debt, that you owe the debt, and that certain legal requirements are met when they filed suit.

Here are some of the requirements a debt collector will have to prove to win a debt collection lawsuit:

Their Ownership of the Debt

The debt collector must prove that they actually have a legal right to the debt. A debt collection agency must provide evidence that they purchased the debt from the original creditor or that the original creditor assigned the debt to them. If the debt collector cannot prove ownership of the debt, they cannot collect on it.

Your Responsibility to Pay the Debt

The debt collector must prove that you actually owe the debt to them. They must provide evidence that you incurred the debt and that they have the right to collect on it. This evidence may include account statements, contracts, and other documents that show the debt is valid.

The Amount of the Debt

The collector must prove that the debt amount they claim you owe is correct. They must provide evidence of the original amount owed, any interest or fees that have been added, and the current balance. They may also try to tack on court costs and attorney fees when bringing suit.

Importance of Responding to the Lawsuit

If you're getting sued for a debt or dealing with a credit card lawsuit, you can't just show up to court and expect a good outcome. In order to win a debt lawsuit, you've got to do some preparation beforehand. When you're getting sued by a debt collection agency, you'll receive a "Complaint" and "Summons". These documents are legally required to be sent to you when a debt collector files a lawsuit.

After you've received these documents, and especially if you want to represent yourself in court, you should review them to make sure the information is accurate. Here are some steps to help when drafting your answer to a debt collection lawsuit.

Verify Everything & Leverage Federal Debt Collection Laws

Before responding to the debt lawsuit, you should verify that the debt is legitimate, the original debt amount is accurate, & you are the right person who owes the debt. Federal debt collection laws require creditors and debt collectors to follow certain procedures and validate information when you request it. If you're able to fight back in court with information that proves to the court that the debt was invalid or that the debt has been sold improperly, you'll be in a much better position to settle your debt or beat the debt collectors completely.

File a Countersuit Against the Debt Collector in Court

In some cases, responding to a debt collection lawsuit might also involve considering a countersuit. This can be particularly relevant if you've identified clear FDCPA violations or other illegal practices by the debt collector.

Filing a countersuit can be a strategic move to hold the collector accountable for any damages you've suffered due to their unlawful actions, such as emotional distress, defamation, or financial loss due to incorrect credit reporting. It's important to approach this option with careful consideration and ideally, legal advice.

A countersuit can shift the dynamics of your case, potentially leading to a more favorable settlement or even compensation for the wrongs you've endured. However, it also adds complexity to your legal situation, so it's essential to weigh the benefits against the potential risks and costs involved.

Drafting Your Answer to Defend Against a Debt Suit

When drafting your answer, you should include the following information:

• Your name and a good mailing address
• The name and address of the debt collector or attorney
• Proper court name, case number, and court address information
• Your response to each allegation in the Complaint
• Any Affirmative Defenses

Although some courts will allow you to handwrite your Answer where you may try to dispute the debt, you'll be in a much stronger position if you follow your court's jurisdictional rules & draft a formal Response document. If you can't afford a debt collection defense attorney or simply want to handle it yourself, we can help you with your Answer when dealing with debt collectors (and it's 100% free!)

Use Affirmative Defenses to Beat a Debt Collector

Affirmative defenses are reasons why you should not be held liable for the debt or otherwise force the debt collector to substantiate their claims against you. Some common affirmative defenses include:

• The debt is so old that they can't collect anymore
• The debt collector does not have the legal right to collect the debt
• The debt collector has violated certain laws regarding lending

Here are a few examples of how defenses in a debt collection case might apply:

Example 1: Sued by a Debt Collector for Medical Costs

Imagine you're being pursued for a medical debt from a procedure that happened six years ago. In this scenario, you might have a valid affirmative defense based on the statute of limitations. For instance, if your state's statute for debt collection is five years, and you haven't made any payments or acknowledged the debt in six years, you could argue that the creditor's lawsuit is time-barred. Successfully proving this could lead to the dismissal of the case, as the debt is legally unenforceable after the expiration of this period.

Example 2: Dealing with Credit Card Lawsuit

Let's say you receive a collection notice for a credit card debt that you don't recognize. In such a case, an affirmative defense of identity theft could be applicable. You would need to provide evidence, like a police report or an FTC Identity Theft Report, showing that the credit card was opened fraudulently without your knowledge. This defense, if proven, can lead to the dismissal of the claim, as you were not the actual person who incurred the debt.

Example 3: Confronting Student Loan Debt

Consider a situation where you're struggling with student loan debt. If you find out that the lender engaged in deceptive practices when issuing the loan, you might use the "unclean hands" affirmative defense. This involves presenting evidence that the lender acted unethically, perhaps by providing misleading information about the loan terms or violating student loan regulations. If the court finds the lender's conduct inappropriate, this could result in a reduction or even a dismissal of the debt, based on the principle that a party cannot seek legal remedy if they have acted unethically in relation to the subject of the lawsuit.

Respond Before the Deadline When Faced with a Debt Collection Lawsuit

It is important to respond to the debt lawsuit before the deadline. If you do not respond, the court may enter a default judgment against you. A default judgment means that the court has ruled in favor of the debt collector without hearing your side of the case.

In conclusion, responding to a debt lawsuit is an important step in protecting your rights. By verifying the debt, drafting a thorough answer, including affirmative defenses, and responding before the deadline, you can increase your chances of winning the case.

Check the Statute of Limitations on Debt

We've mentioned this several times because it's so important and can be a home run legal reason that the debt can't be collected on! This deadline is the amount of time that a creditor has to file a lawsuit against you for a debt. Once the time has expired, the creditor can no longer sue you for the debt.

Statute of Limitations for Different Types of Debt

The statute of limitations for debt collection varies by state and by the type of debt. Here are some examples:

• Credit card debt: The timeline for credit card debt typically ranges from three to six years, depending on the state. In some states, it can be as long as 10 years.
• Medical debt: The timeline for medical debt is generally the same as for credit card debt.
• Auto loans: The timeline  for auto loans is typically longer than for credit card debt, ranging from four to six years.
• Student loans: The timeline for student loans varies depending on the type of loan and the state. In some cases, there may be no deadline at all (gross).

It's important to note that the the clock starts ticking from the date of your last payment or activity on the account. If you make a payment or acknowledge the debt in any way, the clock may reset and the statute of limitations may start over.

If you believe that the timeline has expired on your debt, you can raise this as a defense in court. However, it's important to have documentation to prove that the statute of limitations has expired. This may include bank statements, payment history, or records of communication with the creditor.

Compelling Arbitration as a Strategy

Filing a motion to compel arbitration is an advanced-level way to resolve the debt collection lawsuit and beat debt collectors. This is a super common way to kick the case out of court into a more consumer-friendly setting. Many debt collectors do not want this to happen and will be much more willing to come to a reasonable settlement.

Navigating the Court System

Before you can compel arbitration, you will need to file a motion with the court. Many people will file this motion along with their initial "Answer" document we discussed above. This tactic involves invoking a clause in your contract with the creditor or debt collector that requires disputes to be resolved through arbitration rather than in court. It's crucial to understand that this option is not always straightforward.

The process begins by reviewing the lawsuit and identifying whether the contract in question includes an arbitration clause. If so, you may be able to move the case from the court to an arbitration setting, which is typically a more private and potentially less formal environment.

However, it's important to consider the pros and cons of arbitration, as it also has its own set of rules and potential costs!

Contracts and Legalese

The secret weapon to get into arbitration is hidden in your contract: the arbitration clause. This little paragraph is often tucked into the fine print of things like your credit card or loan agreements.

It basically says if you and the company have a disagreement, you'll settle it in arbitration instead of court. To use this clause to your advantage, take a close look at your contract and make sure the clause fits your situation. Be aware, though – these clauses aren't all made the same. Some have specific rules about how and when you can ask for arbitration.

How to Actually Do it

So, how do you actually get into arbitration? Start by filing a motion to compel arbitration in the same court where the lawsuit popped up. This motion is your way of saying, "Hey, we agreed to handle this in arbitration, so let's do that."

Make sure to do this quickly, usually when you first respond to the lawsuit. The court will then look at your motion and decide if arbitration is the way to go. If they say yes, the court case gets paused, and you move to arbitration.

If you are able to compel arbitration, you may have more options for settling the debt. For example, you may be able to negotiate a payment plan or a reduced settlement amount. It is important to keep in mind that the creditor may be more willing to negotiate if they know that you are serious about pursuing arbitration.

Overall, compelling arbitration can be a valuable strategy for winning a debt collection lawsuit and negotiating a drastically reduced settlement amount. If you need guidance compelling arbitration, we're here to help!

Negotiating a Settlement

If you can't get the case thrown out completely you may be able to get a favorable debt settlement and pay significantly less than the original amount. The best way to settle a debt is to begin discussions early and strategically.

The good news is that if you use Law law to generate your Answer after you were served with a debt collection Summons, you're already showing the opposing party that your ready and willing to defend against a debt lawsuit. The vast majority of lawsuits from debt collectors get ignored--so proving to them that you mean business will help you when reaching out about settling (even if the thought of going to court makes you nauseous!)

Key Moments to Negotiate

Before the lawsuit is filed

If you are unable to make payments on your debt, it is important to contact your creditor as soon as possible. You can explain your financial situation and ask if they are willing to work out a payment plan or a settlement. If you are able to reach an agreement, make sure to get it in writing.

After the lawsuit is filed

Once a lawsuit has been filed against you, negotiating a settlement can still be an option. You can contact the creditor or the creditor's attorney to discuss a settlement. You may be able to negotiate a lower payment amount or a payment plan that fits your budget.

After Filing to Compel Arbitration

Filing to compel arbitration can create a new opportunity for settlement negotiations. This move signals to the creditor that you're prepared to challenge the case in a different forum, which might increase their willingness to negotiate to avoid arbitration's costs and uncertainties. It's an opportune moment to propose a settlement, potentially on more favorable terms than what might have been available in court.

When negotiating post-arbitration filing, it's essential to understand the strengths and weaknesses of your case, as this will influence your negotiation strategy.

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