How to Win a Debt Collection Lawsuit

In some cases, going into debt is unavoidable. If you don’t pay your debt on time, your creditors may sue you. Debt collectors are persistent and aggressive, and the likelihood of winning a debt collection lawsuit may appear quite low from your end. However, you stand a better chance of winning if you know how to play your cards right.

client talking to attorney

So, what should you do when faced with a debt collection lawsuit? These expert tips can help you defeat debt collectors and avoid financial hardships for the rest of your life.

How to Respond to a Lawsuit

A debt collection lawsuit and threats to garnish your wages, bank accounts, and other assets from debt collection agencies can be intimidating, and most people would rather ignore it and hope it goes away. Unfortunately, this is a common mistake that does not help in debt settlement but rather costs defendants the case before it even begins.

Ignoring a debt collection lawsuit will not make it go away; it will automatically trigger a default judgment. Instead, your creditor will get the upper hand, and they can dictate what will happen to you. Some of the consequences that may follow include: 

  • Wage garnishment 
  • Deducting money from your bank account (depending on your state’s laws) 
  • Extra debt from charges for the creditor’s cost of suing you, including their attorney’s fees (this can double or triple your total debt)

As you can see, ignoring the lawsuit is not an option. The best option is to respond appropriately and with a well-planned defense strategy. Here is a brief step-by-step guide on how to answer the lawsuit.

Answer Every Issue on the Complaint

A debt collection lawsuit contains several questions directed at the defendant. You can respond in one of three ways: Agree, Disagree, or I don’t know. Additionally, you can include a brief explanation of why you answer the way you do. It is advisable to answer “I don’t know” to questions that seem tricky.

Assert Affirmative Defenses 

An affirmative defense is a reason as to why you don’t owe the debt or, in general, why you shouldn’t lose the debt lawsuit. You should include these reasons in your answer. Common reasons include canceled contracts or cases of mistaken identity, where the account in question belongs to someone else. You can also prove that the debt has been paid either partially or fully.

File the Answer With the Court

Your answer should be submitted to the court handling your case before the time allowance of about 30 days expires. You should file your answer with the Clerk of Court by following your state’s rules. Additionally, ensure that you get a stamped copy of your answer after filing.

Serve the Plaintiff 

You are legally required to notify the creditor of your answer. Simply make a copy of the stamped certificate and send it to the creditor, ensuring you have proof of receipt.

How to Win Debt Collection Lawsuit: 6 Clever Tips

Undoubtedly, you want to learn how to win a debt collection lawsuit. So, below you’ll find our best tips to help you through the process when you get sued by a debt collector.

The law on debt collection is very clear, and responsible creditors do their due diligence to ensure that they are compliant with the rules before suing their borrowers. However, many creditors often make mistakes during the process. So, you can exploit these mistakes to get the whole case dismissed by challenging the creditor’s right to sue you.

Creditors often sell unpaid debts to debt buyers to cut their losses. This is typically the case by the time the collector files a lawsuit against you. You can leverage this fact by requiring the collector to prove that they have a right to sue you.

Challenging the debt collector’s right to sue you will turn the tables, either temporarily or permanently. The collector will be required to provide several documents proving their right to sue you, including: 

  • A credit agreement with your original signature 
  • Documentation of the paperwork’s chain of custody 

Challenging the collector’s right to sue you is easy: submit a request to the court either in writing or verbally during a hearing. The judge is obligated to grant your request and dismiss the case if the plaintiff doesn’t submit the necessary documentation.

2. Leverage the Burden of Proof 

Debt collectors also need to prove that you deserve to lose the lawsuit without reasonable doubt. Do not admit liability; the plaintiff must provide evidence that you are responsible for the debt and the specific amount you owe.

You stand a high likelihood of getting the case dismissed by demanding that the creditor proves that you owe a specific amount. This is because your account may have changed hands several times before getting to the current debt collector. As a result, some details may have gotten lost or disorganized along the way.

For example, suppose that the collector is suing you for $10,000 in credit card debt. Requiring the collector to prove that you owe that specific amount will require them to verify all documentation, from when you opened the credit card to your last transaction.

Additionally, the court will set a deadline for when the documents should be submitted. Therefore, the collector will be racing against time, and the limited period may not be sufficient to collect all the information needed.

3. Leverage the Statute of Limitations 

The statute of limitations in your state determines how long you may be held legally liable for a debt. Basically, the debt disappears once the statute of limitations ends. The debt collector doesn’t have a case against you if the set period has already expired, but it is important to point the court’s attention to this fact.

Statutes of limitations vary by state and range between four and six years. Limitation periods begin at the point at which activity ceased on the account in question.

The term “account activity” is broad and can mean a wide range of things. It could refer to the last time you made a payment towards the debt. Concerning credit card debt, it could also mean the last time you used the credit card. Bottom line: it is the last time you used the said account in any way. This activity is often defined as making a payment or drawing funds from an account.

The debt can pass from the original creditor to several debt collectors, which is time-consuming. In addition, most collectors tend to wait until the last moment before filing lawsuits against their debtors. As a result, you may observe a sudden push from your debt collector to make a payment (any payment, regardless of how small) to extend the statute of limitations.

4. Pick a Good Attorney 

Considering the numerous loopholes highlighted in this guide, you have a good chance of winning the debt collection lawsuit against you. However, you also stand a good chance of losing the case, resulting in devastating effects on your finances. It all depends on how deep your knowledge of the legal system runs.

It can be complicated to understand the law – financial jargon is confusing enough without adding legal jargon. This is where legal advice comes in. Therefore, you should hire a debt attorney to represent you before answering the lawsuit and taking any other measures recommended above.

Hiring a debt attorney will considerably improve your chances of winning the debt collection lawsuit. However, this depends on your attorney’s level of competence and overall knowledge of the financial law system.

It is therefore advisable to hire an attorney who is affordable and meets the quality standards outlined below.

Experience 

Legal jargon can be confusing for novice debt attorneys still learning the hoops. However, experienced lawyers have already mastered the legal system and have a robust network that they can leverage to your benefit.

That’s why it’s important to hire an experienced attorney who has a good track record and a positive reputation to show for their time in the industry.

Debt collection lawsuits often integrate and interact with other facets of law not related to finances. For example, it can touch on marriage law in the case of couples that share debt.

It is crucial that your lawyer has a strong understanding of any relevant legal niches and can make quick and accurate decisions in a split second. Otherwise, you may need to hire a team of lawyers to address all legal proceedings, which is unrealistic and costly.  

Fees 

It is understandable that you are in a financial bind if you’re caught in a debt collection lawsuit, so it may not be feasible to pay high legal fees. However, you still need a good attorney to ensure that you win the case. As such, it is crucial to make a compromise between price and quality.

The idea here is to get maximum value for your money – not necessarily to save as much as possible. Remember: you get what you pay for! You should consider your financial situation and how much you can afford to pay in attorney fees before seeking a good debt lawyer.

Tip: You can get the debt collector to pay your attorney fees if you get the case dismissed. Additionally, you can get the collector to compensate you if you file a successful countersuit.

It is highly advisable to disclose all available financial information to your lawyer before answering the lawsuit. It is especially important to disclose whether or not you owe the debt. Transparency will help your lawyer develop the best strategy to either win the case or minimize the damages.

Unfortunately, most people don’t trust their lawyers enough to tell them everything, and this often costs them the case. Due to your attorney’s legal obligation to maintain client confidentiality, your financial information will remain private.

5. Can a countersuit help? 

When you win the case, you can seek compensation for your expenses like court costs and attorney’s fees. However, you can go a step further and get the plaintiff to pay for the overall inconvenience if you have grounds for filing a countersuit. Fortunately, this is easier than you may imagine.

Debt collectors are required to follow the Fair Debt Collection Practices Act. However, many collectors often break these rules either out of ignorance or willfully, banking on their debtors’ lack of comprehensive knowledge of the law.  File a countersuit If you or an attorney has found that the collection agency breached the Fair Debt Collection and Practices Act; you may be able to get your legal fees covered in addition to compensation from the agency.

These unlawful practices may include: 

  • Not disclosing their full identities 
  • Using rude language and behavior. The Consumer Financial Protection Bureau protects you against such.
  • Making calls before 8:00 a.m. and after 9:00 p.m. 
  • Calling your friends, relatives, work associates, neighbors, and virtually anyone in your circles 
  • Making false reports to credit bureaus 
  • Making false statements about legal action 
  • Imposing interests and other fees that were not part of the original agreement 
  • Making threats of bodily harm 

Because of this, recording your conversations with debt collectors is a good idea, especially if they engage in unethical behavior. It’s also important to share these recordings with your attorney to pursue a strong case against the collector.

6. Declaring Bankruptcy Is an Option

Declaring bankruptcy is one of the most efficient solutions to get debt collectors off your back. According to the law, all debt collection activity must cease immediately after declaring bankruptcy. As a result, the lawsuit will be put on hold while your bankruptcy case is handled.

However, while declaring bankruptcy is an efficient solution, it can also have devastating effects on your overall finances. Many financial advisors rank it as the financial event with the biggest impact on your credit score. Building a good credit score takes years, and it may take longer than usual to recover from bankruptcy.

Additionally, bankruptcy is included in your credit report. It can stay there for years, and it stands out like a sore thumb. Many lenders take it as a warning that you aren’t a responsible borrower. As a result, most lenders will automatically reject your loan application once they see the bankruptcy on your credit report.

For all of these reasons, it’s essential to consult extensively with your attorney and financial advisor before declaring bankruptcy. It’s interesting to note that declaring bankruptcy can actually be advantageous if done strategically. Theoretically, it may also be a good idea when starting over and wanting to avoid debt collectors.

Final Thoughts 

If your creditors are hounding you through the judicial system by filing debt collection lawsuits, don’t take it lying down. Ensure that you respond, keep all important financial records organized, and develop a winning strategy with your attorney.

The tips discussed above will go a long way towards maximizing your chances of winning the lawsuit. But, it doesn’t replace competent representation that can guide you through the complex financial law system.

Samantha Hawrylack
Meet the author

Samantha Hawrylack is a personal finance expert with a passion for writing and SEO who has been featured in publications like Grow, MSN, CNBC, Clever Girl Finance, Credit Donkey, and more. She writes about various personal finance topics including credit, loans, real estate, investing, and more.