Can a Creditor Sue Me for Less Than I Owe?


Dear Steve,

One of the debt collecting companies sued me over an unpaid personal loan; I denied all and opted for arbitration. The bill of sale they sent to me has a different amount from what they are suing me for, in fact, lower than the amount in the bill of sale. Can I use this to strike the case off?



Dear Dan,

I’m not aware that suing for less than the balance owed is an error. However, it might point to an issue that the debt might not be able to be validated with confidence.

I’m not aware that validating a debt is part of an arbitration process.

As the FTC says, “In arbitration, the parties submit their dispute to an arbitrator – a private third party – rather than to a judge. While arbitration is generally less formal than going to court, the arbitrator’s decision is binding and enforceable in court.” – Source

Essentially you are raising a validation issue since you are claiming the amount demanded is not accurate.

I would be very careful in selecting arbitration as a means of resolving the issue. You potentially have more legal remedies in court since if the arbitrator does not consider your validation request or does not complete your validation challenge to some acceptable standard, you lose and give up some legal rights.

This article by Duff & Phelps has some great information in it, including, “An arbitrator (or panel), although obviously bound by the operative law and the contractual or other framework governing the parties’ relationship, may find greater latitude in weighting the relevant business realities and financial perspectives that are brought to bear in the arbitration hearing. An arbitrator’s decision is typically sealed and represents the last word, with limited rights of appeal.”

My advice is that you must absolutely know what your legal position is before putting yourself at a potential unintentional disadvantage by offhandedly selecting arbitration.

See also  Minnesota Attorney General Sues National Arbitration Forum. Claims Consumer Deception.

My favorite arbitration moment was when the debt collectors were actually the arbitrators. How do you think that worked out. LOL.

The best plan of action would be for you to meet with a licensed attorney in your state to discuss your specific situation and get some sound legal advice to determine which venue would be best for you. One place to look for such an attorney would be here.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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