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How Can I Defend Myself Against a Creditor Lawsuit?

By on July 21, 2016

“Dear Michael,

I am being sued by a debit collector on my unpaid credit card balance. I disagree on the amount I owe because I believe the interest rate was 3.99% for the life of the loan.
The interest charges, late fees, etc. comes to a lot more than I believe is right.

I plan to appear in court to answer this summons. What will be my best defense i can use, in you opinion?

Samual”

Dear Samual,

It is great that you are participating in the court process. It is far too common that people take collection lawsuits laying down, rather than standing up to claims banks and collectors make.

You are already on the track I would be if it were me looking to defend against collectors in my local court. I would want to deny their claim in my formal answer I file with the court. My denial would just be a general one, and not going into details like the interest rates charged etc.

Civil courts are there to decide controversies, so you need to create a He said/She said scenario. They say you owe this much money, and you say you do not. The controversy is established. But from there you have to understand how to wade through the formal court process and participate in discovery, which is how you can force them to show how they arrived at the amount you owe, and provide even more substantiation of the debt you owe. And lawsuit discovery is not as simple as filing an answer to the complaint.

It is in discovery where the bank or debt collectors attorney is going to hit you with their own requests. You will often have to assert yourself expertly, while adeptly fending off their questions and assertions.

Debt collection defense is not a picnic

People are able to protect themselves from debt collection claims very effectively. But the process is becoming a bit more streamlined with the account level documentation that is fast becoming more available to everyone in the collection pipeline. That is what has been happening slowly but surely as a result of banks being caught out for bad data systems, or questionable best evidence shortcut processes used by banks and collectors alike. These debt collection changes are long overdue, and a good thing, and may even help you make short work of your defense.

If they are claiming you owe an amount, that contractually you know is an impossibility, they will not be able to produce anything to the contrary. You just have to hold their feet to the fire – and make them – but through the formal court procedures that have been instigated.

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I highly recommend you at least speak with a debt collection defense attorney about your situation. You can look for one here. That is the best source for finding an experienced consumer law attorney that specializes in beating back collection lawsuits. Most you will find to talk to about your issue will offer an initial no cost consultation.

Sued for more than you remember owing

Balance inflation for late fees and default interest is normal. That 3.99 percent interest you mention may be what was charged when everything was going as expected. But default interest can be triggered when payments stop. It is normal to see that spelled out contractually and in the terms agreed to when we take out loans.

How long ago you stopped making payments on a debt can cause a large discrepancy in the balance you remember owing, and the amount they are suing for in court.

If you are dealing with a situation and decide you want to try to resolve the lawsuit by negotiating a settlement out of court instead, post the name of the plaintiff, and the collection law firm handling this, in the comments below, and I may be able to offer more detailed feedback that can help you accomplish that goal.

Depending on your ability to fund a favorable settlement, and the amount that can be negotiated as a settlement in full, the balance inflation can quickly become meaningless, but only if it was not overly inflated to begin with, and only if that is a strategy you want to pursue.

Michael Bovee founded CRN, a unique company offering debt negotiation education and services, in 2004. Bovee has been contributing articles and free reader feedback on this site for several years.

Michael is a debt industry professional who has volunteered his time to help answer reader questions.

If you have a debt related question you’d like to ask our team, just use the online form.

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About Steve Rhode

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.

One Comment

  1. Steve Rhode

    July 21, 2016 at 1:22 pm

    Samual, Michael just answered your question.

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