Defenses to a Lawsuit by Creditors

A person being sued by a creditor has several legal defenses at their disposal. These barriers will change based on each person’s unique situation.

Statute of Limitations Defense

You may have a statute of limitations defense if your debt is old. A statute of limitations is a law forbidding parties from bringing legal action against another party after a predetermined time. Depending on your state, a statute of limitations may or may not be applicable.

For instance, a written contract has a four-year statute of limitations in California.

If you have paid any part of the debt after the statute of limitations has expired or acknowledged the liability in writing after that time has passed, you might not be able to use this argument.

Interest Rate Caps Imposed by States

Verify whether the interest rate being charged on your debt exceeds the permitted state limitations. Your interest rate is “usurious” if it exceeds the legal maximum set by your state.

Depending on your state’s laws, your creditor might not be able to sue you if they charged you an interest rate that was more than the legal maximum.

Amounts Paid But Not Credited

You could use this as a defense in court if your payments to the creditor weren’t credited to your account. To demonstrate that you have paid, keep copies of your receipts, account statements, canceled checks, etc.

Payments for Faulty Goods

You might be able to use the repair cost to reduce your debt if you bought something that later turned out to be defective. This argument is particularly strong if the individual who sold you the item made claims about it that turned out to be untrue or if the item was unfit for regular use.

If one or more of your creditors file a lawsuit against you, you’ll want to prepare the strongest case you can. In this post, we’ll go through eight legally sound defenses that can help you win your case and what doesn’t qualify as a legal defense.

Improper Service

If either (1) you never received the summons and complaint at all, or (2) you did receive them, but the method of serving was wrong, you have the defense of improper service.

Process servers are permitted to utilize conspicuous service after three failed attempts at personal service or substitution service (otherwise known as nail-and-mail). Conspicuous service entails mailing a second copy of the summons to you at your last known address and attaching it to your door.

Here are a few typical instances of improper service:

1. Giving your neighbor, who occupies a different flat, the summons.
2. Sending the summons to your old address.
3. Hurling the summons to the ground in your housing complex’s lobby.

You must take a few steps to have an incorrect service of process complaint dismissed.

The first time you appear in court, you MUST RAISE the defense in your response.
A copy of the “affidavit of service” from your courthouse file must be obtained. The process server’s affidavit of service, which details how you were served, is a sworn declaration. The plaintiff will use this document to prove that you were properly served.

Within 60 days of submitting your answer, you MUST ASK the court to dismiss the matter for lack of jurisdiction. This may require you to file specific documents, known as “motions to dismiss,” prior to the day set for your initial court appearance.

A “traverse hearing” is a particular hearing that you MUST SCHEDULE AND ATTEND. The judge will hear arguments from both sides at the traverse hearing to decide whether you received proper service. The judge will dismiss the lawsuit if they determine that you weren’t properly served.

Additionally, you must collect evidence to provide at your traverse hearing. This proof may come in the form of witnesses or written materials that back up your allegation of inappropriate service.

The plaintiff may file another lawsuit against you if your case is dismissed for improper service. You must determine whether it is worthwhile to proceed with a traverse hearing based on the facts of your case and the potency of your other defenses.

The plaintiff’s attorney and court staff will frequently oppose a defense based on incorrect service. They will inform you that your defense won’t stop the plaintiff from suing you again. But occasionally, poor service is your best line of defense. In that case, don’t hesitate to insist on your right to a transverse hearing! Always remember that the court could not rule against you if you weren’t properly served.

Process servers occasionally fabricate the affidavit of service. A process server can, for instance, erroneously claim to have left the summons with someone at your house.

By examining the physical characteristics of the person the process server claims to have met at your house, you can spot this bogus assertion.

Mistaken Identity or Identity Theft

You may use these defenses when you feel that the debt you are being sued for is not your debt.

When someone uses your name and other personal information to open credit accounts in your name, this is known as identity theft. It is known as mistaken identity when you are mistaken for someone else with a similar name or other distinguishing characteristics.

Remember that it is the plaintiff’s responsibility to prove that you were responsible for each charge. The debt’s non-ownership need not be proven.

You Were Only an Authorized User

This argument can be applicable if you are being sued for a card you shared with someone else. The distinction between a co-signer and an authorized user is key to the defense.

If someone else permitted you to use their card, you were an authorized user and never agreed to be accountable for making payments on that card. You are not responsible for the credit card debt as you are an authorized user.

However, suppose you agreed to share responsibility for a credit card with another person when you signed a credit card agreement. In that case, this argument does not cover you as a co-signer.

Even if you weren’t liable for any accusations, you could still be held accountable as a co-signer.

What Kind of Legal Defense Is Not Acceptable?

You could have gotten behind on your bills for several reasons. In many cases, you might only hold a portion of the culpability, or have been forced to stop making payments by uncontrollable circumstances.

The following defenses, regardless of how good they are, won’t help you avoid a creditor lawsuit:

• A justification for your failure to make payments on time or for your inability to do so.
• A declaration that you are open to working with the creditor to reach a settlement or create a payment schedule.
• A charge that the debt collector/creditor refused to create a fair payment plan before initiating the lawsuit

Do I Need an Attorney?

Financial attorneys should be contacted if you face legal action from a creditor. A local lawyer in your area can advise you on your strongest defenses, and even if you have none, they might be able to suggest an alternative course of action.