Common Defenses in a Debt Collection Case

A defense is a reason why the plaintiff should not win the case. You tell the Court your defenses when you answer the summons and complaint or when you ask the Court to vacate a default judgment. You must then prove your defenses in Court. If you prove your defenses then the plaintiff will lose and you will win the case.

Below are examples of defenses to a debt collection case. Read the explanations carefully to see if any of them apply to you. Everyone’s case is different. Some of the defenses may apply to you and most may not. You can also tell the Court a defense that is not listed below. You can get more information on LawHelp.


Common Defenses

You do not owe the money
Use this defense when you do not owe the money that the plaintiff is asking for.

Plaintiff is suing for the wrong amount of money
This defense is used when the plaintiff sues you for the wrong amount of money in the complaint. All the amounts listed must be right, including interest, collection costs and attorneys fees.

Plaintiff has been unjustly enriched
This defense is used when the money in the complaint is much higher than what you think you owe. (But remember interest can make the money you owe higher than the original money that you borrowed).

Plaintiff is violating the duty of good faith and fair dealing
This defense is used when you think that you have tried to take care of this debt in a fair way, but the other side has not been fair or was not honest with you.

Plaintiff waited too long to bring this case (laches)
This defense is used when the creditor waited too long on purpose to bring you to court or to sell your debt to the plaintiff. This case surprised you and the delay is very bad and makes it hard for you to defend the case. The amount of delay depends on the facts of each case. If the creditor has a good reason for the delay this defense will not win.

Contract is unfair (unconscionable)
This defense is used when the agreement was not fair and is very, very one-sided. “Shockingly” unfair.

Statute of limitations has passed (too late to bring this case)
As time goes by, people and companies lose old records and people do not remember details as well. Because of this there is a time limit for starting cases. This is called the “statute of limitations.” The statute of limitations for filing a debt collection lawsuit for a “consumer credit transaction” is 6 years, counting from the “date of the default.” The “date of the default” is about 30 days after you last made a payment. In other words, if your last payment was in December 2010, you can be sued for the money until January 2017. The statute of limitations on a store credit card (like a Macys card) is 4 years. If you made a payment at any time after you first stopped paying, the plaintiff’s time to sue you starts to run again. If the court finds that the statute of limitations has passed, you do not owe the money.

Important: If the company is based outside of New York State, the statute of limitations may be even shorter.

Debt was discharged in bankruptcy
This defense is used if you declared bankruptcy and the money that you are being sued for now was discharged as part of the bankruptcy case. If the debt was discharged in bankruptcy you do not owe the money.

Property (collateral) was not sold at a commercially reasonable price
Sometimes you have to give something you own to get a loan. This is called collateral. If you don’t pay your debt, the collateral is sold to pay back the money you owe. If the money from the sale of the collateral does not cover the entire debt, the plaintiff may sue you for the difference. The collateral should be sold for a “commercially reasonable” amount, which is a fair price. This defense is used when you think your collateral was sold for less money than it was worth.

No business relationship with the plaintiff
This defense is used when you don't know who the plaintiff is and how the plaintiff got to own your debt. The plaintiff may have bought your debt from the person or company that you owed money to. Because you never signed a contract with the plaintiff who bought your debt, you can ask if the plaintiff can sue you (also known as standing to sue you). The plaintiff must prove to the court that it owns your debt. To do this, the plaintiff must have a contract of sale (assignment) that says your debt has been sold.

You are a victim of identity theft or mistaken identity
Identity theft is when somebody steals your name and personal information and opens up credit accounts in your name pretending to be you. You are not responsible for debts that a thief made in your name. Mistaken identity is when you are sued for somebody else’s debts because you have similar names or identifying information. This defense is used when your identity was stolen, or if this is someone’s else’s debt.

You paid some or all of the money
This defense is used when you have paid all or part of the money that the plaintiff is suing you for. If the debt is paid off, you should not have to pay it again. Whether this is a full or partial defense to the lawsuit depends on how much of the debt you have paid.


New York City Defenses Only

NYC Department of Consumer Affairs shows no record of plaintiff having a license to collect debt
This defense is used when the plaintiff is a company who buys debts, not the company that you charged money to. Most companies who buy debts must be licensed by the New York City Department of Consumer Affairs. If the plaintiff is not licensed, that is a defense to this case. You can find out on-line at the Department of Consumer Affairs if the plaintiff is licensed.

No debt collector's license number in the complaint
Most debt buyers must be licensed by the New York City Department of Consumer Affairs and must list the license number on the complaint. This defense can be used if the plaintiff did not list a license number. The court may dismiss the case or may let the plaintiff change (amend) the complaint to list the license number.


NOT a Defense

The list above gives only some examples of possible defenses. You may have other defenses. You should tell the Court about all of your defenses. But, it is not a defense to the lawsuit if you lost your job, or you had medical bills to pay, or any other reason that you could not afford to pay the debt. It is also not a defense if the plaintiff refused to take less money from you or agree to let you pay over time.

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