Common Defenses in a Debt Collection Case

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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 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 about a defense that is not listed below. You should tell the Court about all of your defenses.

Common Defenses

You do not owe the money

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

You Dispute the amount of the debt - 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". There is a time limit for starting a debt collection case during which a person or company is limited for starting a debt collection case. In New York, as of April 7th 2022, the Consumer Credit Fairness Act established a 3-year time limit on many kinds of debts including all consumer credit transactions. If you are sued in certain other kinds of consumer debts, longer statutes of limitations may apply. Read CPLR section 214-i to learn more.

As of April 7th, 2022, any additional payments on the debt after the statute of limitations has expired will not extend the limitations period for most types of consumer debts.

Important: If the company is based outside of New York State, the statute of limitations may be even shorter depending on that state’s statute of limitations.

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 (Lack of Standing)

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 were only an authorized user

This applies when the credit card associated with the debt is in another person’s name and that person gave you permission to use their credit card. If you were only an authorized user but never agreed to be responsible for paying the card then you cannot be held responsible for the credit card debt.

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.

Full or Partial Payment of the Debt

This defense is used when you have already 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 that buys debts, not the company that you charged money to. Companies that 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.

Related Information:

You Got a Summons

Money that Can't be Taken to Collect a Debt

Vacating a Default Judgment

Forms