Collection lawsuit defenses that work
(and ones that don't)

When answering a debt collection lawsuit, it's important to include all of your defenses. Here are four defenses that should defeat a collection lawsuit and three that won't get you anywhere. Keep in mind, of course, that there has to be a truthful factual basis for any defense you include in your answer.

Good defense: Statute of limitations

The statute of limitations is the amount of time set by law for a creditor to start a lawsuit against you. In Minnesota, for example, the statute of limitations for most credit card lawsuits is six years. Other types of debt have different statutes of limitations. For example, a car loan typically has a four year statute of limitations.

Keep in mind that the statute of limitations provides that the lawsuit has to be started within the required time. It doesn't mean that the lawsuit has to be finished within that time.

Once you know what the statute of limitations is, you need to determine when it starts to run in your case. Generally, the statute of limitations begins to run on the first day that you are in default on your account. A quick way to figure out when your account went into default is to determine the date that you made your last regular payment. Although this won't always be a precise date that the statute of limitations began to run, it's a good estimate.

When you know the applicable statute of limitations and the date it started in your case, the rest is just simple math. Using Minnesota's six-year statute of limitations as an example again, if you defaulted on your account on December 15, 2015, the creditor must start the lawsuit against you no later than December 15, 2021.

Bad defense: Financial hardship

Unfortunately, the fact that you can't afford to pay is not a defense to a collection lawsuit. The issue in a collection case is whether you're legally obligated to pay, not whether you can afford to pay. That fact that you're unemployed, receive public assistance, or are otherwise "judgment proof" may mean that the debt collector will never collect any money from you. But it's not a legal defense to a collection lawsuit.

Similarly, the fact that the debt collector refused to work out reasonable payment arrangements with you is not a valid defense. While it can be frustrating when a debt collector won't work with you, a court doesn't have the power to force a creditor to accept a settlement or payment plan.

Good defense: Unauthorized use or fraud

Federal law provides that a cardholder is not liable for the unauthorized use of a credit card. The cardholder is not required to notify the issuer of the unauthorized charges to use this defense in a collection case. The creditor bears the burden of showing that the use of the card was authorized and the creditor probably can't meet its burden of proof by merely submitting billing statements and asserting the cardholder never objected to them.

Bad defense: No signed contract

In credit card cases, creditors typically don't have to produce a signed contract to win the case. Instead, credit card cases are often brought under a legal doctrine called "account stated." Account stated is claim where the creditor must show that the defendant received billing statements and didn't object to them. There are defenses to this argument, particularly if the plaintiff is a debt-buyer, but the point is that a signed contract doesn't have to be produced for the creditor to win.

Good defense: I already paid off this account

This goes without saying. If you've already paid off the account, you don't have to pay it again. In legal jargon, this defense is called accord and satisfaction.

Bad defense: Divorce decree says my ex has to pay

Just because your divorce decree ruled that your ex is solely responsible for payment doesn't mean you can't be sued for the account too. Divorce courts don't have the power to modify contracts between you and a third-party creditor.

Good defense: No evidence of assignment

Many collection lawsuits are brought by debt buyers. Debt buyers are companies who buy debts for pennies on the dollar and file lawsuits to collect the full balance. Because of this, it's not enough for the debt buyer to show that you owe the original creditor money. They also have to prove that they have been assigned the debt and are its current owner.