How to Handle a Debt Collection Lawsuit

If a debt buyer sues you to collect a debt, you should respond to the lawsuit and challenge it's right to collect.

By , Attorney · Case Western Reserve University School of Law

If a debt buyer sues you to collect a debt, there's a good chance that you can successfully challenge the debt buyer's right to collect from you. To do so, you must respond to the lawsuit. The steps are as follows:

  • file an answer to the complaint
  • demand proof of the amount of the debt
  • demand proof that the debt buyer owns the debt, and
  • present your evidence to the judge.

Debt buyers file thousands of lawsuits every year, and they count on consumers not fighting back. (Learn about debt buyers and how they operate.) Because of the way debt buyers conduct business, it is very likely that you can successfully challenge the lawsuit. With a little preparation, you may persuade the debt buyer to give up on collecting from you, or the judge to rule in your favor.

File an Answer to the Complaint

You will receive a summons and complaint when the debt buyer files a lawsuit against you. You may receive it via certified mail, or from a process server who hands it to you in person.

The summons will indicate how long you have to file your answer. Typically, the answer is due 28 days after you receive the summons (but this varies by state). If you do not file an answer with the court (and mail a copy to the debt buyer's attorney), a judgment will be entered against you automatically for the amount the debt buyer requests. Do not let this happen.

In your answer, you must go through each allegation in the complaint and either:

  • admit that it's true
  • deny that it's true, or
  • state that you are without enough information to admit or deny it.

Number the paragraphs in your answer to correspond to the paragraphs in the complaint. State in each paragraph which numbered paragraph of the Complaint you are admitting, denying, or stating you do not have enough information to admit or deny. You should prepare the answer carefully, as the debt buyer will be required to prove any allegation that you do not admit.

The answer should also contain any affirmative defenses you may have. Affirmative defenses are defenses to the complaint that you must prove. Typical affirmative defenses to a debt buyer suit include:

  • Failure to state a claim upon which relief may be granted. This is a very general defense, and applies to any situation in which the complaint does not state enough facts to support the claim. For example, the debt buyer might fail to allege that you owed the debt to the original creditor.
  • The plaintiff lacks standing. In this context, "standing" refers to the ability of the debt buyer to sue you. The debt buyer will lack standing if it does not have a legal right to sue to recover the debt. This defense is applicable if the debt buyer cannot prove it owns the debt.
  • Accord and satisfaction. This means that you already paid the debt to the satisfaction of the original creditor. If you have paid the debt, you should use this defense.

There are many more affirmative defenses that may be applicable. (Learn more in Nolo's Common Defenses in Debt Buyer Lawsuits.) If you have questions about affirmative defenses, consult with an attorney.

Demand Proof From the Debt Buyer

The debt buyer must prove both the amount of the debt it claims you owe, and that it has a right to collect that debt. Once you have filed the answer, you and the debt buyer can conduct what's called "discovery." This is the formal method of getting relevant documents from each other, asking each other questions in writing, and taking depositions.

You can request that the debt buyer provide you with all of the documents and other evidence in its possession. You can also submit written questions, called interrogatories, to the debt buyer. To learn more about discovery, see Nolo's article Formal Discovery: Gathering Evidence for Your Lawsuit.

Demand Proof of the Amount of the Debt

To get a judgment against you, the debt buyer must prove how much you owe. Very often, a debt buyer does not have sufficient documentation to prove in court that you owe the debt. This is because debt buyers buy bad debts in bulk. Typically, the debt buyer receives only a spreadsheet with names and addresses and a debt balance, without any documentation to back up the amount claimed.

You have the right to request documents from the debt buyer that show, among other things:

  • the date the account was opened
  • how much was borrowed
  • how much was paid
  • the interest rate charged, and
  • how much the debt buyer claims is owed.

If the debt buyer is unable to produce this information, you should ask the court to dismiss the lawsuit.

Demand Proof That the Debt Buyer Has the Right to Collect the Debt

To get a judgment against you, the debt buyer must prove that it, and not the original creditor, has the right to sue you for the debt. You should never take the debt buyer's word that it owns your debt.

Most debt buyers will state in their complaint that they lawfully purchased the debt and are the rightful owner, but many are unable to support that claim with documentation.

You should request the debt buyer provide you with copies of the agreement between it and the original creditor. That agreement must specifically reference your debt, and state that the debt buyer purchased your debt from the original creditor.

If the debt buyer is unable to produce this information, you should ask the court to dismiss the lawsuit.

Present Your Evidence to the Judge

Once you've collected your evidence, you have to submit it to the judge. You can do this two ways -- by filing a motion asking the court to dismiss the complaint, or using the information at the trial of your claim. If the debt buyer shows up to the trial without any witnesses, the court will likely dismiss the case.

Settlement With a Debt Buyer

If the debt buyer has all of the documentation that it needs to prove its case, you may want to try settling the case before it goes to trial. The debt buyer may be willing to settle for less than what you owe in order to avoid the expense of a trial.

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