Consumers who mismanage their finances are more likely to face the frustration of dealing with debt collectors or debt collection agency. Unfortunately, some collectors have the legal right to file a lawsuit against the consumer.
Reviewing the 11 common defenses to debt collection lawsuits helps consumers prepare for their cases
1. The Defense of Identity Theft
Table of Contents
- 1. The Defense of Identity Theft
- 2. The Defense of Improper Service
- 3. The Debt Was Paid In Full
- 4. The Consumer Was Just An Authorized User
- 5. A Failure to Act Before the Statute of Limitations Ran Out
- 6. There Isn’t A Business Relationship with the Consumer
- 7. The Collateral Was Sold for Less Than a Reasonable Price
- 8. The Consumer Has Filed for Bankruptcy
- 9. A License Number Doesn’t Appear on Any of the Documentation
- 10. The Debt Collector Doesn’t Have A License
- 11. Disputing the Debt Balance
Identity theft occurs when another party steals the consumer’s financial information and uses it to purchase goods or services. Unfortunately, some consumers aren’t aware that they have become the victim of identity theft until legal action is taken against them. This is why it is recommended that consumers keep a close eye on their credit history and their credit scores. Some consumers use services that recognize suspicious transactions and alert the consumer, but not all consumers use the services.
Consumers can use the defense of identity theft even if a consumer becomes the victim of identity theft and isn’t aware of the debt until notified by a debt collector. Once the crime is discovered, the consumer must follow steps to report it and seek assistance from the authorities. The crime will be investigated to find the perpetrator and make an attempt to recover the funds that the consumer lost because of identity theft. After the crime has been reported, the creditor or debt collector receives a report about the investigation. Typically, the debt collector cannot take legal action against a consumer if the consumer can prove that they were the victim of identity theft. Consumers who want to review the lawsuit defense more fully can check out debtlegaldefense.com right now.
2. The Defense of Improper Service
The defense of improper service indicates that the consumer was unaware of the lawsuit and never receives a summons to the court date. Typically, an officer of the court must hand-deliver the summons to the defendant in person. In some cases, a process server delivers the court documents, but the process server must have evidence that the defendant was served. A consumer who was unaware of a legal claim filed against them could use the defense of improper service to have the case thrown out of court. However, the action doesn’t guarantee that the plaintiff won’t refile the legal claim and follow more careful protocol to make sure that the defendant receives the court summons the second go-around.
3. The Debt Was Paid In Full
If the debt was paid in full by the consumer, the debt collector or creditor doesn’t have a case against the consumer. However, the consumer would need invoices that show the full balance owed to the credit, and a copy of the receipt from the payment method. The consumer can use a receipt from a debit or credit card to substantiate their claim. If the consumer paid via check, the bank will have a copy of the check after the creditor collects the payment through the bank.
4. The Consumer Was Just An Authorized User
Using the defense that the consumer was just an authorized user helps the consumer avoid an award or judgment against them. An authorized user is added to allow the individual to pay the bill or acquire information about the account. In these instances, the authorized user is not the account holder, but an individual who was given authorization by the account holder to speak to the creditor on their behalf. According to the law, a creditor cannot file a legal claim against the authorized user even if the individual is the spouse of the account holder. The only way that the creditor could take action against the spouse is if it was a joint account.
5. A Failure to Act Before the Statute of Limitations Ran Out
A failure to act before the statute of limitations runs out prevents the creditor from filing a lawsuit against the consumer. Each state has different statutes for different types of debts. The consumer can review the statutes with their attorney and determine if the statute has run out. If it has, the consumer can take legal action against the creditor if the creditor or a debt collector harasses or threatens the consumer. Consumers who aren’t sure when the statute runs out or what to do next can follow these steps.
6. There Isn’t A Business Relationship with the Consumer
If the debt collector isn’t the original creditor, the plaintiff and the consumer do not have a business relationship. Typically, debts that are charged-off are sold to a collection agency to collect the outstanding balance. Next, the debt collector increases the balance of the debt and makes attempts to collect the money the agency spent purchasing the account from the original creditor. While the debt collector can file a lawsuit against the consumer, the consumer can use the defense that the two parties didn’t have a business relationship to get the legal claim dismissed.
7. The Collateral Was Sold for Less Than a Reasonable Price
If the collateral was sold for a cash price that is unreasonable and below the market value, the consumer can use this defense to avoid an award in a lawsuit. Too often, this occurs with auto loans and mortgages after a foreclosure.
8. The Consumer Has Filed for Bankruptcy
Bankruptcy protects the consumer from any type of legal claim as long as the debt was included in the bankruptcy claim. The automatic stay remains until the end of the bankruptcy case which could be anywhere between six months to five years.
9. A License Number Doesn’t Appear on Any of the Documentation
All documentation from the collection agency must have the agency’s license number on each copy. Without a proper license number, the documents can be invalidated.
10. The Debt Collector Doesn’t Have A License
Debt collection agencies must have a license number to operate and collect debts from consumers. If the agency doesn’t have a lawful license in their state of operations, the collection agency is considered fraudulent.
11. Disputing the Debt Balance
Disputing the debt balance can help the consumer get a lower balance. Balance increases are common when the original creditor sells the account to a debt collection agency. The consumer will need invoices from the original creditor showing the last balance for the account.
Consumers who become the defendants in a lawsuit filed by a creditor or debt collection agency need fast legal assistance. Several defenses are available for consumers and may help the consumers avoid a lawsuit award. Understanding the most common defenses helps consumers prepare for their case more effectively.