How to challenge a debt lawsuit

Have you been served with a debt lawsuit? 

Take a breath. You can get through it. While it's impossible to predict your chances of winning a debt lawsuit, a strong defense could strengthen the odds in your favor. 

It’s scary to get served, but don’t panic. We’ll go over a few debt lawsuit basics. If you know more, you might feel more calm and confident dealing with a tough debt situation. 

We can only scratch the surface and round up general information that might not apply to you. If you’re dealing with a debt lawsuit, one of your first priorities should be to seek qualified legal advice. 

The information provided in this article is intended for general informational purposes only and shouldn't be taken as legal advice. For personalized legal advice, consult with a qualified attorney licensed to practice law in your state.

An intro to debt lawsuits

Creditors file lawsuits when they've exhausted other options to collect an unpaid debt. At least 2.5 million debt lawsuits were filed in the U.S. in 2022, with the actual number potentially reaching 4.5 million, according to the National Center for Access to Justice. 

State laws govern how debt lawsuits work and the requirements creditors or debt collectors must meet to file one. The sequence of events varies by where the lawsuit is filed, but the process usually begins with two documents:

• Summons. The summons is an official court document that tells you you're being sued.

• Complaint. The complaint (or petition, in some states) tells you what you're being sued for.

You have to be served (given) these documents according to the process specified by your state's laws. For instance, you could be considered served if the court papers were handed to you directly, left with someone else to give to you, or left in a place where you can easily find them. The creditor might be required to file an affidavit with the court to prove you've been served.

What you do next is determined by the laws where you live. In California, for example, you could:

• Submit an answer to a summons for debt, which is a written reply that includes any defenses you want to claim.

• Do nothing, which could result in a default judgment. That means the court makes a decision without hearing your side of the story (usually an automatic win for the creditor).

• Pay the debt, either in full or for a negotiated amount, and ask the creditor to dismiss the lawsuit against you.

You have a window of time to respond to the complaint before it goes to court. This window is set by your state's laws. 

Using California as an example again, you have 30 days to submit your answer. Day 1 is the day after you receive the summons and complaint. You may be able to file an answer late if your state allows it.

The court sets a date for a trial. You and your creditor are expected to appear. Before the court date, you might get requests for information from the creditor's attorney. In any legal proceeding, you’re expected to respond.

At the court date, the judge hears arguments from both sides. The plaintiff (that's your creditor) usually goes first, followed by the defendant (that's you). Both sides can offer evidence. The judge then decides whether to rule in favor of you or your creditor.

If the judge believes the creditor has proven their case, a judgment is entered against you. The judgment may be filed at the end of the trial or within a certain number of days/weeks after the trial ends.

A judgment is a court order that states you owe the debt. A creditor might need an additional order from the judge to actually collect what's owed. Creditors may be entitled to garnish your wages, lay claim to your bank account, or place a lien against property you own. 

Certain situations don't require a creditor to get a court’s permission to collect on a debt. For example, the IRS could garnish your wages without a court order if you owe unpaid taxes.

Here are a few other things you should know about debt lawsuits:

• Debt lawsuits shouldn't take you by surprise. Most creditors will try to contact you for weeks or months about your debt first. Lawsuits cost money, and most creditors would prefer to find an acceptable outcome without the costs associated with going to court.

• A debt collector can't threaten to sue you if they don't actually intend to do so.

• Debt collectors can't sue or threaten to sue after the statute of limitations (the time limit for filing a lawsuit) on a debt has expired. If they sue you anyway, you could ask the judge to throw out the case.

• You have the right to ask debt collectors to leave you alone, but if you avoid creditors on past-due accounts, they might be more likely to sue you. Suing you becomes the only way for a creditor to collect once a cease and desist letter is on file. Communicating with them doesn’t mean they won’t sue you, but it puts you in a better position to stay on top of your account status and possibly work out an agreement.

• You may be able to negotiate an affordable solution with your creditor, either by agreeing to a payment plan or resolving the debt for less than the full amount due.

Why you must respond to a debt lawsuit

Responding to a debt lawsuit puts the burden on the creditor or debt collector to prove that you owe the debt. It doesn't mean you agree the debt is yours or that the lawsuit is valid.

If you don’t answer a lawsuit and you don’t show up to trial, the court could enter a default judgment against you. That means the creditor wins. Once a default judgment is issued, it's difficult to get it reversed. 

Filing your answer doesn't prevent a judgment from being entered in the case. It does, however, give you a chance to defend yourself. A defense is a legal reason as to why you don't have to pay the debt. 

A timely response to a notice of credit card debt lawsuit doesn't guarantee you'll win your case, but it’s an important step that could help you avoid a default judgment. 

Here are a few additional tips that could help you protect your rights. 

• Review the notice carefully and check the deadline for entering a response. 

• Decide if you want to respond yourself or get help from an attorney.

• Review the list of eligible defenses you can include in your response, if your court provides them. 

• Format your response following the guidelines provided by the court. Make the appropriate number of copies. 

• Review your information. Check that your name, the court name, case name, and case number are all correct and that you've checked any required boxes. 

It may help to review sample answers for a summons to credit card debt if you're not sure how to respond. Your answer could be something as simple as "I already paid this debt or settled it," or "The plaintiff does not have the right to sue." 

A debt lawyer can assist you with filing your response. If you have questions and you're not represented by an attorney yet, you might be able to get help through a local legal aid organization.

Debt lawsuits step-by-step

A debt lawsuit can be daunting and a cool head can help you navigate the process.

Step 1: Read your summons and complaint

This may seem like an obvious tip, but take the time to thoroughly review the summons and complaint. 

Take note of these details:

• Plaintiff's name 

• Plaintiff's attorney, if one is listed

• Defendant's name 

• Cause of action, which is the reason you're being sued

• Damages, which is the amount of money the plaintiff wants to get from you

• Deadline to enter a response

Verify the information listed on the summons for accuracy. If you don't recognize the debt, move on to the next step.

Step 2: Validate the debt

You have the right to send a debt validation letter to the creditor who is suing you. By law, creditors and debt collectors are required to verify information about a debt, including:

• The amount owed

• The name and contact information of the person the account belongs to

• The account number

• Who the debt is owed to

• How to dispute the debt if you don't believe that you owe it

You can dispute a debt in writing within 30 days of a creditor initially contacting you about it. Time is of the essence. A creditor or debt collector can continue collection efforts (including a debt lawsuit) until they receive your validation letter, as long as doing so doesn't conflict with your right to dispute.

Step 3: Seek legal advice

Research shows that most people who find themselves in a debt lawsuit handle it without an attorney's help. The outcomes are more often bad for the debtors. 

A 2023 study of debt lawsuits in California found that in some counties, up to 95% of defendants didn't have legal representation. The same study found that unrepresented defendants are less likely to file a response to a debt lawsuit. That led to more one-sided cases. The creditor obtained a judgment 57% of the time.

An attorney can't promise you that you'll win a debt lawsuit. But they can be by your side to answer questions, help you mount a defense, and guide you through the process.

If money is an obstacle to hiring an attorney, you still have options:

• Many law offices offer initial consultations for free or at a discount. You can find them by searching for "debt attorney near me" or "debt attorney free consultation" to generate local results. 

• Some attorneys offer pro bono services, meaning they'll take your case for free or for a small fee. LawHelp.org can help you find low-cost attorneys in your area.

• Your city or state may have a legal aid society for eligible residents that provides free or low-cost help. 

• The American Bar Association offers search tools and lawyer referrals to people who need help finding an attorney.

• Nonprofit legal advocacy groups could assist people with getting out of a debt lawsuit, often for free or at reduced fees. Legal Services Corporation is a national nonprofit that helps people connect with low-cost legal aid resources. 

• Your court system may offer free self-help resources, such as access to official court forms. 

You may want to consult a lawyer before responding to a lawsuit so you have their expertise in preparing an answer. But you could still consider getting help from an attorney after the fact if you don't want to handle the lawsuit alone.

When you hire a lawyer, they’ll guide you through the remaining steps.

Step 4: Respond to the lawsuit (file your answer)

Your attorney will draft and file your answer to the complaint. You’ll be asked to gather the documents and information your attorney needs so they can answer accurately. 

Here's how filing an answer typically works:

• Your attorney (or you if you're representing yourself) will review the summons and complaint to identify the plaintiff and learn the details of the lawsuit. 

• Your attorney (or you) will write an answer and include any and all defenses you plan to claim.

• You and your attorney will double-check for errors and blank spaces that got missed. Once the document is final, you’ll sign and date the paperwork and your attorney (or you) will make any required copies. 

• Your attorney will file the prepared documents with the court. 

You may need to pay a filing fee when you submit your documents to the court. The court may allow you to apply for a waiver of the fee if you're unable to pay it.

Your court may expect you to serve your creditor with a copy of your answer once you file it. State laws determine how this works. 

In California, for example, you'll need to choose another adult to serve the papers for you. Your server has to fill out a proof of service form stating that they delivered the document. You may need to make one or more copies of the proof of service form and file it with the clerk of court. 

Step 5: Build a strong defense (challenge the lawsuit)

There are several defenses you might raise to a debt lawsuit, all of which would need to be supported. If you have a credit card lawyer on your side, they’ll explain what evidence might help you.

Affirmative defenses are reasons a plaintiff shouldn't win. They must be included in your answer to the summons—you can't bring them up later. You should consult with an attorney to know your full rights and defenses. They may advise you of some top affirmative defenses for debt lawsuits that might fit your circumstances.  

For example, you may claim that:

• The plaintiff took too long to file the lawsuit and the statute of limitations has expired. 

• The plaintiff misrepresented themselves or otherwise engaged in wrongdoing.

• You don't agree that you owe the plaintiff, either because you've already paid the debt or because it never belonged to you in the first place. 

• The debt was discharged in a bankruptcy proceeding.

• The debt you're being sued for was never agreed to in writing.

• You paid the debt or tried to pay a full or partial amount to satisfy the agreement between yourself and the creditor. 

• The plaintiff (and you) agreed to cancel the debt contract.

• The plaintiff doesn’t have the legal right to sue you under the laws in your state. 

• You were a victim of identity theft and the debt isn't yours.

Your state laws may define what constitutes an acceptable defense to a debt lawsuit. 

As you work your way through your answer to the complaint, think about how you’ll prove your case. For example, if you claim that you were an identity theft victim, you may need to show a police report and evidence that you submitted an Identity Theft Affidavit to the Federal Trade Commission (FTC). 

Being unable to repay a debt because you lost your job is understandable, but it isn't a legal defense. An attorney can advise you on possible defenses you might use if you're not sure which one to claim. 

Step 6: Prepare for trial

Whether you have an attorney or don't, prepare for your day in court. You may want to attend a trial, either in person or virtually, if your court offers that option so you know what to expect. 

You can also plan what you'll say at the trial, and prepare a list of questions you'd like to ask your witnesses and/or the plaintiffs. Preparing may help ease some of the stress or anxiety you feel about going to court. 

More about the statute of limitations in debt cases

The statute of limitations is the legal limit on how much time a creditor or debt collector has to sue you over a debt. The limit varies from state to state and for different types of debt. For example, the limit on credit card debt might be three years, while the limit on medical debt might be five years. 

Why do you need to know this? Simply because once the statute of limitations on a debt expires, you can no longer be sued for it. 

That doesn't mean the debt goes away or that you don't owe it anymore. But a creditor wouldn't be able to sue you or get a court order to garnish your wages. They could, however, continue contacting you about the debt if your state allows that. You can send a written request asking them to stop contacting you since the debt is time-barred.

If you're sued for a time-barred debt, the FTC advises you to:

• Consider talking to an attorney

• Go to court on the scheduled day and tell the judge the debt is time-barred

• Bring documentation with you to prove that the statute of limitations has expired

What is a motion to dismiss? 

A motion to dismiss is a request to have the court throw the case out. You could try this strategy to get out of a debt lawsuit if you believe you have a strong case to do so. 

The process varies by state, but it may look like this:

• Determine grounds for dismissal. You'll need a valid reason to ask the court to dismiss the case. For example, you could say the case should be dismissed if the deadline has passed or the creditor didn't prove the debt correctly. 

• Prepare your motion. Your attorney (or you) will fill out paperwork to file a motion for dismissal following the format your court requires. Your motion will include the reason why you believe the lawsuit should be thrown out and evidence to support your claim. For example, if you're arguing that the statute of limitations has passed, you could attach a statement that shows the last payment date on the account. 

• File your motion. Once the motion is ready, your attorney (or you) can file it with the court. You could file in person or electronically, depending on what the court allows. You'll need to get a certificate of service to show that the plaintiff received a copy of your motion. 

Once you file your motion, the court may schedule a hearing. The plaintiff will have an opportunity to respond. The court will then decide to either grant your motion and dismiss the case, or let it proceed. 

What is the burden of proof in debt cases?

Burden of proof means who has to prove their case. In a debt lawsuit, the burden of proof rests with the creditor that sues you. That means they have to prove you owe the money and they have the right to sue you for it. 

It’s up to the creditor or debt collector to prove why a judgment should be made against you. If the creditor can't prove to the court that the debt is yours and you owe the money to them, they might not win the case. 

Possible outcomes to a debt lawsuit

A debt lawsuit can go several ways. The judge could find that you don’t owe the money and dismiss the case. That is, of course, the best possible result. 

On the other hand, the judge may decide you owe the money and issue a judgment in favor of the plaintiff. The plaintiff could also win interest, court costs, and attorney fees.

If you lose, you usually owe the full amount immediately (unless the judge orders the creditor to accept a payment plan). Prepare for that possibility, because if you can’t pay right away, the winner may be able to garnish your bank account or paycheck. That means your bank or employer would be forced to send some of your money to the court, who would then give it to the creditor who won the judgment.

You can respond to a loss in several ways:

• Pay the debt

• Ask for a payment plan

• Negotiate a settlement with the plaintiff

• Ask the judge to set aside (void) the judgment if you didn’t understand or know about the lawsuit. This doesn’t make the lawsuit go away. It starts over, and you get a chance to defend yourself.

• Consult with a bankruptcy attorney.

If you're interested in trying to settle the debt, consider talking to a Debt Consultant. Your attorney or Debt Consultant can help you negotiate with your creditor, if they're open to doing so.

What to expect in court from a debt lawsuit

When your court date comes up, it’s a good idea to arrive at the courthouse early. The judge will call each person in turn. Dress appropriately. You can check with the court to see if there's a specific dress code. Bring your documents with you and find the right courtroom, then be prepared to wait until your case is called.

Once you're in front of the judge, respond clearly and respectfully to any questions you're asked. If you're asked a yes/no question, you can answer "Yes, Your Honor" or "No, Your Honor." You're expected to stand when speaking to the judge. 

A debt lawsuit isn't ideal but it's a situation you can deal with if you're prepared. Consider talking to an attorney if you're sued for debt so you understand what to expect and how to build a strong case. 

What’s next

If you’ve been served, you have no time to waste. 

• Read your summons and determine your deadline to respond. 

• Gather the documents and information about your debt. If you don’t recognize it, send a debt validation letter right away.

• Contact a lawyer, legal aid society, or legal service to discuss your case.