How to challenge a debt lawsuit

Have you been served with a debt lawsuit? 

Take a breath. You can get through it. Know that lawsuits are winnable in many cases. 

It’s scary to get served, but don’t panic. We’ll show you strategies for challenging lawsuits from creditors when you've had a tough time resolving debt.

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

Understanding debt lawsuits

Creditors file lawsuits for debt when they believe suing you is their best chance of recovering an unpaid balance. Here are a few things you should know:

• Debt lawsuits shouldn't take you by surprise. Most creditors will try to contact you for weeks or months about your debt first. In the U.S., most courts frown on legal ambushes. Judges want to give all sides the chance to be heard. Also, lawsuits cost money, and most creditors would prefer to find an acceptable outcome without the costs associated with going to court.

• You have the right to ask debt collectors to leave you alone, but if you avoid creditors on past-due accounts, they may sue you. (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 can often head off a lawsuit by working with a debt collector. 

You may be able to negotiate an affordable solution with your creditor. But even if that ship has sailed and you’re facing a suit, all is not lost. The biggest mistake people make is failing to respond to the lawsuit. A 2023 Princeton study revealed that 90% of those sued for debt in California didn’t respond to the summons they received. That'll backfire. Here’s why.

Why you must respond to a debt lawsuit

Defendants who don’t respond lose. 

If you don’t answer a lawsuit and you don’t show up in court, the creditor (the plaintiff in the case) will likely receive a “default judgment,” which means you lose—without anyone considering the facts of your case. 

After that, the debt collector can apply to garnish your wages (have a portion of your pay sent to the court before you receive it), withdraw money from your bank accounts, or take other property. Even if you’re judgment-proof now (you have nothing they could take), winning plaintiffs can sometimes swoop in years after the hearing and claim your money or property. 

How to challenge a debt lawsuit

You can’t win if you don’t play. Working through these steps gives you your best chance of having a debt lawsuit dismissed. 

Step 1: Read your summons and complaint

When someone sues you, you should receive two documents: a summons and a complaint (sometimes called a petition). The summons should tell you who is suing you, what they want to happen, and where, when, and how to respond. The complaint is basically their side of the story.

Step 2: Validate the debt

If you don’t recognize the debt or the creditor suing you, you could send a debt validation letter (also called a debt verification letter). If you do, the creditor must stop all collection efforts until it provides you with some basic information about the debt. The information should help you determine if the debt is really yours, and if the amount is correct. 

Step 3: Seek legal advice

A study of debt lawsuits in Utah from 2015 to 2017 found that 19% of defendants who fought their suit without lawyers won their cases. However, 53% of defendants with lawyers won their cases. 

Debt collectors count on the people they sue not having legal advice or representation. Getting a pro in your corner could give you a better shot at victory.

If money is an obstacle, you still have options:

• Many law offices offer initial consultations for free, or at a discount. 

• Your city may have a legal aid society for eligible residents.

• There are cheaper online legal and document services that help people respond to lawsuits. Always check with TrustPilot, the BBB, and other review sites before purchasing services.

It’s important to consult a lawyer before responding to a lawsuit, because your answer is your only opportunity to use the kind of defenses that could get the lawsuit dismissed. 

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. 

Courts have different processes for submitting documents. It may be possible to upload directly to the court’s website, or drop off the answer in person and get a time and date stamp on it when you do. If the court accepts filings by mail, it’s always a good idea to use a method that will give you proof of delivery, and send it early enough to arrive by the deadline. 

The creditor suing you also gets a copy of your answer. The court requires a signed document swearing that a copy was sent or delivered to them. It’s called a certificate of service, and if you have a lawyer, they’ll submit it. 

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

If you plan to fight the lawsuit, you need to assert your defense and force the plaintiff to prove their case. Gather the evidence you need to support your claim. For instance, if you claim that the statute of limitations has expired, you’ll need to show when you made your last payment on the debt. If you have an attorney, they’ll explain what evidence might help you.

• of frauds. This is a state law that says that an agreement must be in writing and signed by you or it may not be enforceable. It doesn’t apply to all types of agreements. But for one that’s covered, if a creditor is suing you but you didn’t sign a written contract, the lawsuit might get thrown out. These laws vary from state to state.

• Lack of standing (the party suing you doesn’t have the right to collect—this can happen when a debt is sold and the person suing you can’t prove you owe it)

• Fair Debt Collection Practices Act (FDCPA) violations. If a debt collector has violated your rights under the FDCPA, you may even be able to sue them. For instance, the debt collector contacting you can’t lie and say they’re an attorney if they aren’t.

As you work your way through your answer to the complaint, think about how you’ll prove your case. For instance, if you claim that you were an identity theft victim, you may have called the police or reported the theft to the three major credit bureaus. 

Being unable to repay a debt isn't a defense. But you may want to go to court anyway, even if you owe the money. That’s because going to court forces the debt collector to prove that you owe them, which isn’t always easy. And even if you lose, the judge could order a payment plan that you can afford. Finally, if the plaintiff knows you plan to fight, they may be more open to negotiating before the hearing.

Step 6: Attend court hearings

Many debt collection cases end up in small claims court because the amounts are low enough to qualify. The process in small claims court is rather informal. Typically, a bailiff introduces the judge and goes over the rules. For instance, you don’t hand documents directly to the judge. Instead, you give them to the bailiff, who hands them to the judge. 

Even if you have an attorney, you may need to be present at all hearings about your case. In many places, an attorney can’t represent you in small claims court, but they could advise you outside of court.

Make sure you have everything you need, including copies of your answer, exhibits, notes, and anything else you or the plaintiff have filed in the case. Make sure your lawyer and any witnesses know the schedule. Stay focused and calm. Be polite, and speak only when it’s your turn. You can take notes when the other side talks so you don’t forget what you want to say. The process doesn’t usually take long. 

Possible outcomes

The judge may find that you don’t owe the money and dismiss the case. That is, of course, the best possible result. Or the judge may decide you owe the money, and find for the plaintiff. Or that you owe a different ‌amount. The plaintiff could also win interest, court costs, and attorney fees.

Unless the judge orders a payment plan, you usually owe the full amount immediately. Prepare for that possibility, because 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. That’s a decent strategy if you didn’t understand or know about the lawsuit, or if there is a default judgment against you. This doesn’t make the lawsuit go away. It starts over, and you get a chance to defend yourself.

• Consult with a bankruptcy attorney

Although it’s more difficult to negotiate a debt after you’ve lost a lawsuit, you may still have that option, either on your own, or with help from your lawyer or a debt resolution service.

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.