Common Defenses to Debt Collection Lawsuits

The first step if you are being sued or harassed by a debt collector is to see if you have any valid substantive or procedural defenses to the case.

You may have substantive defenses — such as usury (lending money at an illegal interest rate), duress (such as medical credit cards offered by some doctors and dentists that have exceedingly high interest, which consumers cannot refuse because of their immediate medical necessity), or simply the fact that the account is not yours (identity theft).

You may also have procedural defenses — these are for when the creditor has done something incorrectly according to the court rules.

For instance, did you know that the Massachusetts trial courts have two levels, District Court and Superior Court? The maximum that a creditor can sue you for in District Court is $25,000. Attorney Culik recently had a $75,000 lawsuit by Citi dismissed completely because it was incorrectly filed in District Court, rather than in Superior Court.

Another procedural defense is if you did not receive notice of the lawsuit. Under the United States Constitution and the Massachusetts Constitution, you have the right to “due process” before a court can deprive you of property or issue a judgment against you. So if you did not receive notice of the lawsuit, the judgment is void. If notice of the lawsuit was left at the wrong address, at a previous residence, or there is some other valid reason you did not receive it, the judgment must be set aside.

For example, in a recent case, Attorney Culik had a judgment for $120,000 set aside by a court nearly two years after it was entered, and after the creditor had already attempted to freeze the client’s bank account. The judgment was canceled and the client’s bank account could not be garnished.

Here is a list of common defenses to debt collection lawsuits that Culik Law uses to defend people:

• You already paid the debt
• Identity fraud
• Statute of limitations (the statute of limitations on contracts in Massachusetts is six years)
• Bankruptcy
• Usury (illegal interest rate)
• Unconscionability — this means that the transaction was so one-sided that it would be unfair to enforce it against you
• Failure of the debt collector to register with the Massachusetts Division of Banks
• Violation of the Fair Debt Collection Practices Act