If a creditor or debt collector sues you, you must raise any defenses or claims you have in your formal response. You do this by stating either an affirmative defense in your answer or filing a separate claim, called a counterclaim, in a complaint that you file against the creditor.
(Learn more about creditor lawsuits, including how they begin, when to respond, and what happens in court, in our Creditor Lawsuits area.)
What Is an Affirmative Defense?
An affirmative defense goes beyond simply denying the facts and arguments in the complaint (although you must do that, too, by formally denying the facts and conclusions you disagree with). An affirmative defense sets out new facts and arguments which, if proved in court, would make the creditor lose on that part of the claim. If you prove your affirmative defense, even if what the complaint says is true, you will win or, at least, reduce the amount you owe.
Types of Affirmative Defenses to Creditor Lawsuits
Listed below are some examples of affirmative defenses you might be able to state in your answer:
- The creditor did not bring the lawsuit in a timely manner. This is called violating the statute of limitations. (To learn about this defense, see Time-Barred Debts: When Collectors Cannot Sue You for Unpaid Debts.)
- You never received the goods or services the creditor claims to have provided.
- The goods or services were defective.
- The creditor damaged your property when delivering the goods or services.
- The creditor threatened you or lied to you to get you to enter into the agreement.
- You legally canceled the contract and therefore owe nothing.
- You cosigned for the loan and were not told of your rights as a cosigner.
- The creditor was not permitted to accelerate the loan.
- The contract was too ambiguous to be enforced.
- The contract is illegal.
- The contract or the creditor has violated a consumer protection statute that makes the contract unenforceable.
- After repossessing your property, the creditor did not sell it in a “commercially reasonable manner.” (To learn more, see Repossession of Cars & Personal Property.)
- The case was filed in the wrong court (wrong jurisdiction or venue). (To learn more, see State Court Venue Rules.)
What Is a Counterclaim?
A counterclaim is the basis of a lawsuit you have against the creditor or collector. It may be based on different issues from those in the complaint. You may even be asking for more money than the plaintiff wants from you. In many states, however, the counterclaim must arise out of the same transaction for which you are being sued.
Here are examples of some counterclaims you might want to make against the creditor or collector. To raise a counterclaim, you will usually have to serve and file your own complaint and pay a filing fee within the time you have to respond to the complaint. If you succeed on a counterclaim, you may be entitled to monetary damages from the creditor or collector, or at least to rescind (cancel) the contract with the creditor.
- The creditor breached a warranty. (To learn about warranties, see Nolo’s Warranty Rights FAQ.)
- The creditor violated the Fair Credit Reporting Act, Truth in Lending Act, Electronic Fund Transfer Act, or Equal Credit Opportunity Act.
- A collection agency violated the Fair Debt Collections Practices Act or a state debt collection law. (See our Debt Collector & Collection Agencies area to learn about illegal collection practices.)
This is an excerpt from Nolo's Solve Your Money Troubles: Debt, Credit & Bankruptcy, by Margaret Reiter and Robin Leonard.