Debt Collection Lawsuit Guide

Getting sued by a debt collector is upsetting, and dealing with the legal system can be intimidating.

Fortunately, dealing with a debt collection lawsuit is not as difficult or expensive as you may think. On top of that, many consumers have a variety of defenses they can use to help them obtain a favorable outcome.

Common defenses to a debt collection lawsuit

Defenses to a debt collection lawsuit generally fall into two categories: defenses that can result a dismissal of the lawsuit, and defenses that can help a consumer reach a lower settlement.

Complete defenses to the debt. One way to think of these defenses is if the consumer can produce evidence proving they do not owe the debt. For example, if a consumer can produce evidence that the last payment on a debt was more than six years ago before a lawsuit was initiated, they have a strong argument that the lawsuit is past the statute of limitations.

Even better, if a consumer can produce a cashed check (or bank account, settlement letter, etc.) showing that a particular debt was previously paid in full.

Evidentiary defenses. In general, these are defenses that attack the creditor’s evidence (or lack thereof). Creditors tend to have terrible evidence to establish ownership of an account. Bills of sale typically state something like “everything we bought is listed in Exhibit A.” Creditors regularly attach redacted spreadsheets titled “Exhibit 1” that list a consumer’s name. Whether or not that is competent and persuasive argument that a consumer owes a debt is ultimately a determination for the court.

Another common evidentiary issue is the alleged balance—how was it calculated, how was interest calculated, what amount of interest was charged (and why), etc. These are valid defenses, and although that may not lead to a complete dismissal of a case, they can certainly be used to reach a lower settlement.

How I can help

I have been helping consumers get great results in debt collection lawsuits for years, using unbundled services and flat fees to keep costs manageable.

I can advise you how to handle your lawsuit, or I can handle it for you, but in order to decide what to do, you need to know what to expect. The steps below are the rough outline of a debt collection lawsuit. Most lawsuits include these steps, but some lawsuits involve more or fewer steps. Consumers can handle some steps on their own, but it is still a good idea to consult with an attorney that defends consumers in debt collection lawsuits (like me) before taking any action.

If you need or want help from a consumer lawyer, contact me. I can help you understand your options and take care of the next step on your lawsuit, or handle it for you.

The general steps of a debt collection lawsuit

Step 1: Answer

This is the number one, most-important thing to do when you are served with a summons and complaint. If you do not answer the complaint you received, you will lose the lawsuit. It’s that simple. Failing to respond means the creditor can obtain a default judgment. If there is a judgment against you, a creditor can pursue wage or bank account garnishment.

In Minnesota, a lawsuit can be started without filing it with the court—if you get a summons and complaint, answer it.

Although a lawsuit can be started without it filing it with the court, the case will need to be filed eventually. In fact, if a lawsuit is not filed within one year of the date of service, it is deemed dismissed with prejudice. That means the other cannot ever pursue the claim again. The only way to extend that one-year timeline is by agreement between the parties.

I make answering a debt collection lawsuit easy and affordable. I charge a flat rate of $350 to help you draft an answer for a debt collection lawsuit. Not only will I help you draft an answer, but I will help you understand your case, your options, and give you advice on how to potentially negotiate a settlement. Answering does not win or lose the lawsuit, but it does ensure that they cannot get a default judgment. In general, it should also provide more leverage in negotiating a potential settlement. Once you answer, the creditor knows they will actually have to do some work to try and recover any money from you. That provides you with powerful leverage.

Step 2: Negotiate

After you serve the answer, it is almost always a good idea to find out what amount the plaintiff may be willing to settle the lawsuit for. You do not have to accept it, but at a minimum it is nice to know.

This can be frustrating; debt collectors at law firms can be rude, unwilling to negotiate, and often ask probing questions about your finances—questions you do not have to answer. Be careful what you say.

If the thought of calling a debt collector sounds intimidating, I can help you prepare, or I can handle settlement negotiations for you. You can find more information about my fees for settlement negotiation—and other tasks—or just contact me to find out more.

Step 3: Discovery conference

If you are unable (or unwilling) to resolve your case relatively quickly, you are required to have a discovery conference with the opposing party within 30 days of the deadline for serving your answer.

During the discovery conference, the rules require that the parties discuss:

  1. The nature and basis of their claims and defenses and the potential for early resolution;
  2. Make or arrange for the disclosures required by Minn. R. Civ. P. 26.01(a), (b);
  3. Discuss the preservation of any discoverable information; and
  4. Prepare a discovery plan for the case.

The discovery plan is essentially a broad outline for the case regarding discovery and other deadlines. If the case been filed, the discovery plan needs to be filed with the court within 14 days of the discovery conference.

If you have represented yourself to this point, now would be a good time to consult an attorney. A really good time.

Unless you have a good understanding of the rules of civil procedure and your potential defenses, you will be in a bad position to discuss your case with the opposing party.

Step 4: Discovery begins

Under Minn. R. Civ. P. 26.04, parties cannot seek discovery until they have met and prepared the discovery plan as described. Minnesota recently amended the rules to limit discovery to include a new proportionality requirement.

This rule is brand new, but it defines proportionality as not limited to: burden or expense vs. likely benefit, considering the needs of the case, the amount in controversy, the parties resources, the importance of issues at stake in the action, and the importance of the discovery in resolving the issues. See Minn. R. Civ. P. 26.02(b). Again, the rule is new, so there is relatively little guidance on the element of proportionality.

Whether or not you wish to engage in discovery at this point truly depends on your case. As noted below, the parties are required to make initial discovery disclosures soon after the discovery conference. So, you may want to wait to see what the other party discloses automatically before serving discovery requests.

Step 5: Serve and receive initial discovery disclosures

Unless the parties have agreed otherwise in the discovery plan, initial disclosures under Minn. R. Civ. P. 26.01(a) are due within 60 days of the service of the answer. As noted in the rules, the parties are allowed to agree to make these disclosures at a different date.

However, if you are being sued on a debt, you likely have a number of potential evidentiary defenses based on the creditor’s evidence (or lack thereof). It is unlikely that you will get all of the other side’s evidence in their initial disclosures. But you may get some of it—at least enough to hopefully gain a better understanding of your case. In other words, you probably want to see their evidence sooner rather than later.

Specifically, the rules require that the parties disclose:

  1. The name, and if known, the address and telephone number of each individual that is likely to have discoverable information;
  2. A copy–or a description by category and location–of all documents, electronically stored information, and tangible things that the disclosing party has in it’s possession/custody/control;
  3. A computation of each category of damages along with providing the other party an opportunity to inspect and/or copy the documents supporting damages claimed;
  4. For inspection and copying, any insurance agreement that may be used to satisfy all or part of a potential judgment.

In theory, the other side should provide all documents that support it’s claims. However, the rule only requires a copy or a description—so the other side may just simply provide a list of potentially relevant documents.

The information that you need to produce, however, depends on the facts of your case and the various claims and defenses. If you have not hired or consulted an attorney, it is a good idea to do so at this point. The rules provide for sanctions (Minn. R. Civ. Pro. 37.01) if a party fails to make a required disclosure. That means if you don’t provide certain information (or documents) the court could fine you. If you fail to serve any disclosures, you could also be subject to a fine from the court.

Step 6: Serve and/or respond to discovery requests

After the initial disclosures have been served by both sides, one or both sides may serve discovery requests.

For example, perhaps the creditor disclosed a long list of documents but did not actually provide copies of the documents. You could serve requests for production of the actual documents. Or perhaps you need more information about an applicable defense and want to ask the creditor questions related to that defense—you could serve interrogatories.

The plaintiff may serve you with discovery requests. These are a long list, usually made up of interrogatories, requests for admission, and requests for production of documents.

While you can handle the previous steps on your own, you should probably hire a lawyer to help with this one. How you answer can determine whether you win or lose the case. Debt collectors like to use unusual definitions and other tricks to try to get you to admit more than you should. Responding to discovery requests requires extremely careful reading and a thorough understanding of court rules.

One option, at this point, is to hire a lawyer to handle the entire case for you. I do that for a flat fee, based on the amount of the debt. Or, you can just send me the requests, and I will meet with you to respond to discovery requests for a flat fee.

Step 7: Further discovery

Once you get responses to the discovery requests you previously served, it may make sense to follow up with depositions of the plaintiff’s representatives, or some additional discovery request to check for additional holes in the plaintiff’s evidence.

Contact me, and I will be happy to help you figure out whether you might want to do some further discovery in your case.

Step 8: Summary judgment

Summary judgment is a motion that is usually brought by the plaintiff in a debt collection lawsuit. If none of the facts are in dispute, the judge can decide the case because there is nothing for a jury to decide. If you lose a motion for summary judgment, the plaintiff will have a judgment against you.

A motion for summary judgment involves both written and oral arguments. You have to put together a legal memorandum explaining your position on a strict deadline, and then appear in court to explain your position to the judge.

This is probably the hardest part of a debt collection lawsuit to handle yourself, and I highly recommend you hire a lawyer to handle it, or at a minimum, get some coaching. Sign up for a consultation as soon as you find out about the motion for summary judgment. Once the clock starts ticking, time is of the essence.

Step 9: Mediation

Nearly every court will order you to participate in mediation. At mediation, a neutral mediator will try to get you and the plaintiff to settle the case. The mediator cannot force you to settle, but he or she can talk with both parties about the merits of their claims or defenses, and explain the benefits of settlement.

It can help to have a lawyer with you at mediation, but you can certainly handle it yourself. Being ordered to mediation does not mean you have to settle the case; it just means you have to try.

Step 10: Trial

If you get to trial, you probably need a lawyer. In cases where a party represented himself or herself at trial, that usually turns out to have been a bad idea.

If you survive summary judgment and participate in mediation without reaching a settlement, it is a good time to contact a lawyer to talk about trial. As with a motion for summary judgment, trial includes written submissions on a tight deadline, together with appearance at the trial. The earlier you see an attorney about trial, the better your chances of a good result.