When you’ve been served with a lawsuit, the most important thing is to take action immediately.  Answer it before the deadline.  How do you answer?  It’s really simple: you just write down your response to the lawsuit on a piece of paper and take it to the clerk of court.  They receive it and enter it into their records, and then the Court will read it and depending on what your answer says, either enter a judgment against you or set the case for hearing.

Drafting the Answer.

Most of the time, this is pretty easy.  If you disagree with any of the allegations or just want to have your day in court, you can write a “general denial,” which basically says “This is your case: prove it.”  A general denial looks like this:

“I deny all material allegations and demand strict proof thereof.”

Federal court cases require more specificity, but luckily 95% of all collection suits are filed in state court, so the Alabama Rules of Civil Procedure govern the process.  And under the Alabama Rules of Civil Procedure, you can just enter a general denial and that will set the case for trial.

So even if you don’t think you have a defense, you can file a general denial and that will get your case set for a court hearing.  Maybe they’ll give you a good settlement offer.  Maybe they won’t show up with any proof.  Maybe they won’t show up at all.

Defenses & Counterclaims.  If you do have defenses, the answer is the time to present them.  In fact, any defense that you don’t put in your answer can be lost forever.  So here is where you may need some legal help.  Is the debt to old?  The statute of limitations may bar the lawsuit.  Here are the most common statutes of limitations for collection suits:

Contract (including credit card cases where they have a signed contract): 6 years

Credit Card (if they have proof of written statements mailed to you): 6 years

Credit Card (without a copy of the contract or written billing statements): 3 years

Auto Loan: 4 years

If they do have a copy of the contract, look at the contract for governing jurisdiction.  Some contracts may say “this contract is governed by the law of Georgia.”  If so, the GA statute of limitations could give you a defense.

Statutes of limitations run from the date of the alleged breach, which typically means the last time you made a payment.  If you last made a payment on a car note in March 2010, and they sue you on or after April 2014, then they lose.  Period.  Even if you owe $500,000, they still lose.  Furthermore, a lawsuit filed by a debt collector after the statute has run is a violation of the Fair Debt Collection Practices Act (FDCPA), and you are the one who can go after them for money.

There may be counterclaims as well.  Have they violated the Truth in Lending Act?  The Fair Debt Collection Practices Act?  The Fair Credit Reporting Act?  The Alabama DeceptiveTrade Practices Act?

Here is an answer I recently filed for a client where I saw a potential TILA violation:

Answer with TILA Counterclaim in Auto Loan Deficiency Case

Feel free to adapt it to your own ends.  It’s public record anyway.

If you think you may have counterclaims against creditors, debt collectors, or mortgage companies who are suing you, then you need to speak with an attorney who can help you.  Not a bankruptcy attorney, a real consumer rights attorney who will actually defend you and not just file a bankruptcy and pretend that you have no other rights.

So get out there and fight back!  If you have a collection lawsuit story to tell, let me know.