How to Challenge a Debt Collector & Win

A reader, Anthony, wrote to me to share the success he had in dealing with the debt collection issues he faced earlier this year. He started off with the goal of settling an old unpaid credit card, and ended up winning in court and getting his costs covered. He wrote:

“Hi Michael, I contacted you several months ago as I was being sued by a debt collection law firm for a [credit card] account that I had in 2008. I tried to negotiate the charge, which they calculated at $900, but original balance was only $600. I ended up hiring an attorney after they failed to negotiate. To make a long story short, they dismissed the case because they had no witness at which time my attorney objected and asked the court to pass on court fees and attorney fees to the collection agency. The judge ruled in my favor on the spot for the court fees, and instructed my attorney to file a separate complaint for attorney fees. By objecting, he stated that the collection law firm couldn’t come after me again. Thanks for your help and motivation to fight their efforts to sue!”

The majority of debt collection lawsuits are ignored, never contested, or not challenged effectively (some reports suggest more than 90% of lawsuits end in default or summary judgment).

From what I have seen in my many years of helping people resolve their debts — debt collectors are more likely to not challenge smaller balance lawsuits like Anthony’s, even if they’d previously refused to negotiate a fair settlement. Meanwhile, it is cost-prohibitive for a consumer to challenge the debt collector’s claims with one’s own attorney, when the cost of hiring an experienced debt defense attorney may end up costing more than paying the debt in full. And there are no guarantees that you will win. Having the judge pass the court and attorney fees along to the debt collector, like in Anthony’s case, then, is ideal for the consumer.

Dealing With Collections in the Courts

It’s important to be prepared when dealing with debt collection lawsuits and judgments. This resource checklist can also help you when you’re dealing with late-stage debt collection, or if you believe a debt collector has violated your consumer rights:

If your goal is simply to negotiate an affordable lump sum settlement, there are resources you can consult to help you through that process.
If you are looking for an attorney to help you defend against a collection lawsuit, you need to know that the vast majority of attorneys are likely unable to effectively assist you with your defense. Most attorneys just do not practice in this area, and over the years I have found that talking to the wrong attorney about your issues can do more harm than good. But there are some attorneys who focus on collection defense.
Look for an experienced debt defense attorney with the National Association of Consumer Advocates (NACA). Distance is not always an issue with these cases. Some debt collection defense attorney offices cover multiple states.
Contact a low-income legal aid office nearest you. Some of these offices do offer debt collection defense to people who qualify for low- to no-cost legal assistance.

It’s also a good idea to also make sure your debt hasn’t surpassed the statute of limitation. This chart lists the statutes of limitation by state. You may also want to check your credit reports to ensure the debt is being reported accurately, and to correct any errors. You can get your free credit reports every year from AnnualCreditReport.com, and you can get a free credit report summary, updated every 14 days, on Credit.com.

There are additional things you can do to resolve debts with collectors, including picking up the phone to talk to collection attorneys and their staff. Anthony may not have had success with his efforts, but he did try that first. And countless others are able to get a result they can live with by simply opening up the lines of communication.

Everyone is welcome to post in the comments below for feedback. Please consider sharing your successes, failures, and other outcomes. It is important for people to hear about how others make out with late-stage collections when they are trying to decide what to do in their own situation.