How Do You Defend Against Debt Collection?
Debt collection is a reality that unfortunately many Americans face. Whether it’s a lingering credit card balance, medical bills, unpaid utilities, or debt from identity theft, debts can accumulate and bring along debt collectors knocking on your door.
Debt doesn’t make you powerless. You can defend yourself effectively in a debt collection case.
Get help navigating the best defenses in a debt collection lawsuit by contacting a consumer protection debt defense lawyer to safeguard your rights and dignity and minimize its impact.
Why Defense Matters in Debt Collection
Being Proactive Makes a Difference in a Collection Case
Taking a reactive stance can put you at a disadvantage. Debt collectors are well-versed in tactics aimed at recovering debts, and they often bank on consumers’ lack of knowledge about their rights.
A proactive approach means being informed, understanding your legal rights, and taking calculated steps to defend your position.
This puts you in the driver’s seat, allowing you to control the narrative and make choices that align with your best interests.
For instance, knowing your rights under the Fair Debt Collection Practices Act (FDCPA) can equip you to recognize unlawful practices, challenge any inconsistencies, and even turn the tables on aggressive debt collectors.
According to the Consumer Financial Protection Bureau, consumers have the right to dispute a debt, seek verification from the original creditor, and restrict communication channels, among other protections.
Exercise these rights proactively, and you’ll likely fare much better in your dealings with debt collectors.
The Consequences of Inaction
Ignoring debt collection efforts is not a wise strategy. Choosing not to defend yourself can result in a range of negative outcomes.
You could be facing higher interest rates on the debt, additional fees, and a plummeting credit score.
But the ramifications don’t stop there; a collector might sue you, obtain a court judgment, and proceed to garnish your wages or even seize property, depending on the laws in your state.
When you don’t take defensive actions, you’re essentially rolling out the red carpet for debt collectors to escalate their efforts, which can put you in an increasingly precarious financial situation.
Being on the defensive, therefore, isn’t just about dealing with the immediate issue at hand—it’s about protecting your long-term financial health and peace of mind.
By grasping the importance of defense in debt collection cases and adopting a proactive strategy, you can minimize stress, protect your credit score, and navigate the situation with your rights intact.
Understanding the laws that protect you and the consequences of not taking action can arm you with the tools needed to manage debt collection effectively.
What Are Common Debt Collection Tactics?
Understanding the methods commonly employed by debt collectors can help you better navigate the legal process.
These tactics can range from simple to more aggressive:
- Phone calls and letters: The initial stages usually involve persistent calls, texts, and mail designed to prompt immediate action. These communications may sometimes include warnings about potential legal actions.
- Reporting to credit agencies: Unresolved debts are often reported to credit bureaus, affecting your credit score negatively. The FDCPA governs how and when a debt collector or debt buyer can report to credit bureaus.
- Legal actions: In extreme cases, a debt collector may file a class action lawsuit. If you lose, they can secure a court judgment, which opens the doors to wage garnishment, asset seizure, or liens against your property.
- Debt settlement offers: Some collectors offer to settle for less than the debt amount, but this can come with tax implications and further credit damage.
- Coercive tactics: These include excessive calls, threats, and false statements. The FDCPA prohibits these actions. If you believe your rights have been violated, consult with a debt collector harassment lawyer for your next steps.
Knowing and Protecting Your Rights
Understanding your rights and common defenses is crucial when dealing with debt collectors. Here are some key elements:
- Validation of debt: Under the FDCPA, you may request that a debt collector validate the debt they claim you owe. This process obliges the collector to provide evidence that the debt is legitimate and belongs to you. It is an essential step in ensuring that the debt is not a result of an error or fraud.
- Cease and desist letters: You may send a cease and desist letter to the debt collector, which stops all communication from them. However, it doesn’t eliminate the debt. This tool is most effective when you need time to review your legal options or when you feel harassed.
- Statute of limitations: Debts don’t last forever. Each state has a statute of limitations that prescribes the period within which a creditor can legally sue you for a debt. Knowing this timeline can serve as a defense against outdated debt claims.
What Are Some of the Best Defenses to Debt Lawsuits?
How to Use Affirmative Defenses in Your Answer to a Collection Lawsuit
- Dispute validity: If you believe that the debt is incorrect or doesn’t belong to you, you can dispute its validity. FDCPA allows you to request verification of the debt within 30 days of the initial communication from the collector. Failing to provide this information could make further collection efforts illegal.
- Violation of FDCPA: If a debt collector violates any provision of the FDCPA, such as employing coercive tactics or misrepresenting the amount you owe, you may have legal grounds for defense. Consult an attorney to explore your options, which may include countersuing the debt collector.
- Wrongful identity: Mistaken identity can happen, especially in cases where people have common names or when debts are sold to third-party collectors. Proving that you are not the person responsible for the debt can be an effective defense.
- Statute of frauds. Some types of debt must be in writing to be legally enforceable. This law varies by jurisdiction but generally requires that certain contracts, like those involving credit card agreements and loans, be documented in writing and signed by the party to be charged. If there’s no written and signed agreement, you could have a strong defense in your favor.
- Bankruptcy: If you successfully filed for bankruptcy and discharged the debt, collectors can no longer pursue them. The discharge is a court order that makes it illegal for creditors to take any form of collection action on discharged debts, including legal action and communications with the debtor, like phone calls and letters.
- Inability to pay due to duress: Duress is a defense rarely used but still worth mentioning. You can use this defense if you can demonstrate threats, coercion, or any undue pressure that robbed you of the free will in agreeing to the debt terms. This complicated legal avenue generally requires you to hire a qualified consumer protection attorney to assess whether your circumstances fit the criteria for a duress defense.
- The debt was already paid: If you paid off the debt, but the collection agency is still after you, that’s not just frustrating – it may violate debt collection laws. Your best defense is documentation such as receipts, bank statements, or any correspondence confirming the debt was paid. If you provide copies of documentation to the collection agency and they continue to pursue the debt, you may file a formal complaint under FDCPA.
Understanding these potential legal defenses empowers you to stand your ground against debt collectors.
Armed with knowledge and help from a debt defense lawyer near you will put you in a better position to handle the debt collection process and protect your financial well-being.
Can You Sue a Debt Collector for Emotional Distress?
Sometimes the best defense is a great offense. If a collector violates your consumer rights and you have documented evidence, you may pursue a lawsuit for emotional distress. Under FDCPA, you can seek up to $1,000 in statutory damages for each lawsuit.
If you can substantiate that you experienced emotional suffering due to the collector’s actions, you could secure additional damages.
For example, if medical records can confirm that you developed anxiety or if you had to leave your job due to the stigma of debt exposure, the court may grant additional financial remedies.
Legal Framework
The FDCPA is a federal statute that governs how debt collectors must behave when they collect debts.
The Act identifies numerous forms of conduct that are prohibited and could be deemed abusive. Such actions may include making false statements, making threats, and the use of foul language, among other things (Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p). If a debt collector violates these rules, they could be subject to legal penalties.
Emotional Distress as Damages from Debt Collectors
Emotional distress becomes particularly relevant because the FDCPA allows consumers to recover actual damages in addition to statutory damages.
Actual damages may include emotional distress. If you have documented medical records showing the development or worsening of stress-related conditions like anxiety or depression due to the actions of a debt collector, these could serve as strong evidence for claiming emotional distress.
What Qualifies as Emotional Distress?
When a debt collector runs afoul of the Fair Debt Collection Practices Act (FDCPA), they essentially commit legally abusive actions.
These violations can range from:
- Using foul language
- Making threats of physical harm
- Impersonating a law enforcement officer or lawyer
- Excessively calling or texting your phone
- Ignoring your requests not to be contacted at work
- Discussing your debt with your employer
These actions, among others, can lead to severe emotional distress. For example, if a collector discusses your debt with your boss, you could face humiliation. Or, if they persistently call you outside of acceptable hours, it may lead to sleep deprivation.
These circumstances can trigger or exacerbate mental health conditions like anxiety or depression, thereby forming the basis for an emotional distress claim.
Note that you can only hold those classified as collectors under FDCPA accountable for these actions.
This doesn’t apply if, for instance, a friend you owe money to starts asking for repayment; they are not a debt collector under this law.
Only entities seeking debt repayment on behalf of another individual or organization fall under this classification.
Standing in an Emotional Distress Lawsuit
To have standing, or the legal ability to file a lawsuit, you’ll need to show a few key things:
- The person or entity contacting you qualifies as a debt collector under FDCPA.
- You suffered actual harm—emotional, in this case—because of the debt collector’s actions.
- You can prove a direct correlation between the debt collector’s conduct and your emotional distress.
The U.S. Court of Appeals for the Seventh Circuit recently upheld the dismissal of a debtor’s credit card debt lawsuit under FDCPA, stating that the debtor did not meet the criteria for Article III standing per the U.S. Constitution.
The debtor had sued a collections company and its hired law firm for alleged false and misleading communications related to a debt, which caused the debtor harm.
The trial court had initially dismissed the case on grounds that the debtor did not have standing, or the legal capability to sue because he didn’t suffer concrete harm.
The debtor’s allegations included hiring an attorney, paying an appearance fee, and experiencing lost sleep and emotional distress.
Should you find that a debt collector’s actions led to emotional distress, consult an attorney with experience in consumer protection against unfair debt collection.
Additional Factors to Consider
- Time limits: Under FDCPA, you generally have one year from the date of the violation to sue a debt collector (15 U.S.C. § 1692k).
- State laws: Many states also have their own debt collection laws that might offer further consumer protections and may extend the range of possible damages.
- Legal representation: The complexities of the law and the requirement for substantial proof make it critical to consult with an attorney experienced in dealing with debt collection harassment cases.
Suing a debt collector for emotional distress is feasible, but it requires a well-structured case that can demonstrate actual harm and a direct link to the debt collector’s conduct, all within the framework of existing federal and possibly state laws.
Contact a Debt Collection Defense Attorney
When you’re facing persistent debt collection efforts and need guidance on how to protect your rights, don’t hesitate to consult with a debt collection defense attorney.
Kazerouni Law Group offers free initial case evaluations to help you understand your options. Our consumer protection attorneys can scrutinize your case to identify potential defenses and guide you through the complexities of debt collection laws.
We’re here to assist you in combating unlawful collection practices and securing your financial peace of mind. Give us a call at (949) 612-9999 or contact an attorney online for your free consultation and find out how we can help you today.