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How to Defeat a Credit Card Debt Collection Lawsuit

Katie Wheat is a consumer who was sued by debt buyers and has been researching debt collection laws for over 10 years.


If you are sued for a credit card debt, the best action to take is to contact a consumer attorney.

I am not an attorney. In the event you are sued for a credit card debt, please contact a consumer attorney in your state. You can locate an attorney by contacting your state bar association. Another option is to contact the National Association of Consumer Attorneys.

Those who are considered to be low income can contact their local legal aid department.

If your income does not allow you to access the services of your legal aid department, and you still can't afford to hire an attorney, perhaps you could afford a thirty-minute or one-hour consultation with a consumer attorney. In that consultation, the attorney would review the claims against you, and you could get answers to your questions.

AGAIN, I am not an attorney. Any information I provide is based upon my own experiences, court rulings (case law) and state or federal laws.



The internet is full of advice on how to defeat credit card lawsuits. Some information is accurate while other information is just plain wrong.

Be wary of those who offer their “advice” by way of information you must purchase. Do NOT spend your money or waste your time on internet advice offered by an author who cannot verify his claims.

Some authors who are not attorneys will claim that they can help you defeat debt collection lawsuits. What are their credentials?

Is the author an attorney? Is the author a consumer who fought a debt collection lawsuit in his county court?

Some who offer advice are, like me, non-attorneys. It is perfectly acceptable for non-attorneys to relay their experience(s) in the court(s) in which they were sued. However, it is NOT acceptable to claim their experience(s) apply in every court in the United States. The tactics used to achieve success in a county court in Michigan may or may not work in a county court in another state.

There are those who have had a favorable result in a lawsuit in their county magistrate court. As a result, they believe their tactics will provide the same results to defendants in every court across this country. They do not understand that a favorable result in their court does NOT qualify them to advise consumers throughout the rest of the United States.

Some people do not seem to understand that court rules of civil procedure differ from state to state. In fact, rules of civil procedure can differ from court to court in one state. The rules that apply to your state’s magistrate court can differ from the rules in superior court.

In addition, state court opinions on the details of debt collection can differ. While a court of appeals or supreme court of one state may require a debt collector to provide certain evidence to prove a debt is owed, the courts in another state may require different proof.

The lower courts in a state must follow what there own higher courts have ruled. The rulings of courts in another state have no bearing on what YOUR court must decide.

There are those who will claim to have "studied law". In what capacity did they study law? Did they actually attend law school? If so, for how long and which areas of law did they "study"?

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I have "studied law", but I have not attended law school. I have spoken to consumer attorneys and regularly read court rulings from different states. However, I would NEVER claim that the tactics I used would result in a favorable outcome for others. I would also NEVER write a book based upon my claim to "have studied law" and expect people to pay for that book.

DO NOT waste your money and time on books unless you can verify the credentials of the authors.

Once you've been served a summons and complaint, read your court's rules to make sure you were properly served.

The court in which you are sued will have rules of civil procedure. Those rules can usually be found online on the court's website and must be followed by the parties in a lawsuit. They will provide information on proper service, answering a complaint, discovery requests, etc.

You should first determine if you were properly served. Some might advise that you must be served by certified mail. That is only one method of service.

One can also be personally served at his or her home. The court rules will tell you if a summons and complaint must be handed to you or can be left at your door.

Note: If you know that you've been sued but have not yet been served, it is not a good idea to try to avoid service. The reason is because some courts allow for "service by publication". In the event that a defendant cannot be located or refuses service, the plaintiff can get permission from the court to place an ad in the newspaper that notifies the defendant (and anyone else who reads it) that he has been sued

In the event you choose to represent yourself, you must determine how to answer the complaint. The summons should inform you as to how you should respond to the complaint and how much time you have to do so. If you're not sure about the information, read your rules.


Just as the plaintiff must prove it's allegations (claims), you must prove any defenses you claim in your answer.

If you are required to file an answer to the complaint, you may want to include defenses in your answer.

There are numerous sites and articles that recommend affirmative defenses to credit card lawsuits. Certain defenses suggested by those sites have been floating around the internet for years.

Some of the suggested defenses are not properly explained. In order for a defense to be valid, it must apply to your situation. An example is the defense of Statute of Frauds which requires signatures on contracts. All states require certain types of contracts to be signed by both parties. However, credit card agreements are not signed. You must read your state's statute in order to determine if credit card agreements require signatures. Most, if not all, states do not make that requirement.

That's an example of a defense that is not properly explained by those sites and articles that recommend the defense. You can certainly include it as a defense, but you must prove that your state requires signatures on a credit card agreement.

Here are just a few rulings from a few state courts.

A party asserting an affirmative defense bears the burden of proof on that issue. See Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 344 (Tex. 2011).

A party defendant who asserts an affirmative defense bears the burden of proof thereof." See Fin & Feather, LLC v. Plaquemines Par. Gov't, 2016-0256 (La. App. 4 Cir. 9/28/16), 202 So. 3d 1028, 1034.

"T]he party asserting an affirmative defense bears the burden of proof." Ozark Air Lines, Inc. v. Valley Oil Co., 239 S.W.3d 140, 145 (Mo.App. W.D.2007).

Just as the plaintiff must prove the claims it makes against you, the above rulings show that any defense you claim must be proven by you.

The best advice you can receive will come from a consumer attorney in your state. He or she will know the defenses you should raise in your answer. In the event you choose to to defend yourself, you must do your research.

Valid defenses can be supported by state laws and/or court rulings.

You must research suggested defenses to determine which ones apply to your case. Simply because someone suggests a defense applies to credit card debt does not mean it is a valid defense. If the person suggesting the defense does not or cannot offer a single law or court ruling to show that the defense is valid, you should beware. DO YOUR OWN RESEARCH.

Also note that your research should be based upon your state's laws and court rulings.

Google Scholar is an excellent source for court rulings and case law. All of the case law I provide in this article can be found on Google Scholar.

Another source for case law is your state court's website.

In order to determine how to answer a complaint, research your court's rules of civil procedure. Your court may provide a form for you to fill out that will serve as your answer.

Lack of Standing to Sue is the best defense to raise when sued by a debt buyer.

Lack of standing to sue.

"Standing to sue" means that the plaintiff has suffered an injury, has a stake in the outcome of the lawsuit, and has the right to be compensated for that injury.

"The most critical requirement of standing *** is the presence of `injury in fact—an actual legal stake in the matter being adjudicated". Security Pacific Nat. Bank v. Evans, 31 AD3d 278, 279 (2006).

"To have standing to sue means the person 'must have sufficient stake in an otherwise justiciable controversy to obtain judicial resolution of that controversy.'" Sanchez v. State, 692 N.W.2d 812, 821 (Iowa 2005).

The purpose of the doctrine of standing is to ensure that issues are raised only by those parties with a real interest in the outcome of the controversy. The purpose of the doctrine of standing is to ensure that issues are raised only by those parties with a real interest in the outcome of the controversy (Wexler v. Wirtz Corp., 211 Ill. 2d 18, 23 (2004)).

"LACK of standing to sue" is the best defense to use against a debt buyer plaintiff. It means that the debt buyer has not proven or cannot prove ownership of the account in question. If the plaintiff cannot prove that it has purchased and owns the account, it has not proven it has suffered an injury and has has a stake in the outcome of the lawsuit. Therefore, it has no right sue you.

Most debt buyer plaintiffs will provide a "bill of sale" that shows a credit card bank or another debt buyer sold accounts to the plaintiff. However, it will not list the accounts that were included in the sale. As a result, that bill of sale does not prove that your account was among those that were sold to the debt buyer.

When sued by the credit card bank with which you had an account, lack of standing is not a defense.

Lack of standing is not a defense that you would raise if the plaintiff is an original creditor. Well, you can raise it as a defense, but as with any defense, you'd have to prove the bank doesn't have the right to sue you.

Conspiracy theories abound on the internet. One of those theories is that debt buyers who have purchased defaulted credit card account will sue consumers and name the credit card bank as the plaintiff attempt to trick the consumer defendants into believing they are being sued by the credit card bank instead of the debt buyer.

I'm not saying that this cannot happen and has never happened. However, after searching Google Scholar and other sites, I haven't found anything to support that claim.

Here a couple of problems with that claim.

According to the Federal Trade Commission, 60 to 95 percent of debt collection lawsuits result in default judgments. Read page 5 of the following link.

That means that 60 to 95 percent of consumers did not answer complaints. While some consumers are not properly served, others simply ignore complaints. From page 5 in the previous link:

"Most alleged debtors fail to answer complaints or otherwise defend themselves in debt collection actions".

Debt buyers know that most consumers don't answer complaints and rely upon that fact. Why would they need to lie about the identity of the plaintiff when most complaints go unanswered?

Another problem with the claim is that an attorney who intentionally deceives the court is guilty of misconduct. The following is from the American Bar Association's Rules of Professional Conduct.

Rule 3.1 Meritorious Claims And Contentions

"A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis in law and fact for doing so that is not frivolous, which includes a good faith argument for an extension, modification or reversal of existing law."

An attorney who lies to the court could face disbarment. Considering that so many debt collection lawsuits go unanswered, why would an attorney take the chance of lying to the court?

Todd v. Discover Bank (Alabama Court of Civil Appeals, 2012)

"We note, however, that the affidavit itself makes clear that the debt is owed to Discover."

"Todd presented no evidence to the trial court, despite the trial court's having provided him extensive opportunities to do so, indicating that Discover did not own Todd's account or that his account had been transferred."

Nguyen v. Citibank, NA (Texas Court of Appeals, 2013)

"As described above, in her affidavit, Reynolds attested to the basis for her knowledge and explained that Citibank was the owner of the account in question, the delinquent balance was owed to Citibank, and the account records attached to the affidavit belonged to Citibank."

"Testimony in an affidavit that a particular person or entity owns a note is sufficient to conclusively establish ownership even in the absence of supporting documentation if there is no controverting summary judgment evidence."

FIA Card Services, NA v. Mahoney (Supreme Court, Erie, NY, 2011)

"In reply, the plaintiff has submitted the affidavit of Bradley Cleek who identifies himself as "a custodian of records and an authorized Officer of Plaintiff FIA Card Services, N.A. for purposes of this affidavit." Based upon Mr. Cleek's affidavit, the Court is satisfied that the plaintiff has standing to sue."

Notice that the courts in the above-cited rulings relied on the affidavits provided by the plaintiff. Affidavits are made under penalty of perjury, so courts take them seriously.

Note also that the courts in the first two rulings stated that the defendants didn't provide anything in the way of evidence that the plaintiffs were not the proper parties with the right to sue.

I'll repeat what I've previously written. When you raise a defense, you have the burden of proof. If your defense is that the plaintiff doesn't have the right to sue you because the account was sold to a debt buyer, you have to prove it. If you claim that a credit card bank received an insurance payment for your account, you have to prove it.

You make any claim that you choose, but you must be able to support it with some kind of evidence.

Here are some more suggested defenses to credit card debt lawsuits.

Failure to state a claim for which relief can be granted.

This means that the allegations in the complaint do not provide allegations that are sufficient to establish a cause of action.

For instance, the complaint should, at the very least, provide the name of the credit card bank with which the account was opened, that you opened the account, the exact amount owed, and that you failed to pay.

If you are sued by a debt buyer, the complaint should also include an allegation that the debt buyer is an assignee who purchased or currently owns the account.

Complaints must state allegations that give you enough information to be able to admit or deny the allegations and to state facts that, if true, would allow the court to rule in favor of the plaintiff. They must also comply with your court's rules of civil procedure.

Statute of Limitations

This is self-explanatory. A lawsuit must be filed within your state's statute of limitations. Check your state's laws regarding the statute of limitations for credit card debts.

In most states, the statute of limitations begins to run (cause of action accrues) on the date of the last payment you make on an account. Again, you must check your state's laws to determine this issue.

In the event you are sued by a debt buyer after the statute of limitations has passed, contact a consumer attorney because the filing of a lawsuit on a time-barred debt is a violation of the Fair Debt Collection Practices Act.

Accord and Satisfaction

This defense applies to settlements between debtors and creditors (or collection agencies). If you have already paid the credito or collection agency, either in full or for a lesser amount as a settlemen, you could raise this defense

Allen v. R.G. Indus. Supply (Ohio Supreme Court, 1993)

"An accord is a contract between a debtor and a creditor in which the creditor's claim is settled in exchange for a sum of money other than that which is allegedly due. Satisfaction is the performance of that contract."

Horizon Well Service, L.L.C. v. Pemco of New Mexico, L.L.C. (New Mexico Court of Appeals, 2015)

"When considering the existence of an accord and satisfaction, we should examine the following elements: (1) [d]id the debtor make an offer in full satisfaction of the debt; [(2) w]as there an unliquidated or disputed claim which formed the basis of this offer; [(3) w]as this offer accompanied by acts and declarations which amounted to a condition; [(4) w]ere those acts and declarations such that the offeree was bound to understand them; and [(5) w]as the offer accepted in full satisfaction of the debt."

MECO, Inc. v. Township of Freehold, NJ (Superior Court of New Jersey, Appellate Division, 2011)

"The traditional elements of an accord and satisfaction are the following: (1) a dispute as to the amount of money owed; (2) a clear manifestation of intent by the debtor to the creditor that payment is in satisfaction of the disputed amount; (3) acceptance of satisfaction by the creditor."

The above rulings show that "accord and satisfaction" occurs between a creditor and debtor. This defense would apply if you settled the debt with the creditor or collection agency before a lawsuit was filed. If that is the case, hopefully you have a written agreement with the credit card bank or a collection agency that proves that the debt was settled and paid.

Note that this has nothing to with whether or not a credit card bank received a tax deduction when it charged off the account. A tax deduction received by a credit card bank after charging off a debt is an action allowed by law and is between the creditor and the United States government. It is not an agreement (contract) between the creditor and you (the debtor).

I cannot reiterate enough the importance of researching lawsuits in YOUR courts to determine how they have ruled on a particular issue.

Statute of Frauds

This has already been explained.

Do your research to determine if the following defenses apply to credit card debt in your state.

Contact an attorney or read rulings from courts in your state regarding theses defenses.

Scienti et Volenti Non Fit Injuria. (To one who is willing, no harm is done. An injury is not done to one who knows and consents to the act.).

This defense means that the plaintiff (party who filed the lawsuit) knew a danger existed and was willing to place itself in harm's way. If you do some research, you will find that this defense is used predominately in lawsuits involving insurance and physical injury.

For years, this defense has been touted as a defense to lawsuits filed by debt buyers, yet no one who makes that claim has offered a single court ruling to support it. There are consumer attorneys who regularly defend consumers in debt collection lawsuits. If it were a legitimate defense, those attorneys would raise that defense and courts would make rulings on the defense. However, to date, I have been unable to locate a single court ruling connecting that defense to credit card lawsuits.

If anyone can locate such a ruling, please provide it.

You can certainly raise the defense in your answer to a complaint, but unless you can provide a court ruling from your state that shows scienti et volenti non fit injuria is a valid defense to a credit card or contract action, you will be unable to support the defense if questioned by the judge.

The Consumer Financial Protection Bureau (CFPB) sued Midland Funding and Portfolio Recovery Associates for violations of debt collection practices. Both debt buyers settled the claims with the CFPB. Here are the links to the settlements.

Read the consent orders. The CFPB did NOT state or even imply that debt buyers cannot sue for the full amount of a credit card debt. Nor did the CFPB even hint that debt buyers put themselves in harm's way by purchasing defaulted debts.

Subrogation of Debt

This is another supposed defense that has been occasionally touted on the internet. Banks charge off a debt after it has been in default for a particular period of time. They may choose to attempt to collect the debt or will sell it to a debt buyer.

The "subrogation" advice offered by some assumes that credit card banks receive compensation from an insurance company for all or part of a defaulted credit card debt. "Subrogation" means one person (or business) is substituted in the place of another. Therefore, the insurance company would be the party who would have the right to sue for the credit card debt. There are problems with that advice.

One problem is that there's nothing to support that claim. Those who offer "subrogation" as a defense offer NO proof that credit card banks receive insurance payoffs for defaulted credit card accounts.

A second problem is that there is no evidence that insurance companies have ever filed lawsuits to recover moneys owed on defaulted credit cards.

Some will claim that credit card buy back the subrogation rights to the credit card debts. That claim raises another problem: it doesn't make sense.

Here's why it doesn't make sense.

In order to obtain insurance, a person or business must pay insurance premiums. Therefore, credit card banks would have to pay for insurance to cover defaulted credit card accounts.

Let's say that John Doe owes a $5000.00 balance on his credit card with ABC Bank. He defaults ABC Bank charges it off $5000.00. According to those who claim banks receive insurance payments for such accounts, ABC Bank would receive payment from its insurance company.

ABC decides to purchase the subrogation right to the debt. It takes the $5000.00 that the insurance company just paid, gives it back to the insurance company, and buys back the defaulted account. In other words, the bank is right back where it started.

Then you have the fact that the bank has paid premiums for that insurance. What is the purpose of the insurance if the bank is just going to buy back the accounts? The premiums paid by the bank have been wasted!

Does that make sense?

If subrogation were a legitimate defense, attorneys defending consumers would raise it, yet just as with "scienti et volenti non fit injuria",there are no court rulings connecting subrogation to credit card debts.

The Consumer Financial Protection Bureau (CFPB) has filed lawsuits against numerous banks for deceptive credit card practices and sales to debt buyers. Not a single one of those lawsuits even mention the term "subrogation". In other words, the CFPB did not claim that banks received insurance payments for defaulted credit card accounts.

Here are some links to CFPB filings:

That is very telling. Considering the fact that the CFPB recognized that banks sold credit card debts to debt buyers and made no mention of insurance payments of any kind, where is the proof that banks receive insurance payoffs for defaulted credit card accounts?

The fact is that there is NO proof. Remember, if you raise the defense, it's up to you to prove it.

Anyone who claims that this is a valid defense should be able to support it with something other than conjecture. If he or she cannot do so, the advice should be ignored.

No Contract Between the Plaintiff and Defendant

I've seen some refer to this as "repudiation"

Read your cardmember agreement. The Consumer Financial Protection Bureau website provides copies of cardmember agreements. Older agreements may be in their archives.

Credit card agreements state that accounts can be sold/assigned. Most, if not all, courts have ruled that an assignee stands in the shoes of the creditor. Since an assignee can stand in the shoes of the original creditor, a contract would exist between the plaintiff debt buyer and defendant.

Burkhardt v Bailey (Michigan Court of Appeals, 2004)

"An assignee stands in the position of the assignor, possessing the same rights and being subject to the same defenses."

Yenko v. Crown Asset Management, LLC (California Court of Appeals, 1st Appellate Dist., 1st Div. 2017)

"The assignee 'stands in the shoes of the assignor, taking his rights and remedies, subject to any defenses which the obligor has against the assignor prior to the notice of the assignment.'"

CACH, LLC v. Hoffman (South Carolina Court of Appeals, 2014)

"In South Carolina, it is well established that '[a]n assignee stands in the shoes of the assignor.'"

If your court has ruled that an assignee stands in the shoes of an original creditor or that contracts can be assigned to other parties, "repudiation" is not a valid defense.

Some claim that a credit card bank which has charged off an account and taken a tax deduction or credit for the debt cannot sue you or sell the account.

That is NOT true!

The following is from the United States Code of Federal Regulations.

26 CFR 1.166-1 - Bad debts

(f) Recovery of bad debts. Any amount attributable to the recovery during the taxable year of a bad debt, or of a part of a bad debt, which was allowed as a deduction from gross income in a prior taxable year shall be included in gross income for the taxable year of recovery

Notice the above cited federal regulation states "[a]ny amount attributable to the RECOVERY". Then it states "which was allowed as a deduction from gross income in a prior taxable year".

Those phrases show that a business which claims a tax deduction for a bad debt is allowed to RECOVER some of that debt at a later time. Once it recovers some of that bad debt, it must claim the amount of the recovery as part of its income.

The following is from the United States Code of Laws.

26 U.S.C. § 166(a)

(a) General rule

(1) Wholly worthless debts

There shall be allowed as a deduction any debt which becomes worthless within the taxable year.

(2) Partially worthless debts

When satisfied that a debt is recoverable only in part, the Secretary may allow such debt, in an amount not in excess of the part charged off within the taxable year, as a deduction.

Note the words highlighted phrases. Just as in the Code of Federal Regulations, they show that part of a bad debt is allowed to be recovered after it has been charged off.

Here's an example:

A credit card company charges off a credit balance of $1000.00 and takes a tax deduction for that amount. The next year, the credit card company sells the debt to a debt buyer for $50.00. That $50.00 becomes a profit for the credit card company, and it must claim that profit on its taxes.

Now, for some court rulings:

"In the event that a taxpayer unexpectedly recovers part of a debt that was deducted as worthless in a prior tax year, the taxpayer must report these funds as income in the years in which the unexpected recoveries occurred." See 26 U.S.C. § 111. Estate of Mann, 731 F.2d 267, 277 (5th Cir.1984).

Instead of amassing interest on a worthless account, Chase and WFNB sought to sell the accounts and shift the risk of nonpayment to a third party for a nominal fee. This practice also permitted Chase and WFNB to remove the account from the financial records and receive a bad debt tax deduction. See I.R.C. § 166(a)(2). McDonald v. Asset Acceptance LLC, 296 F.R.D. 513 (E.D.Mich.2013).

The Michigan noted that Chase and WFNB sold accounts AND were allowed to receive a bad debt tax deduction.

In Stratton v. Portfolio Recovery Associates, the 6th Circuit Court of Appeals noted that GE Money Bank sold a bad debt to Portfolio Recovery Associates. Here is a quote from the court in that ruling:

By charging off the debt and ceasing to charge interest on it, GE could take a bad-debt tax deduction, I.R.C. § 166(a)(2). A little more than a year later, in an increasingly common practice, GE assigned its interest in Stratton's charged-off debt to PRA. Stratton v. Portfolio Recovery Associates, LLC, 770 F.3d 443, 448-49 (6th Cir. 2014).

The 6th Circuit did NOT rule that a bank which charges off a debt and receives a tax cannot then sell the debt to a debt buyer.

From Haney v. Portfolio Recovery, 8th Circuit Court of Appeals.

"See, e.g., McDonald v. Asset Acceptance LLC, No. 2:11-cv-13080, 296 F.R.D. 513, 525 (E.D. Mich. Aug. 7, 2013) ('Instead of amassing interest on a worthless account, [the creditors] sought to sell the accounts and shift the risk of nonpayment to a third party for a nominal fee. This practice also permitted [the creditors] to remove the account from the financial records and receive a bad debt tax deduction.' (citing I.R.C. § 166(a)(2))); see also 26 C.F.R. § 1.166-3(a)(2)(i) ('[T]he amount which has become worthless shall be allowed as a deduction under section 166(a)(2) but only to the extent charged off during the taxable year.'). Upon sale of a completely charged-off account, the creditor's basis likely will have been adjusted to zero, and the entire proceeds of the sale must recognized as income. Haney v. Portfolio Recovery Associates L.L.C., 837 F.3d 918 (8th Cir. 2016)."

Both the courts and federal regulations show that a bank can receive a tax deduction for a charged-off debt and still recover part or all of that debt at a later date.


Katie Wheat (author) from South Carolina on December 17, 2018:

You are most likely being sued by the credit card bank (original creditor).

Does the bank”s entry on your credit report still show that you owe a balance?

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