Defenses in a Debt Collection Case

A defense is a good reason you should not have to pay the amount the creditor is asking for in the complaint.

This article explains some common defenses you might be able to use in a debt collection case. You may want to talk to a lawyer to see if there are other ways to defend your case.

If you have a defense, you must state it in your Answer. You must tell the court the specific facts of your defense. If you include a defense in your Answer, you must prove it in court. You must tell the court certain things about each defense. Include with your Answer any proof, such as documents to show that what you’re saying is true.

The defenses listed in this article are included in the Do-It-Yourself Civil Answer tool, which you can use to prepare your Answer.

You Paid the Debt

If you’ve already paid the debt, you shouldn’t have to pay it again. This defense can apply if any of the follow apply to you:

• You completely paid the debt;

• Your creditor accepted partial payments as payment in full;

• Your payments weren’t all credited to your account.

If this defense applies to your case, tell the court what kind of debt it is and what proof of payment you have. When you file your Answer, attach copies of your proof.

Your Creditor Accepted Partial Payment as Payment in Full

Sometimes a creditor will agree that the debt will be settled or cancelled if part of it is paid. If you paid a debt as part of such an agreement, you shouldn’t have to pay more of it.

If this defense applies to your case, tell the court:

• What kind of debt this is

• When you and your creditor agreed that your partial payment would be accepted as payment in full

• When you paid the agreed amount

• What proof of the payment you have

When you file your Answer, attach copies of the proof of payment to it. Also attach a copy of your agreement to accept partial payment if it was in writing.

Your Payments Weren’t Credited to Your Account

If the amount your creditor is asking for doesn’t match what you think you owe, see if all your payments have been credited to your account. If this defense applies to your case, tell the court:

• What kind of debt this is

• What payments were not credited to your account

• When you made the payments

• What proof of payments you have

When you file your Answer, attach copies of the proof of payment to it.

The Creditor Waited Too Long to Sue

In Michigan, the statute of limitations for contract disputes is usually six years. This means the creditor must sue within six years of the last activity on the account. It is probably too late for the creditor to sue if in the last six years you haven’t done any of the following:

• Used the account

• Made any payments

• Communicated with the creditor

• Done something else to acknowledge the debt

Some cases have different statutes of limitations. The creditor must sue within four years of the last activity on the account if the case involves an installment sales contract to buy a motor vehicle or the sale of goods. The creditor must sue within three years of when the contract was signed if the case involves a mobile home sale.

If this defense applies to your case, tell the court when the last activity on the account was. If the case involves a mobile home sale, tell the court when the contract was made.

Your Repossessed Vehicle Was Sold in a Commercially Unreasonable Manner

If you fall behind on paying for a vehicle, it might get repossessed and later sold by the creditor. The creditor can then sue you for what you still owe on the vehicle, minus what the creditor got from the sale of the repossessed vehicle. If the creditor does this, it must sell the vehicle in a “commercially reasonably manner.” This means it must be sold at a reasonable price and in the usual way you would expect such a vehicle to be sold.

If this defense applies to your case, tell the court why you think the sale was unreasonable. This could be based on the amount the creditor accepted for the vehicle’s sale.

The Debt Was Discharged in Bankruptcy

If you’ve filed bankruptcy, this debt might have been discharged. You don’t have to pay back a debt that was discharged in bankruptcy. Some types of debt, such as student loans or tax debts, aren’t discharged in bankruptcy. If a debt wasn’t included in your bankruptcy case, it wasn’t discharged.

If this defense applies to your case, tell the court:

• When and where you filed for bankruptcy

• What Chapter you filed

• Whether this debt was discharged as part of that case

When you file your Answer attach a copy of the final order from the bankruptcy court to it.

There is a Problem with the Contract

A contract is any agreement between two or more parties (people or companies) in which each party must do something as part of an exchange. To enter a contract, one party must offer something and the other party must agree to take and pay for it. Both parties must understand the contract.

A contract can be for services or work done, to borrow money, or to buy something. A credit card agreement is a contract. So is a loan.

Sometimes a problem in the contract means it can’t be enforced. You might have a defense If one of the problems listed below applies to your contract.

You Were a Minor when the Contract Was Made

You can’t enter a contract unless you’re legally an adult. If you were less than 18 years old when the contract was made, you might not be bound by it. You may still have to pay the contracted amount or return what you got in the contract.

If this defense applies to your case, tell the court when the contract was made and what your birthdate is.

You Weren't Mentally Competent when the Contract Was Made

If you weren't mentally competent when the contract was made, you might not be bound by it. Some people who aren't mentally competent have a court-appointed conservator or guardian. If you didn't have a conservator or guardian and you still want to use this defense, you may want to talk to a lawyer about it.

If this defense applies to your case, tell the court the case number from your conservator or guardianship case. When you file your Answer attach copies of letters of conservatorship or guardianship that show you weren't mentally competent when you entered the contract.

Misunderstanding of the Contract

Both parties must have the same understanding of the meaning of the contract when they agree to it. This is called the meeting of the minds. You might have a defense if you and your creditor didn’t have the same understanding of the contract.

If this defense applies to your case, tell the court about the misunderstanding and why the contract wasn’t clear.

The Written Contract is Not Correct

Sometimes when two parties make an agreement it isn’t written down correctly, and it doesn’t reflect what the parties meant. If this happened and your creditor is trying to enforce the written contract, you might have a defense.

If this defense applies to your case, tell the court what the contract was supposed to say. When you file your Answer attach copies of any evidence of what it was supposed to say.

The Contract is Not in Writing

A contract must be in writing if it is for the sale of goods worth $1,000 or more. A contract for the sale of goods is one to purchase a specific item or items, such as a contract to buy furniture. It is not usually a revolving credit account such as a credit card.

If this defense applies to your case, tell the court:

• What the contract was for

• How much you were expected to pay

• What evidence of the contract you have

When you file your Answer attach copies of the evidence to it.

The Contract Was Extremely Unfair

If you signed a contract that was extremely unfair or one-sided, you might have a defense. However, you must be able to explain to the court why you agreed to the contract even though it was unfair. Tell the court what was so unfair about the contract and why you signed it despite the unfairness.

You Entered the Contract Because of Fraud or Duress

If the other party forced or deceived you to get you to agree to the contract, you should not have to pay it. The fraud (deception) or duress (force) must have influenced your decision to enter the contract. Tell the court how you were forced, misled or deceived into entering the contract.

The Goods Bought in the Contract Were Defective

Goods are defective if they don’t work or don't do what they’re meant to do. You might want to raise this defense if you’re being sued to enforce a contract to buy goods that were defective and not worth what you paid for them.

If this defense applies to your case, tell the court how the goods were defective. Attach copies of evidence you have when you file your answer.

Proving Your Defense in Court

To raise any of these defenses, you need to be prepared to talk about them in court. To learn about defending a debt collection case in court, read the article Going to Court to Defend a Debt Collection Case.

When you’re defending a case in court, you may want to have a lawyer. A lawyer can help you raise these and other, more complicated defenses to debt collection. Use the Guide to Legal Help to find lawyers and legal services in your area.