Potential Defenses To Lawsuits

General Concepts

Typical Responses

Consumers who choose debt settlement do so because they want to pay their creditors what they can reasonably afford, while avoiding bankruptcy and lawsuits. It is inevitable that some debt settlement clients will be sued. As some creditors become more aggressive and less amenable to settlement, the frequency of such suits is likely to increase.

When served with a collection lawsuit, the consumer has four basic alternatives:

(1) Ignore the suit. This may a tempting option for those who are "judgment proof" (Meaning that the creditor will be unable to collect a judgment when it gets one). But even if you are judgment proof, your credit will be damaged, and you will suffer a certain stigma. Further, in most cases there are far better options that may even put money in your pocket.

(2) Settle the lawsuit with a lump sum payoff. This will usually require a payment of the entire balance with only a small discount. It can be difficult to arrange, and often, debt collectors continue to try to collect after the arrangement is made.

(3) Settle through a payment plan. Again, this can be difficult to arrange, and often, debt collectors continue to try to collect after the arrangement is made.

(4) File a bankruptcy. This is what the consumer wanted to avoid in the first place - and it's not as easy as it used to be. Further, it severely damages ones credit. We discourage it, because it is often unnecessary. (See Option #5.)

(5) Defend the lawsuit

As collection lawsuits become more frequent, more consumers are choosing this last alternative, of defending the suit. This section is dedicated to some of the defenses that can be raised by a consumer against a credit card lawsuit.