April 01, 2016 by Marc Rapaport


Posted by Marc A. Rapaport, April 01, 2016

You will find that answering a debt collection complaint in state court is a far less complicated and a much faster process than you may have otherwise suspected, especially if you have a sample answer form to consult as a template for your own answer form. Please keep in mind that the type of answer form described below only applies to a specific type of debt: unsecured debt, which involves creditors such as credit card companies, medical providers, and service providers. The first thing that you need to know is that there is an entire industry based around debt collection and debt buying - we're talking corporate revenues over $2.4 billion a year. One of the reasons why debt collection is so lucrative is because most debtors don't respond to the complaints that they receive. This is a huge mistake because if you respond to a complaint and put up some form of resistance, many times the debt collection company will just walk away because there are easier targets to be had that won't respond. Ideally, a debt collector is looking for something called a default judgment, which means the judge rules against you because you didn't show up to prove your side of the story.

There are three steps involved in answering a debt collection complaint: receiving the papers, deciding to respond, and actually responding.

Step 1: Receiving a Debt Collection Complaint

The lawsuit begins with a creditor, such as a credit card company or hospital, filing a complaint in state court. The creditor (also known as a plaintiff after the filing of the lawsuit) arranges to have the complaint and a summons "served" upon the debtor (who is now called the defendant). To serve someone means to ensure that they have received copies of relevant legal documents. There are several different ways to effectuate service, but the most common way is through personal service, which means that a process server will personally deliver the documents rather than sending them in the mail or posting an ad in a newspaper. Depending on the jurisdiction, that process server may be a regular individual (private process server) or a local sheriff. It doesn't really matter who is selected to do personal service, the relevant piece of information is that they go to a defendant and deliver the legal documents. Typically, once the documents have been delivered, you will have a 20-day window in which to respond.

Step 2: Making the Decision to Respond to the Complaint

Many debtors are confused or scared the first time they see the complaint, as they are unfamiliar with debt collections laws. They are unaware of their legal rights and potential defenses. Considering how they don't have enough money to pay off their debt, and let alone hire a lawyer, they assume that there's nothing they can do to win this case, so what is the point of responding to the complaint?

Debtors need to understand the business of debt collection in order to see how there is actually a chance for them to eliminate or significantly reduce their debt. Debt collectors, many of which represent credit card companies, file thousands of suits a year. They do so because they know that a certain fraction of these lawsuits will go unanswered, earning them default judgments, and because these days it is incredibly cheap to purchase debts, oftentimes for merely pennies on the dollar. This doesn't just affect debtors - it actually affects the court system (and indirectly, taxpayers) as well by clogging up the system with more cases it can handle.

Once a debtor fails to respond and the default judgment is in place, the amount begins to generate interest, the percentage of which varies by state, and will take even longer for debtors to pay off. The good news is by the simple act of answering a complaint, a debtor may be able to shrink the debt they owe or even get it completely removed. You don't even need a lawyer to have this happen; by becoming aware of legal defenses and responding with them, miracles can and do happen. For example, many of these cases are well beyond the statute of limitations; a statute of limitations is a time period in which you are allowed to bring a lawsuit, and after that period has passed, you cannot bring a lawsuit anymore. If you point this out in your response, your case may be dismissed. The court is actually on your side in this matter; in the US system, the plaintiff has the burden of proving why the defendant should lose, not vice versa, which makes their job a lot harder.

Step 3: Answering the Complaint

Most state courts give you up to 20 days to answer the complaint once you have received it. You don't have to write a long response; a short, concise one will do the trick and judges definitely appreciate getting to read as little as possible. You can answer the complaint by using the following outline:
  1. The top of the page contains the caption. The caption includes the title of the case centered at the top of the page, along with the docket number (unique number assigned to the case) on the right hand side of the page.
  2. Your answer will consist of numbered paragraphs. These paragraphs should correspond to the paragraphs in the complaint, so if there are 30 paragraphs in the complaint, you should have 30 paragraphs to combat them. Each paragraph in the complaint will contain a single allegation, and each of your paragraphs will contain a refutation of each allegation. For example, your third paragraph will correspond to the third paragraph in the complaint. You may be tempted to only address the most egregious allegations, but it would be a mistake to leave out any allegations as in most courts, not responding to an allegation is the same as admitting that the allegation is true. You can use simple language like "Defendant denies all of the allegations contained in paragraph # __ of the Complaint."
  3. You also need to include affirmative defenses in the body of your answer. An affirmative defense does not mean you did not do what you were accused of; it means that you may have very well done what you were accused of, but that you have a good reason why you should not be criminally or civilly liable. A good example of this can be found in homicide - if you did kill someone, but your affirmative defense is that it was self-defense, then you should not be held criminally liable for their death. The same concept holds true for debt collection. Two popular affirmative defenses for debt collection include statute of limitations and lack of standing. This means that you may very well have the debt, but either the time period in which the plaintiff can collect the debt has expired, or the plaintiff is not actually the party to whom you owe the debt, so they aren't entitled to collect! The second defense is true more often than you would suspect; the reason for this is because debts are sometimes bought and sold so many times that that it becomes difficult for the plaintiff to obtain all of the required paperwork proving the chain of ownership. The plaintiff may be legally unable to prove that they actually own the debt and are entitled to repayment! Debt buyers are very aware of this issue, and they're hoping that you aren't because if you bring it up, the judge may throw out the case. However, if you don't respond to the complaint, the judge will be forced to enter judgment in favor of the plaintiff, even if the debt is not valid.

Don't think you're alone in being sued for debt collection; 30 million Americans are involved in some sort of debt collection, $15,000 is the average credit card debt for a US household, $29,000 is the average student loan debt for college graduates. A sizeable portion of these people are being sued by debt collectors that endlessly churn out complaints. You don't have to end up on the losing side of this lawsuit; make sure to answer that complaint and you might end up better off than you started!