COMMON DEFENSES TO CREDITOR LAWSUITS
This guide contains general information to New Yorker who face claims for debt collection in New York City civil courts. This guide is not applicable to courts outside of New York. It’s not a substitute for seeking legal advice regarding your specific situation.
What’s the defense?
In general, a defense is an excuse for that the plaintiff shouldn’t succeed in its claim. In a debt collection case it is an explanation for why (1) you was unable to establish its case or (2) the plaintiff does not have to pay the debt. When one or more of the defenses are successful the plaintiff loses and you’ll win.
What is not an argument?
The reason why you were in debt on your payments.
The reason is that you are unable to pay it off today.
The reality that the creditor or debt collector was unable to negotiate reasonable arrangements for payment over the years.
A declaration that you wish to settle the matter or sign a payment arrangement.
Do the majority of defendants have defenses against claims brought by creditors?
Yes. Any of the defenses commonly that are discussed below could be applicable to your situation. Each defense discussed below — in the event that it can be applied to your situation there is a reason the plaintiff loses and you must win. If you’re unsure the possibility that a specific defense could be applicable to your particular case contact toll-free the NYC Financial Justice Hotline at the number 212-925-4929 or go here to ask for assistance.

What is the best method to argue my case to the judge?
In order to alert the court of your defenses, be sure to mention them in your response. You can get an answer sheet online or or get it from the office of the civil court clerk or contact for assistance at the NYC Financial Justice Hotline at 212-925-4929 to assist in preparing your personal Pro Se Answer (or click here to ask for assistance).
Defense 1: Improper Service (no personal jurisdiction)
The defense of ineffective service can be argued when (1) you didn’t receive the summons or complaint at all, and (2) that you were served with the complaint and summons however, the method of service was not proper.
According to New York law, a process server is required to provide personal service or substitute services. Personal service is when the process servers delivers notice of the complaint and summons in person to you. Substitute services occur where the server has a copies of summons in your residence (or your place of business) with your roommate, a relative or any other responsible person (known by the term “person of suitable age and discretion”) and then sends a duplicate copy of the summons to the address you last contacted (or your business address).
If a process service fails three times to provide personal service or alternative service, the process server is permitted to employ an obvious service (otherwise called nail-and-mail). Conspicuous service involves affixing the summons to your door and sending a duplicate document of summons your last address.
Here are some examples of improper service:
- Send the summons to your neighbor whom you share an house.
- Notifying the court at an address at which you no longer reside.
- The summons is thrown on the ground in front of the building you live in.
- Notifying you of the summons by post only.
If you’d like to see an appeal dismissed due to wrong service there are some things you must do:
It is mandatory to raise your defense in your response at the very first opportunity you make an appearance in the court.
You must obtain a Copy of your “affidavit of service” from your courthouse file. The affidavit of Service is a sworn declaration by the process servicer which explains how it was served to you. The plaintiff can use this document to prove that you were served in a proper manner.
The court must be asked to dismiss the case due to inadmissibility within 60 days after making your response. Sometimes , this means that you’ll need submit special papers that are referred to as”motion to dismiss, “motion to dismiss,” prior to the date your first court hearing is set.
You must make an appointment and attend the special hearing referred to as”traverse hearing. “traverse hearing.” At the traverse hearing, a judge will listen to both sides to determine if you were served properly. If the judge concludes that you were not served properly then he/she can dismiss your case.
Also, you must gather evidence to be presented during your traverse hearing. This could be evidence from witnesses or documents to support your assertion of wrong service.
In the event that your claim is dismissed due to wrong procedure, the person who filed it could pursue you for a second time. You must determine, depending on the circumstances of your case and the strengths of your other defenses, if it’s worthwhile to pursue the matter the traverse hearing.
Defense 2: Identity Theft or Mistaken Identity
These defenses are available if you are of the opinion that the debt against which the lawsuit is pending for isn’t yours. Identity theft happens when someone is able to steal your identity and personal information and then opens credit accounts on your behalf. The mistaken identity happens when you are confused by someone else with an identical name or identifiable information. Keep in mind that it is the responsibility of proof lies upon the defendant to prove that you authorized or made each charge. It is not necessary to show that the debt isn’t yours. Never accept a settlement offer when you’re a person who has been the victim of identity theft a mistaken identity.
Defense 3: Statute of Limitations
An expiration date is the time that a creditor has to bring an action against you. The statute of limitations typically runs beginning from the day of your default which is usually 30 days after the time you last paid a debt. If you live in New York, the statute of limitations to file an action for collection of debt can be anywhere between three and six years, based on the nature of the debt.
In April 2022 New York has a three-year time limit for a variety of consumer debts, such as the debts incurred by credit cards (NY Civil Practice Law and Rules section 214-i). If you were sued over an outstanding credit card on the 7th of April, 2022 or later and the last time you paid the credit card occurred greater than 3 years old, then you could can argue that the time limit has run out. If the time for filing a lawsuit has passed then the court is required to dismiss the case. (If there was a lawsuit filed over credit card debt before March 7, 2022 and aren’t certain of what time limit applies, call to the NYC Financial Justice Hotline.)
In April 2020. New York also has an expiration period of three years for medical loans (NY Civil Practice Law and Rules section 213-d).
If you’re accused of a different type of consumer debts, like unpaid auto loans or rent A longer period of limitation — as long as the period of six years could be applicable.
In April 2022, it is also impossible to extend an expiring time limit on various types of consumer debts such as credit card debts, through a payment (NY Civil Practice Law and Rule section 214-i). This protection, however, is not applicable to all kinds of debts owed by consumers. To ensure your safety, do not make a payment if are planning to use your statute of limitations to defend.
If you’re unsure which statute of limitations is applicable to the debt you have, you can call for assistance at NYC Financial Justice Hotline.
Defense 4: You Were Only an Authorized User
This defense could be applicable when you’re being accused of stealing a credit card you shared with a third party. The defense is based on the distinction between cosigners and authorized user. If someone else granted your permission to make use of their card but you have not signed a contract to be accountable for the cost of that card, then you are an authorized person. As an authorized user you’re not responsible for that debt. However, if you have signed an agreement with a credit card company where you signed a contract to share responsibility for the credit card, you’re cosigner. This defense is not applicable to you. As a cosigner you could be held accountable for the debt even when the debt were yours.
Defense 5: Payment
If you’ve made a payment or a portion of the amount due, but you are of the opinion that you haven’t been paid for the amount then you may raise the defense of the payment.
Defense 6: Dispute the Amount of the Debt
If you think that you have a claim that the sum of debt was not correct you are entitled to contest the debt. Keep in mind that the plaintiff bears the obligation of proving that you are liable for the amount for which you’ve been brought to court. The plaintiff has to prove that the principal amount, interest, costs for collection, and attorneys ‘ fees are right, as stated in your contract, and legally assessed. You are always entitled to demand that the plaintiff present your original contract, statements of account as well as purchase receipts to establish that the sum of amount owed.
Defense 7 The defense is that there is no business relationship to the Plaintiff (lack of good standing)
This defense applies to the case where it is the buyer of debt and not your creditor in the first place. Since you didn’t sign an agreement that directly was with the debt purchaser You have the legal right to contest the right of the debt buyer to pursue you (also called “standing”). The plaintiff won’t be successful until it can show the judge that it is the owner of the debt. In order to prove this, the buyer has to submit an agreement of sale (also called”assignment”) “assignment”) that mentions the debt in particular. If the buyer purchased your debt from a different debt buyer, it must offer a chain of assignments that go back to the creditor who originally purchased the debt. If the debt buyer is unable or is unwilling to give the required evidence, the court will end the proceedings.
Defense 8: The Plaintiff Is Not A Licensed Debt Collector
This defense is applicable in situations where the plaintiff is a debt purchaser who is not your creditor. Every debt collector working within New York City must have an authorization issued by the NYC Department of Consumer Affairs. On the DCA website you can run an instant check for license, to determine if the plaintiff of the debt in the instance is licensed. If it’s not so, judge must dismiss the case.
Defense 9: The Complaint Does Not Contain A License Number
This defense applies to the plaintiff who is a debt-buyer who is not the initial creditor. This defense is like Defense 8 above. Each licensed debt collector must mention its license number on the complaint. If the debt collector is unable to include the license number on the complaint, the case is deemed to be invalid and dismissed. However, the court could let the debt buyer alter the complaint so that it includes the license number.
Defense 10: Bankruptcy
If you have previously declared bankruptcy and the debt against which you are suing was discharged in the bankruptcy process, you will not have any obligation to it. It is the only defence against any debt collection suit.
Defense 11: Collateral Was Not Sold at a Commercially Reasonable Price
This is a particular defense in cases involving auto loans. If you fail to pay auto loans the lender will typically repossess the vehicle and sell it , usually at a much lower price than the actual value of the vehicle. If the proceeds from the sale are not enough to suffice to pay for the entire loan, the bank can claim the rest (called”the “deficiency”). However, the bank is not able to seek to recover a deficit until it has negotiated an acceptable price for the vehicle (a acceptable price, also also known as an “commercially reasonable price”). This burden rests for the lender to prove that it purchased the car at a reasonable commercial price. Because banks rarely achieves an affordable commercial price for its car it is a robust defense that should be taken into consideration in every automobile deficiency case.