Common Defenses to Creditor Lawsuits

This guide provides general information for New Yorkers who are facing debt collection lawsuits in the New York City civil courts.  It does not apply to courts outside the state of New York.  It is not a substitute for obtaining legal advice in your individual case.

What is a defense?

Generally, a defense is a reason why the plaintiff should not win its case.  In a debt collection lawsuit, a defense is a reason why (1) the plaintiff failed to prove its case or (2) you do not owe the money.  If one of your defenses is successful, the plaintiff will lose and you will win.

What is NOT a defense?

  • The reason that you fell behind on your bills.
  • The reason that you cannot pay the debt today.
  • The fact that the creditor or debt collector refused to make reasonable payment arrangements in the past.
  • A statement that you want to settle the case or make a payment agreement.

Do most defendants have defenses to creditor lawsuits?

Yes.  One or more of the common defenses discussed below probably applies to your case.  Each of the defenses discussed below — if it applies to your case — is a reason why the plaintiff should lose and you should win.  If you have questions about whether a particular defense might apply to your case, call the NYC Financial Justice Hotline at 212-925-4929, or click here to request assistance.

What is the best way to present my defenses to the court?

To alert the court to your defenses, you should list them briefly in your answer.  You can download the answer form online, get it at the civil court clerk’s office, or call the NYC Financial Justice Hotline at 212-925-4929 for assistance preparing your own Pro Se Answer (or click here to request assistance).

Defense 1:  Improper Service (no personal jurisdiction)

The defense of improper service applies if (1) you never received the summons and complaint at all; or (2) you received the summons and complaint, but the manner of service was not correct.

Under New York law, a process server must try to make personal service or substitute service.  Personal service occurs when the process server delivers the summons and complaint to you in person.  Substitute service occurs when the process server leaves one copy of the summons at your home (or place of business) with a roommate, relative, or other responsible party (known as a “person of suitable age and discretion”) AND mails a second copy of the summons to you at your last known address (or place of business).

If a process server makes three unsuccessful attempts at personal service or substitute service, he or she is allowed to use conspicuous service (otherwise known as nail-and-mail).  Conspicuous service means attaching it to your door AND mailing a second copy of the summons to you at your last known address.

Here are some common examples of incorrect service:

  • Leaving the summons with your neighbor, who lives in a different apartment.
  • Sending the summons to an old address where you no longer live.
  • Throwing the summons on the floor in the lobby of your apartment building.
  • Sending the summons to you by mail only.

If you want to get a case dismissed for improper service, there are a few things you have to do:

  • You MUST RAISE the defense in your answer the first time you appear in court.
  • You need to GET A COPY of the “affidavit of service” from your file in the courthouse.  The affidavit of service is a sworn statement by the process server that describes how you were served.  The plaintiff will rely on this document to claim you were served correctly.
  • You MUST ASK the court to dismiss the case for lack of jurisdiction within 60 days of filing your answer.   Sometimes this means that you will have to file special papers, called a “motion to dismiss,” before your first court date is scheduled.
  • You MUST SCHEDULE AND ATTEND a special hearing called a “traverse hearing.”  At the traverse hearing, the judge will hear from both sides to determine whether you were properly served.  If the judge decides that you were improperly served, he or she will dismiss the case.
  • You also need to GATHER EVIDENCE to present at your traverse hearing.  This evidence could include witnesses or documents that support your claim of improper service.

If your case is dismissed for improper service, the plaintiff can sue you again.  You have to decide, based on the facts of your case and the strength of your other defenses, whether it is worth it to go through with a traverse hearing.


Know Your Rights!

The plaintiff’s attorney and court personnel will often try to discourage you from pursuing a defense of improper service.  They will tell you that the defense will not help you because the plaintiff will only sue you again.  But improper service is sometimes your best defense.  If so, do not be afraid to insist on your right to a traverse hearing!  Remember that the court has no power to issue a judgment against you if you were not served according to law.


Know Your Rights!

Sometimes process servers lie when completing the affidavit of service.  For example, a process server may falsely claim to have left the summons with someone at your home.  You can detect this false statement by looking at the physical description of the person the process server claims to have met at your home.  Does it sound like someone you know?   You can file a complaint against a lying process server with the NYC Department of Consumer Affairs


Defense 2:  Identity Theft or Mistaken Identity

These defenses apply when you believe that the debt for which you are being sued is not your debt. Identity theft occurs when somebody steals your name and personal information and opens up credit accounts in your name.  Mistaken identity occurs when you have been confused with somebody else who has a similar name or other identifying information.  Remember that the burden of proof is on the plaintiff to establish that you made or authorized each and every charge.  You do not have to prove that the debt is not yours.  NEVER agree to a settlement if you are a victim of identity theft or mistaken identity.

Defense 3:  Statute of Limitations

A statute of limitations is a time limit for a creditor to file a lawsuit against you. The time limit usually runs from the date of default, which is roughly 30 days after you last made a payment. In New York, the statute of limitations for filing a debt collection lawsuit is between three and six years, depending on the kind of debt.

As of April 7, 2022, New York has a three-year statute of limitations on many kinds of consumer debts, including credit card debts (NY Civil Practice Law and Rules section 214-i). If you were sued on a credit card debt on or after April 7, 2022, and your last payment on your credit card was more than three years ago, you likely have the defense that the statute of limitations has expired. If the statute of limitations has expired, the court must dismiss the lawsuit. (If you were sued on a credit card debt BEFORE April 7, 2022, and are not sure what statute of limitations applies, contact the NYC Financial Justice Hotline.)

As of April 3, 2020, New York also has a three-year statute of limitations on medical debt (NY Civil Practice Law and Rules section 213-d).

If you are sued for certain other kinds of consumer debts, such as unpaid rent or auto loans, a longer statute of limitations — up to six years — may apply.

As of April 7, 2022, you also cannot restart an expired statute of limitations on many kinds of consumer debts, including credit card debts, by making a payment (NY Civil Practice Law and Rules section 214-i). However, this protection does NOT apply to all types of consumer debts. To be safe, NEVER make a payment if you want to assert the statute of limitations as a defense.

If you are not sure what statute of limitations applies to your debt, contact the NYC Financial Justice Hotline.

Defense 4:  You Were Only an Authorized User

This defense may apply if you are being sued for a card that you shared with someone else.  The defense hinges on the difference between a cosigner and an authorized user.  If another person gave you permission to use his or her card, and you never agreed to be responsible for paying for that card, you were an authorized user.  As an authorized user, you cannot be held responsible for that credit card debt.   However, if you signed a credit card agreement in which you agreed to be jointly responsible with someone else for a credit card, you are a cosigner, and this defense does not apply to you.  As a cosigner, you can be held responsible for the debt, even if none of the charges were yours.

Defense 5:  Payment

If you have paid all or a part of the debt, and you believe you have not been credited for the payment, you can raise the defense of payment.

Defense 6:  Dispute the Amount of the Debt

If you believe that the amount of the debt is incorrect, you have the right to dispute it.  Remember that the plaintiff has the burden to prove that you owe the amount for which you have been sued.  The plaintiff must prove that the principal, interest, collection costs, and attorneys fees are all correct, agreed to in your contract, and lawfully charged.  You always have the right to insist that the plaintiff come up with your original contract, account statements, and even purchase receipts, to prove the amount of the debt.

Defense 7:  No Business Relationship with the Plaintiff (lack of standing)

This is a defense that applies when the plaintiff is a debt buyer, not your original creditor.  Because you never signed a contract directly with the debt buyer, you have the right to challenge the debt buyer’s right to sue you (also known as “standing”).  The plaintiff will not be able to prevail unless it can prove to the court that it owns your debt.  To do this, the debt buyer will have to produce a contract of sale (also known as an “assignment”) that mentions your debt specifically.  If the debt buyer bought your debt from another debt buyer, it has to provide a chain of assignments going all the way back to the original creditor.  If the debt buyer cannot or will not provide these documents, the court must dismiss the case.

Defense 8:  The Plaintiff Is Not A Licensed Debt Collector

This is a defense that applies when the plaintiff is a debt buyer, not your original creditor.  All debt collectors working in New York City must have a license from the NYC Department of Consumer Affairs.  At the DCA website, you can perform an instant license check, to see whether the debt buyer plaintiff in your case is licensed.  If not, the court should dismiss the case.

Defense 9: The Complaint Does Not Contain A License Number

This is a defense that applies when the plaintiff is a debt buyer, not your original creditor.  This defense is very similar to Defense 8 above.  Every licensed debt collector is required to write its license number in the complaint.  If the debt buyer fails to write the license number in the complaint, the complaint should be dismissed.  However, the court may allow the debt buyer to amend the complaint to include a license number.

Defense 10:  Bankruptcy

If you previously declared bankruptcy, and the debt for which you are being sued was discharged as part of that bankruptcy proceeding, you do not owe it anymore.  Bankruptcy is an absolute defense to a debt collection lawsuit.

Defense 11:  Collateral Was Not Sold at a Commercially Reasonable Price

This is a special defense that applies in auto loan cases.  When you default on an auto loan, the bank will usually repossess the car and sell it — often for far less than the value of the car.  When the proceeds of the sale do not cover the entire auto loan, the bank may sue you for the remainder (called the “deficiency”).   However, the bank cannot pursue you for a deficiency unless it obtains a fair price for the car (a fair price is known as a “commercially reasonable price”).  The burden of proof is on the bank to establish that it sold the car at a commercially reasonable price.  Because a bank rarely, if ever, obtains a commercially reasonable price for the car, this is a very strong defense that should be raised in every auto deficiency case.

More Information

How to Read a Civil Court Summons (PDF)

The Basics of Defending Creditor Lawsuits

Preparing for Your Court Date

Negotiating A Settlement Agreement in Court

Vacating a Default Judgment

Frozen Bank Accounts

Wage Garnishment

What is Exempt from Debt Collection?

Helpful Links and Resources

LawHelp/NY: attorney referrals and information for pro se litigants

National Association of Consumer Advocates: national database of consumer lawyers

New York City Civil Court: information about representing yourself in court, including contact information and court forms

eCourts: information about cases filed in New York courts

Laws of New York: complete text of New York laws


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