Have you been sued by a debt collector, and the thought of going to trial is keeping you up at night?
Here are three ways you can win your debt collection lawsuit without going to trial. No courtroom, no testifying, and no going up against the collection attorney in person.
Most debt collection lawsuits are lost by default, not at trial
When a debt collector files suit, a large share of those cases go to default judgment, because the person sued never responds. Nationwide studies have found the overwhelming majority of people don’t answer their debt collection lawsuits at all. They lose right out of the gate, without a judge ever looking at whether the debt is valid.
If you’re reading this, you’re probably one of the exceptions. You filed an answer or some other response to the complaint, and now your case is on that slow march toward trial.
And for a lot of people, the idea of actually going to court, facing the debt collector’s attorney, and testifying about their own finances causes a lot of stress and a lot of anxiety. That’s understandable. It’s an intimidating process.
The good news: there are ways to resolve your lawsuit without ever going through the trial process.
Way #1: Check the statute of limitations on your credit card debt
The first step is to evaluate your case for strong defenses, and the strongest one is often the statute of limitations.
Every state has laws setting out how long a creditor has, from the time you stopped paying on the card, to file a lawsuit against you. That window varies significantly from state to state.
In Arizona, where our firm practices, the statute of limitations on credit card debt is six years.
Here’s how that plays out. Say you had a credit card and stopped paying. Thirty days later the account went into default and collections started. In Arizona, the credit card company then has six years to file suit. If more than six years passed between your default and the day they filed, you can ask the court to dismiss the case.
How to get a time-barred debt dismissed
In most jurisdictions, you file what’s called a motion to dismiss, which is a written motion submitted to the court that lays out what the statute of limitations is, why the collector violated it, and why the case should be thrown out. Sometimes it’s handled through a motion for summary judgment instead, but particularly if you’re representing yourself, a motion to dismiss will often do the job.
One thing to get right on the front end: raise the statute of limitations in your written answer, too. It’s what’s called an affirmative defense, and defenses you don’t raise in your answer can be treated as given up, which means losing a defense you actually had. Plead it, then move on it.
This is a big deal if you can get it. Not only does the case get thrown out, it may entitle you to compensation under the federal Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from suing you for an amount you don’t owe. If the statute of limitations expired and they sued anyway, they may be opening themselves up to liability.
All of that happens on paper. No trial.
Way #2: File a motion to compel private arbitration
Let’s say they filed within the statute of limitations. What else can you do?
Look at the terms and conditions that came with your credit card, the fine print nobody reads when they open an account. In virtually every credit card agreement, there’s a provision for private arbitration.
An arbitration clause says that if a dispute arises between the parties, either party can elect to have it decided by a private arbitrator rather than through the court system.
Either party. Not just the bank. You.
And almost 100% of the time, the creditor is not going to be the one to invoke it. They don’t want private arbitration, for one simple reason: it’s expensive. Their entire business model is getting a judgment against you while spending as little money and time as possible, then garnishing your wages or going after your bank account. That’s the endgame.
But they put the clause in the contract. And as a party to that contract, you can invoke it, even after a lawsuit has been filed.
How to use the arbitration clause
Find the terms and conditions for the specific card they’re suing you on. If the collector hasn’t provided them, you can look them up online. Search the year the card was opened and the type of card, and you’ll find depositories where you can download copies.
Read the arbitration language. It likely says you can ask the court to dismiss the case and send the parties to private arbitration. You do that by filing a motion to compel private arbitration, attaching a copy of the clause, and telling the judge: this agreement says either party can request arbitration, and I’m requesting it.
Why this usually ends the case
You might wonder why you’d want out of court. Here’s why: in most instances, the creditor won’t participate.
They’re the one with the claim against you, so they’d have to file the arbitration claim themselves, usually with the American Arbitration Association (AAA). And the fees are very high. There’s an initial filing fee, the arbitrator has to be paid, and other costs pile on. It can cost them more than they’re suing you for.
So when a court compels private arbitration, the case is usually done. The creditor puts your file in a different pile and moves on to the next one.
Way #3: Settle your debt collection lawsuit before trial
The third way is settlement, which may mean adjusting how you define winning.
If you can settle for a low dollar amount, that counts. If they’re suing you for $5,000 and you resolve it for $800 or $1,000, that’s a win. Think about it this way: if someone had called you the week before the lawsuit and said “pay $800 and this whole thing goes away,” you’d have jumped on it. That’s a good deal.
You can reach out to the creditor directly and propose different terms.
Here’s something most people don’t know: under the rules of evidence, settlement discussions are not admissible in court. If you call and offer $500 to make it go away, they can’t run to the judge and say “he offered $500, clearly he owes it.” They can’t do that.
And start lower than the maximum you’re able to pay, because no matter what you offer, they’re going to come back with a counteroffer.
The three ways, recapped
- Statute of limitations. Check whether the six-year window (in Arizona) expired before they filed. If it did, move to dismiss. Raise it in your answer as well.
- Private arbitration. Pull the terms and conditions for that specific card, find the arbitration clause, and file a motion to compel arbitration.
- Settlement. Negotiate a reduced payoff. Your offers can’t be used against you in court.
Any of the three can end your case without a trial.
Frequently asked questions
Can you win a debt collection lawsuit without going to trial? Yes. Most debt collection cases never reach trial. They’re resolved by dismissal, by an order compelling arbitration, or by settlement, all of which happen on paper or over the phone.
What is the statute of limitations on credit card debt in Arizona? Six years, measured from when you defaulted on the account. If a collector files suit after that window closes, you can ask the court to dismiss.
Can I force a credit card lawsuit into arbitration? Often, yes. Nearly all credit card agreements contain an arbitration clause that either party can invoke, and you can generally invoke it after the lawsuit has already been filed by moving to compel arbitration.
Why would a debt collector drop a case that goes to arbitration? Cost. The collector has to file and fund the arbitration, and the fees frequently exceed what they’re suing you for. It stops making economic sense.
What happens if I ignore a debt collection lawsuit? The collector gets a default judgment against you without any review of whether you actually owe the debt. That judgment opens the door to wage garnishment and bank levies.
Will my settlement offer be used against me in court? No. Settlement discussions are generally inadmissible to prove liability.
Do I need a lawyer to fight a debt collection lawsuit? You can represent yourself. But each of these strategies turns on specifics: which court, which creditor, which version of which cardholder agreement, and what date you defaulted. Getting one detail wrong usually means a judgment.
Sued by a debt collector in Arizona? Let’s talk.
Arizona Consumer Law Group defends consumers against debt collectors throughout Arizona. We handle debt collection defense and bankruptcy, and our fees are flat and quoted up front, so you’ll know the number before you decide anything.
Call (602) 887-6992 or schedule a consultation.
This article is general information about the law, not legal advice, and reading it does not create an attorney-client relationship. Every case depends on its own facts and no particular result is guaranteed. Laws and court rules change over time. Please consult an attorney about your situation.