Did you know that two magic words can help you defend – and possibly win – a collection lawsuit?

Whether you’re being sued for a private student loan, a credit card debt gone bad, or a bank loan it’s unbelievable that the lender or debt buyer can be scared off so easily.

At least, that’s the sense Ira Glass gives in the prologue to the episode of This American Life that aired on August 15, 2014. Relaying a story by Jake Halpern, Glass tells of a Georgia couple who had fallen on hard times. They went past due on their credit cards and got sued by LVNV Funding – an entity they’d never heard of.

Rather than do what over 95% of people do – that is, nothing at all – the consumers went to court to try to make some sense of the lawsuit. They didn’t necessarily deny that they’d fallen behind on their American Express debt, but they wanted to figure out how LVNV Funding fit into the picture.

Standing before the judge, they demanded that LVNV’s lawyer prove the case and show evidence of their ownership of the debt. In response, LVNV’s attorneys (who had previously not been particularly nice to them) dropped the case.

Just like that.

Here’s a copy of the entire show, by the way. I’m a huge fan of This American Life and recommend that you listen to the entire episode, but if you’re here for the collection lawsuit stuff then you’ll find that at the very beginning.

 

So What Are The Two Magic Words?

The two magic words to help you defend a debt collection lawsuit more effectively are:

prove it
When you make the collection company prove the case, that means you want the other side to provide you with the following:

  • you signed the application
  • the entity suing you purchased the right to collect on the debt
  • the balance claimed as being due is calculated properly
  • the loan has not been rendered unenforceable due to the expiration of the statute of limitations

Why It’s Magic

It’s only by using these magic words that the creditor is forced to do anything beyond filing the complaint against you.

Failing to utter those words allows a default judgment to be taken against you.

In that way, using these magic words when you’re being sued for a debt will instantly turn the tables on the debt collection lawyer. They go from a position of strength to one of being on the run.

Why The Magic Works

I’ve talked about the fact that debt collection lawyers often don’t get more than a name, creditor, and balance due before starting a lawsuit to collect an unpaid debt. If the creditor is a company that’s purchased the debt, that debt buyer hasn’t gotten any proof in the form of the Note, billing statements or an accounting.

In other words, more often than not the creditor doesn’t have a shred of legal proof to counteract your magic words.

They can’t prove the debt. And that frequently means that if you push them hard enough, they may lose in court.

When the debt collector loses, you win.

Use The Magic Sparingly

You may be tempted to fall behind on your debts and wait for the collection lawsuits to come, if only to beat them at their own game.

It’s understandable, but remember that the result of any debt collection lawsuit is firmly in the hands of the judge. Though their proof may be weak, a judge may see things their way.

And if you’re going to fight the collection lawsuit, you’d be wise to hire a lawyer rather than roll the dice on your own.

Finally, you don’t want to defend the case if you acknowledge that you owe the debt. After all, doing so would be lying.

But for the right situation and the right time, these two magic words are some of the handiest you can find.