Why You Should Not File A Counterclaim To A Debt Buyer Lawsuit


Why You Should Not File A Counterclaim To A Debt Buyer Lawsuit

Why shouldn't I file a counterclaim in a debt buyer lawsuit?We receive many calls and emails from Alabama consumers who have been sued by debt buyers.  Some consumers believe it is smart to file a counterclaim against the debt buyer.

We generally do not do this for our clients.  Sometimes this surprises folks we speak with and they have asked us why we don’t file counterclaims.

Here are some of the reasons.

First, it can complicate an otherwise simple case.

The debt buyer sued you.

They must prove you owe money to the debt buyer.

To do this they must prove it owns the debt that you owe.

This sounds so basic – the plaintiff must prove it has a right to sue you but the amazing thing is we have not seen this happen.

So the case is straight forward and we want to keep it that way for everyone involved, including the judge who has hundreds of cases he or she must deal with at any one time.

But when we get counterclaims involved, the simple case can become messy and distracting.

Second, we have never seen a debt buyer or collection law firm give up just because someone has filed a counterclaim.

So the reason many on the internet advise to file counterclaims – to scare the collector – is simply not valid.

Most debt buyers require their collection attorneys to handle the counterclaim for free so the debt buyer doesn’t normally mind a counterclaim.  But if a separate claim is filed against the debt buyer (debt collector) in federal court, the debt buyer has to get a lawyer capable of handling the case in federal court.

So if the debt buyer is not going to give up just because of a counterclaim, then use that claim in federal court.

Finally, if you have a legitimate claim, file it in federal court.

Don’t file it in district court or small claims court unless the value is $10,000 or under.

If you are the victim of identity theft and the debt buyer sues you anyway, you likely have a great case to sue the debt buyer.

Even if it was not identity theft but there has been false credit reporting, you may can sue.

Or you can sue if the lawsuit was bogus from the start.

Find out your options for suing the debt buyer after you win the collection case.  

File that good case in federal court. If a claim is worth filing and pursuing, then almost always it is better to do that in a separate lawsuit.

Contact us if you have any questions.

If you would like more information, feel free to call us at 205-879-2447.

Or, you can fill out our contact form and we’ll get right back with you.

You have 5 options when you are sued — find out which one is best for you.

Educate yourself so you can make the best possible decision on how to handle a debt buyer lawsuit.

I look forward to talking with you.

Have a great day!

-John Watts


2 Comments

  1. gordon hall says:

    When a debt collector is sued in state court, they nearly always remove it to federal court, because they think that that federal courts are a better forum for them, since many perceive district courts to be “plaintiff friendly.”

    Wouldn’t it then be better to file a FDCPA counterclaim in state court because those counterclaims cannot be removed to federal court?

    • JohnGWatts says:

      Gordon,

      I understand what you are saying and it is a legitimate point.

      Normally if we file a case in State Court, it will get removed to federal court. This is more of a “knee jerk” reaction than a well reasoned move in my opinion.

      Here’s one issue with counterclaims — at least if we file them, the debt buyer says “OK, let’s do a mutual dismissal, we will delete the credit reporting, and no 1099.”

      Its a great deal for our client except they lose their claim against the debt buyer.

      Normally we can get all of that benefit (claim is gone, no 1099, and delete credit reporting) without giving up our claims. Although it is something to consider.

      The other issue is if you try the case — in state or federal court — you have now injected into the case the issue of the debt. Will the jury be distracted by this?

      If you win the case when sued — so you have a judicial declaration that you don’t owe the debt — and then you sue, the jury is less likely to get confused. The federal judge will tell the jury the debt is not owed — the debt buyer sued and lost. That issue is over.

      The debt buyers and their defense lawyers hate this.

      We point out that when you sue and lose, there are consequences….

      My thoughts but you do make a very good point.

      John Watts
      Birmingham, Alabama

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