Defenses you can use in a debt lawsuit

Defense: The statute of limitations has ran out

The plaintiff must file a lawsuit within a set amount of time. After that period expires, they can no longer sue. This time limit is called the statute of limitations. 

The statute of limitations that apply to most debt cases: 

• Breach of written contract: 4 years  

• Account stated: 4 years  

• Open book account for money due: 4 years  

✅ If the period of time has been longer than the statute of limitations allows, you may be able to use the statute of limitations as a defense.   

Defense: Laches 

Even if the plaintiff files the lawsuit within the statute of limitations, they are not allowed to delay so long that it negatively affects your ability to defend yourself.  

• You can use this defense if the plaintiff waited a long time to file this lawsuit and you thought that the plaintiff was no longer trying to collect this debt.
• The delay must cause you harm because it increased the amount that the plaintiff is suing you for. Or, you no longer have documents relating to this case.

For example, the plaintiff waited almost 4 years to file for a breach of written contract suit. But your defenses depend on bank records and your bank only keeps 3 years of records. 

✅ If this is the case, you may be able to use the defense called laches. 

Breach of contract by plaintiff 

A contract means both sides have to do what the contract requires. If the plaintiff says you broke (breached) the contract, but the plaintiff did not do everything they were required to do, then you may not be legally required to pay what you owe (or may not need to pay as much). 

✅ If this is the case, you may be able to use breach of contract by plaintiff as a defense. 

Equitable Estoppel 

If the plaintiff:

• misrepresented something to you (said one thing to you, or left out important information you needed), to get you to agree to something,
• did something different, and
• that misrepresentation hurt you in some way,

✅  you may be able to use equitable estoppel as a defense.  

• For example, if the plaintiff communicated to you that if you lost your job your payments would be suspended for up to six months, but instead sued you as soon as you didn’t pay after losing your job, you could use this defense. 

Fraud, misrepresentation, or deceit by the plaintiff 

If you only entered into the contract because the plaintiff:

• misrepresented something important to get you to agree
• committed fraud and tricked you into signing the contract
• deceived you (lied or misled you) 

✅  you could argue this defense of fraud, misrepresentation or deceit by the plaintiff. 

Unclean hands 

This argues that the plaintiff has committed wrongdoing (has unclean hands) and is attempting to benefit from this wrongdoing. 

✅ If the plaintiff did this, you may be able to use unclean hands as a defense.

Usury 

California law limits the amount of interest charged when loaning money or giving credit to 10% per year.

• Some lenders, like banks and other commercial lenders, are exempt from (do not have to follow) this rule.
• If the lender isn't exempt, charging more than 10% interest a year is called usury.

If the plaintiff has charged you more than the 10% interest allowed by law, they cannot collect any interest from you.

✅  If this is the case, you may be able to use usury as a defense.

Duress/Undue Influence 

This defense says that you entered the agreement because the plaintiff took advantage of your mental state or used force to get you to agree.

✅ If the plaintiff did this, you can use duress or undue influence as a defense.

Recoupment 

This is a defensive counterclaim. It says that the plaintiff is suing you for money, but you have your own valid claim against them—for example, because they violated the Rosenthal Fair Debt Collection Act in how they tried to collect money from you. Instead of filing a separate lawsuit, you can use what you would have won in that case to reduce what you owe the plaintiff.

• For example, if they're claiming you owe $5,000, and you could have sued them for $2,000 in damages, the recoupment defense lets you knock that $2,000 off their claim in the same case the filed against you.

✅ If this is the case, you may be able to use recoupment as a defense.

No breach by the defendant 

You did everything you were required to do under the contract. This means you do not believe you broke the contract at all.

✅  If this is the case, you may be able to use this as a defense to say that the plaintiff does not have the right to get any money from you.

Lack of privity 

This defense argues that you and the plaintiff did not have a contractual relationship, or if the plaintiff is not the original creditor, that the contract was not properly assigned to the plaintiff.

✅  If that's the case, you can use the lack of privity defense to argue you do not owe the plaintiff anything. 

No damage to the plaintiff 

This defense argues that, even if you might have breached the contract, the plaintiff has not been harmed by that breach.

✅  If this is the case, you may be able to use this defense to say there's no damage to the plaintiff and they should not be allowed to recover any money from you. 

Offset 

If you paid the plaintiff money that they're not giving you credit for in their Complaint, you may  not owe the plaintiff as much as they claim. Or, the plaintiff may actually owe you money.

✅  You may be able to use this defense to ask that the amount the plaintiff asks for is offset by the money you already paid. 

They can't recover attorney's fees

If the plaintiff asked for attorney's fees in the Complaint, check your contract to see if it says that they can get attorney's fees. Also check to see if there are any laws that say that the plaintiff can get attorney's fees.

✅ If it's not in the contract and there's no law that allows it, you can use the defense that the attorney's fees are not recoverable.

Identity theft

If you were a victim of identify theft, and you didn't already, you should file a police report about the identity theft and give the plaintiff a copy of the report.

✅  If this happened to you and you do not owe the debt, you can use identify theft as a defense.

Discharge by bankruptcy 

If you filed for bankruptcy and the debt you're being sued for now was canceled (discharged) in the bankruptcy case, the plaintiff can't sue you for it now.

✅  If this happens, you can use the defense of discharge by bankrupcty for this debt. 

Res Judicata/Collateral Estoppel 

If the same issue you're being sued for now was previously been decided by a court, and the court found you did not breach the contract, a creditor cannot re-file the suit and argue that the same actions were a breach of contract. 

✅  If you're sued again for something you were already cleared for, you may be able to use res judicata/collateral estoppel as a defense.

Statute of frauds 

The statute of frauds is a law that requires certain types of contracts to be in writing and signed in order to be enforceable (legally binding).

The idea is that for high-stakes agreements — like contracts involving real estate, large sums of money, or deals that can't be completed within a year — a handshake or verbal agreement isn't enough. If it's not in writing, a court generally won't enforce it. 

✅  If the contract the plaintiff is suing you about is not in writing, but you think that law says it should have been, this statute of fraud defense may apply to you.

Parol Evidence Rule 

By law, a written contract takes priority over what is said in relation to the agreement. This is called the parol evidence rule.

✅ If the plaintiff’s claim is based on a verbal statement that contradicts or falls outside the written terms of the agreement, you may raise this defense.

Satisfaction 

✅ If you have completely paid the plaintiff or paid an amount the plaintiff agreed to accept as full payment, you may argue that you have satisfied the debt. 

Prevention of performance 

If you tried to pay but the plaintiff would not let you, you can argue that the plaintiff prevented you from doing what they're now asking you do to (they prevented you from performing under the contract).

• For example, you offered payment in full, but the plaintiff would not accept it. 

✅ If this was the case, you may use the prevention of performance defense. 

Cancelation of contract 

✅ If you and the plaintiff both agreed to cancel the contract, you can raise the defense that the contract was canceled.

Rescission 

✅ If you promptly returned the goods or rejected the services under the contract, you may be able to argue that your actions voided (rescinded) the contract. This defense is sometimes used in a sales contract. 

Frustration of purpose 

Frustration of purpose is when something unexpected happens — something neither side could have reasonably anticipated — that completely destroys the whole point of the agreement. Even if technically you could still perform your end of the deal, the reason you made it in the first place no longer exists. Because the deal has lost its entire purpose, you can argue that you shouldn't be held to it.

• For example, you rent a room to watch a parade, but the parade gets cancelled. You could still occupy the room, but the whole reason for the contract is gone.

✅ If this happens, you can argue frustration of purpose as a defense.

Lack of consideration 

Consideration is what each side gives up or promises in exchange for the deal — it's what makes a contract a contract rather than just a gift or a promise. Lack of consideration means one side didn't actually give anything in return. If only one person is bound to do something and the other gives nothing, there's no real bargain, and the agreement isn't legally binding.

✅ If this is what you believe happened, you can use lack of consideration as a defense.

Failure of consideration 

With failure of consideration, there was a valid exchange when the contract was made (unlike lack of consideration), but then one side didn't follow through on what they promised. So you held up your end, but they didn't deliver what you were promised in return.

✅ Because you didn't get what you bargained for, you can use the failure of consideration defense to argue that you shouldn't have to pay or perform either. 

Failure of condition precedent 

A condition precedent is something that has to happen first before either side is required to perform under the contract.

Failure of condition precedent means that thing never happened — so the obligation to perform never actually kicked in. You're not saying the other side breached; you're saying the trigger that would have made the contract binding never occurred, so you were never obligated in the first place.

• For example: A contract says you'll buy a house if you get approved for a loan. If the loan falls through, the condition precedent failed, and you're not obligated to buy.

✅ If the condition precedent didn't happen in your situation, you can use this as a defense.

Quantum meruit 

Quantum meruit means "as much as they deserve."  It's used when there's no valid contract, or the contract falls through, but one side already did work or provided something of value. Instead of enforcing a contract and ordering you to pay for something that wasn't finished (or letting you benefit from partial work without paying the plaintiff anything), the court asks: what is the reasonable value of what was provided, and then, the court orders payment for that. 

✅ If the plaintiff never completed performance under the contract with you, you can raise the quantum meruit defense to argue that they should only get payment for the portion of the contract that they did complete. 

Lack of standing to sue 

Lack of standing to sue means the person suing you doesn't have the right to bring the lawsuit in the first place.  The law requires that the person suing must be the right person — meaning they were personally affected by what happened.

• For example, you stop paying on a credit card and the credit card company hires a collection agency to collect the debt. The collection agency itself doesn't actually own the debt, so they don't have standing to sue you. 

✅  If the plaintiff is suing to collect a debt they don't own and never owned (like a collection agency, or a debt buyer that can't prove they bought the debt), you may be able to raise lack of standing to sue as a defense.

Waiver 

If someone has a right under a contract but they act in a way that shows they're not going to enforce it — or they explicitly tell you they won't — they may have waived that right. If so, a plaintiff may not be entitled to recover anything.

✅ If the plaintiff told you, by actions or words, they were giving up their rights under the contract, and you relied on what they did or said, you may be able to use waiver as a defense.

No deficiency judgment permitted 

This argues that:

• the lawsuit follows the sale of property securing a contract, such as a home or a car,
• the amount sought is the deficiency (shortage) under the contract, and
• the plaintiff has not completed the legal requirements to seek this deficiency.

Other examples:

• The loan was a first mortgage for the purchase of real property (land/buildings) which was foreclosed on non-judicially (not by the court) 

• The loan was a motor vehicle loan, and the plaintiff or original creditor did not: 

  • Send notice of the intent to sell the vehicle 
  • Send notice that the defendant had a right to redeem the motor vehicle prior to sale 
  • Include in the notice the right to reinstate the contract if such a right existed 
  • Include in the notice in at least 10 point bold type that “NOTICE. YOU MAY BE SUBJECT TO SUIT AND LIABILITY IF THE AMOUNT OBTAINED UPON DISPOSITION OF THE VEHICLE IS INSUFFICIENT TO PAY THE CONTRACT BALANCE AND ANY OTHER AMOUNTS DUE.”  (Civil Code section 2981)
• That the vehicle was not promptly sold (within 90 days of repossession) 
• That the vehicle was not sold in a commercially reasonable manner.