Can You Get Sanctions When There Are Bogus Defenses Used In A Debt Collection Litigation?

Sanctions on Bogus DefenseA debt collection litigation can spur bogus defenses from a debtor who is attempting to minimize or avoid their payment obligation. There may be cases where debtors have a legitimate reason for withholding payment. However, there are enough cases of bogus defenses that the courts have made accommodations to protect the creditor and penalize the debtor.

This could happen to you. It might be happening now. Sanctions in these cases are typically granted when a debtor uses bogus defenses in debt collection litigation.

Can I ask for sanctions and costs when there is a bogus defense?

The customer was perfectly pleased with the goods and/or services that you provided.  Now, the customer makes bogus defenses as you seek to enforce your rights to get paid through debt collection litigation. This is the very same customer who previously agreed that the monies were owed. Or the customer who repeatedly failed to respond to your demands for payment.

You initiate a debt collection litigation as a final attempt to collect monies owed. Once in the court system you can you ask the Court to award sanctions and costs when the delinquent customer includes bogus defenses.

The Court has the power to impose sanctions for bogus defenses.

It is reasonable for you to petition the Court to award sanctions in your debt collection litigation when the debtor uses bogus defenses. The Court has the power to impose sanctions and assess costs against a party (and/or their attorney) that knowingly and wrongfully engages in frivolous conduct.

Judges are given this power through Part 130 of the Administrative Rules of the Unified Court System & Uniform Rules of the Trial Courts.

For the Court to award sanctions for bogus defenses you will need to provide proof.

Knowing that the defense is bogus and proving it is not the same. The Court generally requires that there be proof that your non-paying customer is using a bogus defense. They will also want to see that their conduct is frivolous. To accomplish this, you will need to show:

  1. the defenses are completely without merit in law and cannot be sustained
  2. these defenses are used to delay or harass the other party, or
  3. the defenses asserts false material statements

What else does the court consider in awarding sanctions for bogus defenses?

The Court takes the following conduct into consideration when reviewing a petition to award sanctions:

  1. consider the circumstances under which the conduct of using these bogus defenses took place
  2. take into account if the conduct continues once brought to light
  3. aware that the non-paying customer or their attorney should have discovered the conduct of bogus defenses

These factors carry weight regarding the award of sanctions for bogus defenses.

What you can do if your customer includes the bogus defenses in your debt collection litigation.

It is imperative that you work as strategic partners with your debt collection attorney. Arm them with proof that demonstrates how the defenses are bogus.

Should your non-paying customer continue the sham defenses, your collection attorney should make a motion for sanctions and costs.

If you are thinking that it is time to litigate an outstanding debt, give us a call or contact us to discuss the particulars of your case.