How To Settle Credit Card Debt When a Lawsuit Has Been Filed
Credit card debt has surpassed the $1 trillion mark in the United States, creating a debt crisis in the country.
If you’re one of the millions of Americans struggling with credit card debt, your payments might have lapsed. You started off making monthly payments, but after realizing that paying the minimum wasn’t putting a dent in your debt, you used the money for other things, such as energy bills and mortgage payments. Your credit card balance went to collections, and now, you are facing a lawsuit. Fortunately, you can still settle the debt and avoid going to court.
However, you don’t have much time to act. You normally have 20 days from the time you receive the summons until you must file your answer. It could be even shorter if you live in Texas, which gives people 14-20 days to answer, depending on the court. Fortunately, the settlement process doesn’t take long, so as long as you start immediately, you can avoid battling it out in front of a judge.
Verify the Debt
The first thing you should do is considering hiring a debt relief law firm on a flat fee. We have defended tens of thousands of lawsuits.
If you’re being sued directly by a bank or a credit card company, you do not need to verify the debt. You should have statements you can review, or you can log into the online system.
However, if a third-party collection agency purchased the debt from the bank or credit company and it looks like more than you owe, take steps to verify it before attempting to reach a settlement. Make sure the collection agency hasn’t added any fraudulent fees to the debt. This happens more often than you might think.
You will need to submit your request in writing and mail it to the debt collector. Then, the collector is required by law to send you proof of the credit card agreement and the debt. Also, the third-party debt collection agency must show that the credit card company assigned or sold the debt to that agency for collections. If the debt has been transferred more than once, the debt collection agency needs to provide evidence of the paper trail, as well.
Request a Settlement
Credit card companies and debt collections agencies realize they will spend lots of money if a suit goes to court. Most would prefer to settle instead of spending time and money in court.
While most companies are open to a settlement, the amount they are willing to settle for differs. Typically, they would want the settlement to be in the 50-80 percent range of the debt amount, but it is possible to get a company to settle for even less. Consider starting with an offer of 30 percent of the debt and then going up if needed.
Before you contact the credit card company, decide if you want to make a lump-sum payment or installment payments. If you have extra money, consider the lump-sum payment since you can likely settle for less if you pay it all at once. Also, you won’t have to worry about keeping up with payments if you choose this option. You can make the full payment and then leave this problem behind you.
Once you are ready, contact the creditor and make an offer or hire a debt relief company to act on your behalf. Be prepared to negotiate back and forth before reaching an agreement. If you reach a settlement agreement, get it in writing before making a payment. Otherwise, the debt company might claim that a settlement wasn’t reached, and you simply made a payment toward the debt. That can be used as evidence against you in court. You must get a valid debt settlement agreement.
Many people prefer paying in installments instead of paying in full since it’s more affordable. However, if you choose this route, the settlement will stay on your credit report for a full seven years. Still, a settlement is much better than having a judgment against you on your credit report.
Enter a Debt Settlement Plan
With Debt Settlement you can roll all of your accounts into a plan and then work to settle the debts individually. At Weston Legal we offer debt settlement plans and will defend you in lawsuits are filed, unlike virtually all other debt resolution companies.
Take Action Before Your Court Date
Getting a summons for a lawsuit is very frightening. You don’t want to stand before a judge while an attorney proves the creditor’s case. Fortunately, you can settle the debt before the court date occurs. Just remember that you must act quickly to settle your debt. It’s critical to handle it before your answer is due in court. If you are worried about meeting the deadline or unsure of how to negotiate a settlement, contact a debt relief attorney for help.