Can I Settle My Credit Card Debt Without Going To Court?

A lawsuit is one of the terrifying things that can happen in your life. If you have credit card debt, going to court can cost you a lot of time and money. When you go to court, it can even be not very comfortable, as you have to take time off work.

If your credit card debt isn’t paying off, you might be wondering if there is a way to settle it before going to court. The answer, fortunately, is yes, and this guide will help you learn how to settle your credit card debt and avoid the additional expense and hassle of a court appearance.

Do Debt Collectors Have The Right To Take Me To Court?

In general, debt collectors may sue you if they believe that you are capable of paying your debts but have been unwilling to do so. You probably won’t be sued for a debt under $500, but larger debts can make you more vulnerable to debt collectors who can use the law to collect the debt.

Usually, when you are sued over credit card debt, it is likely that the debt collector believes one or more of the following:

• There is a large amount of debt that you owe.
• There have been several months in which you have not made your payments.
• There are multiple accounts that are past due that you owe money on.
• It is possible that your creditors will be able to see your transactions if you have other accounts with them.
• There is a possibility that your creditors may have access to your assets.

The risk increases the most when your debt reaches six months. This is due to the fact that creditors usually write off an account after six months, which means that the debt is written off as an uncollectible loss. Additionally, when the creditor does this, they might decide to turn your debt over to a third-party collection agency or debt buyer, who can sue you in order to reclaim it.

Protect Yourself From Credit Card Lawsuits

Obviously, it is best to avoid a lawsuit altogether. Life happens, and it is easy to fall behind on your payments. However, as you try to juggle multiple credit card payments, it is important to keep in mind that the six-month rule applies to every credit card payment you have to make. You want to settle your debts before your creditor hands over your debt to a collection agency as soon as the charge-off period arrives.

In the event that you are simply unable to make the necessary payments, you should contact your creditors as soon as possible in order to negotiate some kind of payment plan in order to remain in good standing before a charge-off occurs.

It is worth noting that in addition to the cost of a lawsuit, a creditor may be willing to accept a lower payment if they want to avoid the burden and expense of collecting the entire debt.

4 Steps To Deal With A Credit Card Debt Lawsuit

As a matter of fact, the debt collection lawsuit begins when your creditor or debt collector files a Summons and Complaint with the court and serves you with a copy. If you are ever slapped with a lawsuit, it is important that you act immediately. Here are some tips for how to handle a debt-related lawsuit in the first place.

1. Abide By The Statute Of Limitations On Debt

Depending on where you live, your creditor may have a narrow window of time in which to collect the debt, which is called the statute of limitations. This rule is designed to prevent creditors from targeting consumers for old debts that are still owed to them.

As a result, if you have been sued for a debt, check the date on which the debt was incurred, then compare the date to your state’s statute of limitations. If enough time has elapsed, you may be able to use this as an affirmative defense in your lawsuit, allowing the issue to be resolved without appearing in court.

2. Be Aware Of Your Rights

If you do decide to challenge the lawsuit, you can do so by filing a response in court. As a debtor, you have certain rights that protect you from unscrupulous creditors.

It is for this reason that the Fair Debt Collection Practices Act (FDCPA) protects you against such errors as improperly serving you, serving the wrong person, or violating the statute of limitations, for example.

Similarly, the Fair Credit Reporting Act (FCRA) offers protection to you in the case of a debt that is the result of identity theft. If your rights have been violated in any way, you can state that in your Answer, which you will file with the court.

3. Don’t Take Long To Respond

If you receive a Summons and Complaint, you will have at most 30 days to respond to it, but in some states, the time frame is as short as 14 days. It is during this time that you will need to prepare and submit a formal Answer in response to the lawsuit, which will either admit or deny the debt or ask for additional information regarding it.

4. Explore Settlement Options

If you believe that the debt on your credit card is legitimate, you may have to consider your options for settlement. You’re unlikely to avoid paying your debt completely, especially if you wish to avoid appearing in court. Therefore, it’s important that you consider ways to at least pay off a portion of your debt.

How To Settle Credit Card Debt Before Court

In some cases, you can’t avoid a lawsuit. But you can settle your credit card debt before you go to court. Here are four ways to do it.

1. File An Answer To The Lawsuit

As soon as you receive notification that you will be sued for a debt, it is imperative for you to submit an Answer to the lawsuit. Do not ignore the lawsuit, and do not procrastinate. In most cases, you have between 14 and 35 days (depending on your location) to file your Answer, and failing to do so can result in a default judgment in the creditor’s favor.

In the event that they obtain a default judgment against you, they may be able to seize your assets or garnish your wages until the debt is settled.

You should also file your Answer even if you agree on a settlement with the collector. This way, the collector won’t be able to pull a fast one and request a default judgment after you make an agreement. Your Answer must be on file in order for the court to be able to understand what arrangements have been made to resolve your debt.

Let’s look at an example.

A good example would be: When Thomas is sued by LVNV Funding for an old credit card debt, he responds to the lawsuit by filing an Answer. Thomas’ Answer document provides him with a number of affirmative defenses that he believes will strengthen his case against most of the claims against him. As a result of receiving his Answer, LVNV Funding realized they could not sue Thomas for his debt due to the fact that the statute of limitations had already expired. LVNV Funding dismissed the case, and Thomas was let off the hook.

2. Write A Debt Lawsuit Settlement Letter

Depending upon when you file your Answer, you might need to wait 20 to 30 days and then send a Debt Lawsuit Settlement Letter, which is a written proposal to settle the debt for a specific amount of money in order to resolve the outstanding debt you owe.

You’re asking to pay a portion of your debt to avoid the lawsuit. After all, appearing in court costs your collector, so they might accept a lower payment to save time and hassle.

It is very important that you wait for at least 20 to 30 days before making any further moves in court, so that the collector is aware that you have responded in your initial Answer. However, you don’t want to wait for too long, as this may give the creditor time to make additional moves.

It is important to send a Debt Lawsuit Settlement Letter even if your offer is rejected. Even if your offer is rejected, sending the letter demonstrates that you have made an effort to respond to the lawsuit. Additionally, the letter can show your creditor that you are willing to fight the lawsuit, making them more likely to agree to further negotiations in the future.

Here’s another one.

As an example of a debt dispute, Katie was sued by Capital Collections LLC for her credit card debt. She responded by sending a Debt Lawsuit Settlement Letter. As soon as she realized she could afford to pay off a portion of the debt right away, the Debt Lawsuit Settlement Letter opened up a way for her to negotiate an agreement with the collectors. The collectors then counteroffered Katie a counteroffer, and Katie accepted it. It turned out that the case was dismissed, and Katie ended up paying off 80% of the debt to settle it. In addition to saving money, she also saved herself from the stress of going to court.

3. Make A Lump-Sum Settlement Payment

You should offer to settle the debt in the form of a one-time, lump-sum payment rather than a payment plan in order to avoid further problems. The reason is that a payment plan can still involve interest payments, which can be even more costly over time. Moreover, it does not solve your problems with credit card debt but rather prolongs them rather than removes them altogether.

Furthermore, most collectors would prefer to receive a lump-sum payment since they are third-party agencies that purchase your credit card debt from the original creditor. This is because debt collectors are third parties who purchase your credit card debt from the original creditor. Providing a lump-sum payment rather than paying over time makes it easier for them to claim these expenses.

Here is another example to illustrate the point.

As an example, when John fell behind in his credit card payments, he felt like he was drowning in debt as a result. After several months of failing to pay, John’s creditor marked his account as a charge-off. Encore Capital, a debt collection agency, acquired the charged-off account and started contacting John aggressively about it.

Encore Capital purchased the debt for less than half of its actual value. As a result of his research into the debt-buying process, John decided that he should offer Encore Capital a lump sum payment of 60% of the debt in order to settle the matter. Ultimately, John was able to settle the debt for 75% of the original amount, saving him hundreds of dollars in the process of doing so. He sent the offer and started negotiations.

4. Pay Off The Debt In Full

In the event that your other negotiations fail, you can simply offer to pay off the remaining credit card debt in full. The only thing to keep in mind about this option is that you are dealing with a debt collector, not a credit card company itself. You will have to follow the terms of their repayment, which might not be ideal.

It is also worth mentioning that the other options allow you to settle your debts for a lower amount, which can help you get out of debt more quickly, and you should therefore only pay your debt in full as a last resort.

As a final example, let’s take a look at the following one.

For example, Paula was sued by Chase bank for a past-due credit card balance. When she couldn’t pay off her debt, she asked family members for help. The case was dismissed and Paula could now focus on paying back her family without having to worry about going to court. Her parents and siblings pitched in, and she was able to pay off the debt in full.

Some Alternatives To Settling Credit Card Debt

In most cases, settling your debt is the best option, and most debt collectors are more than willing to accept a reasonable settlement rather than tie up your resources in court. However, if you cannot afford to settle, you might want to consider these alternatives if you cannot afford to settle.

Chapter 7 Bankruptcy

A Chapter 7 bankruptcy filing, which is often called a liquidation bankruptcy, clears all judgments against you. Filing a Chapter 7 bankruptcy is inexpensive and can result in quick results.

The first thing you need to do is to determine if you qualify for this option by meeting the government’s “means test.” The second factor that needs to be considered is that filing for liquidation bankruptcy has a broader impact on your financial well-being and your credit score, which can negatively impact you for years to come.

Chapter 13 Bankruptcy

It is important to remember that the Chapter 13 bankruptcy process, sometimes referred to as the “wage earners plan,” allows you to repay your debts through a monthly plan, usually between three and five years. As with any bankruptcy filing, this could have negative effects beyond the lawsuit, so the option should be made only as a last resort.