If you have debt, you feel like a pit in your stomach that never goes away. If your creditors, or debt collectors, contact you several times a day or take you to court, this situation can get worse. If you end up in a situation like this, debt settlement in Kansas can still be a viable option for you to salvage your financial future.
The practice of debt settlement involves offering to pay off a debt with your creditor for less than the original debt amount. In some situations, the creditor may approach you when it perceives that you might not pay the debt at all after you have missed several months of payments.
In this article, you will find out how to settle a debt in Kansas by taking the first step to ask for a settlement, even if you have been sued. Additionally, you will read other helpful tips regarding how to ensure the entire process is very successful.
3 Steps To Settle Debt In Kansas
The law that makes it possible for consumers and creditors to settle a debt is a set of laws designed to ensure that consumers and creditors can save a small amount of money when they settle a debt. In addition to providing relief from debt, debt settlement assists companies in closing accounts that will help them maintain or improve their overall credit standing.
There’s no point in having too many open debt accounts, which is why companies sue you for it. Here’s how to settle a debt if you have a pending debt collection case.
- You should respond to the debt lawsuit with an Answer.
- In order to begin the negotiation process, make a settlement offer to the other side.
- Make sure that the settlement agreement is in writing.
We will go into more detail about each of these steps in the sections below
1. Answer The Debt Lawsuit
The process of responding to your lawsuit is mandatory if you want to avoid getting into legal trouble. It also has the advantage for you because if you fail to respond, the creditor may receive a default judgment against you. They may be able to garnish your wages, place a lien on your property, or access your bank account if they are able to obtain permission.
In a lawsuit, the complaint is usually the very first document you have to work on. It lists all of the allegations that the creditor has against you, and Kansas law allows you to answer those allegations by either admitting, denying, or denying for lack of knowledge.
After that, there is a part where you can express your affirmative defenses. These reasons can be helpful to you in case the matter proceeds to court. You should research what can be included as your affirmative defenses in this section.
If you feel like you may want to work out a debt settlement agreement with the court, the Kansas Statutes 60-212 (A) (i) allows you 21 days to file an Answer with the court. Be sure to file in advance of this deadline so you don’t risk losing by default judgment.
2. Open Up Negotiations By Offering A Settlement
As soon as you file the Answer, plan how you will approach the creditor or collection agency in order to negotiate a debt settlement. A do-it-yourself approach may be effective if you have excellent negotiation skills or you can hire a reputable company to do the work for you.
First of all, you need to determine what money you have and how much you are willing to use for the settlement. You can use the money you have saved for this purpose or you can begin saving a portion of your income every month until you reach the amount you need. Getting money for settlement can be achieved through dividends, investment maturation, or a gift as well as cutting down on expenses you don’t need.
You should then find out how much the creditor might accept as a settlement offer. If you are dealing directly with the original creditor, for instance, they may accept a settlement offer of 40%–80% of the original amount. You should avoid initiating negotiation when you have only a tiny percentage of what they are willing to accept. However, if your debt was sold to a collection agency, they might accept an offer between 10%–60%.
You should know that most debts are resolved at a 50% rate, so if you are able to reach a settlement in that range, you are in good shape. The best strategy is to begin the negotiations at a lower rate because the creditor will counter the offer several times over.
3. Ask For A Written Settlement Agreement
There have been multiple complaints filed with the Consumer Financial Protection Bureau about various creditors and collection agencies that have promised to clear their debt after a settlement but failed to deliver as promised.
As a precaution, you should ask for a written settlement agreement. Make sure all the essential details are included so that your interests are safeguarded. Here is a sample of a debt settlement agreement to give you an idea of what it details.
In order to illustrate what has been covered, let’s take a look at Harriet’s example.
Harriet, for example, was suing CreditOne Collections for failing to pay $8,200 in debt. The allegations were mostly true, but she denied some of the allegations because she didn’t want to make it difficult for CreditOne to prove its case if the matter was taken to court. Despite this, she preferred to settle the debt out of court with the money from her dad’s estate. After Harriet sent an offer, CreditOne welcomed the settlement offer, but they sought $7,360 (90%). She sent an offer, beginning the negotiation process at $2,460 (30%). There was a series of negotiations that resulted in a settlement of $5,330 (65%), which Harriet got in writing and made the payment, and CreditOne withdrew the case.
You Are Protected By Kansas Debt Settlement Laws
As well as the Fair Debt Collection Practices Act, Kansas has enacted other laws to keep consumers safe from creditors, collection agencies, and settlement companies. These laws are found under the Kansas Fair Debt Collection Practices (Kan. Stat. 21-6502 to 21-6503) and Kansas Consumers Protection Act (KSA 50-1121). They say debt settlement companies shouldn’t:
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- Give you insufficient information to make an informed settlement decision.
- Provide debt settlement services in a deceptive and misleading manner.
- Obtain a written debt settlement before making payments.
You can report debt settlement companies that violate these laws to the Kansas attorney general’s office.
The Federal Trade Commission recently amended the Telemarketing Sales Rule to apply to all debt relief organizations and companies. All 50 states, including Kansas, are governed by this Rule.
Companies that provide debt relief services, such as debt settlement companies, are prohibited from:
- Debt settlement companies cannot charge upfront fees before the debt has been effectively settled.
- Provides inaccurate information about services before enrolling consumers. A consumer’s rights, the cost of the service, the length of time it takes for results to show, how much money to save before a settlement offer can be made, consequences if they fail to make payments on time, and other important terms are included.
- A debt settlement company cannot make false or unsubstantiated claims about its services.
The Best Debt Settlement Companies
It can be difficult to find a legitimate debt settlement company that does not exploit or scam consumers in any way. In order to choose which company you would like to work with, you have to look at their Better Business Bureau profile and find out if they are among the companies that are prohibited from operating by the Fair Trade Commission. Here are companies that you could consider working with.
- Having an A+ BBB rating, Pacific Debt Relief assists consumers in settling a variety of debts, including credit card debts and personal debts.
- There is a company called Freedom Debt Relief that offers a free consultation with a debt specialist to devise a plan to work on your debts.
- There is another company called New Era Debt Solutions that gives you a free debt analysis and will help you find the best debt settlement plan for you.
Choose How To Contact The Debt Collectors
When it comes to communicating with debt collectors, it can be a challenge, since they want to control the conversation. You will need to persist in the first conversation to get them to agree to settle. Using a debt settlement company instead can make the process much easier.
The following are the three main methods of negotiating a settlement with debt collectors in Kansas:
- Phone: It is important to understand that talking over the phone may not be the best route as you may be required to provide hard evidence of the settlement agreement. Fortunately, Kansas Statutes 21-6101 establishes Kansas as a one-party consent state, which means you are allowed to record the conversation as the consenting party.
- Mail: There are several benefits to utilizing this method, including the ability to think through your response once you receive a reply, as well as being able to obtain written proof in case the creditor decides to back out of the agreement.
- Email: The advantage of this method is that it is instantaneous, and you have a full record of the discussion. Furthermore, you can reach a settlement quickly because you have a whole record of the discussion.
Debt Relief Options In Kansas
In addition to debt settlement, other debt management plans such as debt consolidation and bankruptcy can also be used to deal with your debt situation in order to resolve it. Debt consolidation is a type of debt management plan that involves combining multiple debts into one loan with a lower interest rate, thus reducing monthly payments and making it easier to pay off the debt. Bankruptcy is another option that involves liquidating your assets in order to pay off your creditors.
Debt Settlement In Kansas – FAQs
How To Eliminate Debt Using Debt Settlement Programs?
There are several ways in which debt settlement programs can help you eliminate your debt:
- Making an assessment of your current debt situation is the first step
- It is important to come up with a plan to eliminate the most pressing debts
- Providing you with instructions on how to save money so that you can make an offer to settle your case
- It is important to approach the settlement company and make an offer to them
- Taking part in negotiations on your behalf until a favorable deal is reached
How Much Does Debt Settlement Really Cost?
In general, debt settlement companies charge a percentage of your total debt or the amount they saved you. The range of these fees varies from 8% to 35%. Additionally, they consider the amount of time they intend to spend on your case and the amount they intend to offer the creditor to cover the costs of the settlement.
Is Debt Settlement In Kansas Legal?
There is no doubt that debt settlement is legal in Kansas if it is done by a licensed debt settlement company or law firm. You should do your research well before hiring a company to handle your debt situation. In case you are uncertain, you can reach out to the Kansas attorney general’s office, and they will help you find out which division is best to consult.
It’s also important to know that debt settlement is a process that requires expertise and knowledge of Kansas law. Thus, you need to make sure you work with a company or law firm that is qualified and experienced.