It can be scary to deal with a debt lawsuit in Missouri. However, there is a way to reach out to a debt relief agency during the debt lawsuit process in Missouri.
The stress might seem never-ending as you need help maintaining your mortgage, car, grocery bills, and credit card payments without falling behind on any credit card or personal loan payments. If your finances have reached a point where you cannot pay your monthly payments, you must know your options.
When you have unmanageable debt, you have several options, including setting up new payment arrangements, settling your debt, or considering filing bankruptcy. Once you decide on a debt, you will not have to worry about future collection activities from your creditor as you will be able to pay less for the outstanding obligation. You will be able to avoid the nuclear option of bankruptcy.
The best option if you are facing a lawsuit from a creditor is to settle the debt. If you pay the debt, a Missouri judge will not grant the creditor a judgment against you, allowing your creditor to garnish your wages and freeze your bank account, making your life much more difficult.
Debt can be settled in three steps
It is possible to settle your debt before the date of your court date if you follow these three steps:
- It is essential to respond to your debt lawsuit with an answer.
- You can start the negotiation process by making a debt settlement offer.
- Make sure that the settlement agreement is in writing.
We will be taking a closer look at each of these steps in the following paragraphs
Respond to the debt lawsuit with an Answer
In a Debt lawsuit, a creditor or debt collector files a complaint against you. You’ll get a copy of the Complaint and a Summons to appear in your local court, along with information about the account they’re suing you for, including the amount due plus interest and fees.
If settling the debt before your court date, you should respond to the Complaint with an Answer. An Answer lets you defend yourself and keeps the court from granting a default judgment.
A Missouri debt lawsuit has a 30-day response period, after which you lose automatically when the court grants a default judgment. With a default judgment, creditors and debt collectors can garnish your wages and seize your stuff.
Your Answer can explain why you didn’t pay the debt or why you don’t believe you owed it. If, for example, you don’t think the debt collector has the right to collect from you, you can say that. You can mention that if the debt has passed Missouri’s statute of limitations.
Make an offer to start negotiations
Depending on your situation, you may need to determine how much you can afford to pay in a settlement to your creditor. It is recommended that you start with at least 60% of the total value of your debt. For example, if you owe $2,000, you would offer $1,200 if you settled.
If you can’t afford to pay 60% of the value of the debt, start the negotiations with what you have available. Your chances of a successful settlement may decline when you offer less. You can explain your situation to the creditor or debt collector. You can get some leeway or extend repayment.
It’s normal to go through several rounds of negotiation. Negotiation is part of the process, so work with the creditor or debt collector until you’re satisfied.
Get the settlement agreement in writing
To be safe, you must get your debt collection agreement in writing as soon as possible. Even if you have negotiated a deal in good faith with your debt collector, some debt collection agencies and creditors will use nefarious methods to pursue the remaining balance. They may claim there was no deal and go to court.
The written agreement prevents debt collectors from making changes to the terms of the settlement. If the debt collector tries to take further action against you, you will have a contract to refer to.
Typically, the creditor or debt collector will draft the agreement for you, so read it carefully before you sign it.
By requiring your debt collector or creditor to notarize the agreement, you are ensuring that there is a witness to the deal. This will add further credibility to your case if the debt collector attempts to renege on the contract.
The following is an example of a person who was able to settle their debt with these three steps successfully:
For instance, when Portfolio Recovery Associates sued Katie for a $5,000 debt in Missouri, she responded to the lawsuit before the state’s deadline of 30 days passed. Katie denied most of the claims in her Answer and asserted her affirmative defenses. This gave Katie enough time to figure out how much she could afford to pay to settle the debt. Katie decided she would be able to afford to pay $4,000 in a lump sum, which is 80% of the original amount. She then sent a letter offering her 50% of the debt for $1,500 as her initial offer. Katie and Portfolio Recovery managed to reach a debt settlement of $3,500, which represents just 70% of the debt, after a few rounds of negotiation.
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How does Missouri’s debt collection and debt settlement law work?
A recent amendment to the Telemarketing Sales Rule by the Federal Trade Commission has enacted regulations that apply to all debt relief organizations and companies so that all 50 states, including Missouri, are subject to these regulations about debt settlement services.
To comply with the new Rule, any company that offers debt relief services, namely debt settlement companies, cannot:
- Charge upfront fees. A debt settlement company can only collect payments from a consumer after the debt has been successfully settled or resolved in some other way.
- Ensure to disclose certain information about its services before a consumer enrolls in the program. Many important terms need to be covered for the settlement process to proceed. Some of these include how much the service costs, how long it takes to see results, how much money must be saved before a settlement offer can be made, consequences that may occur if the consumer fails to make payments on time, the customer’s rights, and many others.
- Misrepresent their services. There can never be any false or unsubstantiated claims regarding the services provided by a debt settlement company.
The Fair Debt Collection Practices Act (FDCPA) is Missouri’s only law regulating debt collection. This is the only state law that governs debt collection in Missouri. Under the FDCPA, it is illegal for debt collectors to:
- Call you repeatedly throughout the week.
- Lie about your debt.
- Threaten or use obscene language to collect a debt.
- Attempt to seize your property without a warrant.
- They threaten to jail you if you don’t pay.
- Make calls at odd hours, such as after 9 p.m.
- Publicize your debt.
It is possible to file a complaint with the FTC if a debt collector has broken the FDCPA laws. The collector may be fined and penalized as a result of the activities carried out by them.
Like all other states, Missouri has a statute of limitations that limits the time a collection agency has to file a lawsuit against you. This time limit varies depending on the type of debt you owe.
Missouri’s Statute of Limitations on Debt
- Written — Money / Property (MO Rev Stat § 516.120): 5 years
- Oral Contracts (MO Rev Stat § 516.120): 5 years
- Written Contracts (MO Rev Stat § 516.110): 10 years
- Collection of Debt on Account (MO Rev Stat § 516.110): 10 years
- Judgments (MO Rev Stat § 516.350): 10 years
Where can I find the best debt settlement companies?
It is possible to contact one of these companies to get help if you are ready to try debt settlement.
National Debt Relief
There are several well-known debt settlement companies out there. National Debt Relief is one of them. Since 2009, National Debt Relief has brought over $1 billion in unsecured debts to its clients.
Through the company’s debt settlement programs, which typically last between two and four years, you can settle multiple debts with the company. The cost of the debt settlement service is usually between 15 and 25 percent of your total debt.
Freedom Debt Relief
It is also well known that Freedom Debt Relief is also one of the largest and most well-known debt settlement companies in the country. Since 2002, the company has helped over 650,000 people eliminate debt obligations through debt settlement. The company charges 15% to 25% of the client’s debt for its services over two to four years.
When sending an offer to a collector, what’s the best way to do it?
In exchange for your debt settlement, it is advised that you try to resolve it on your own by calling, sending an email, or sending a letter to the debt collector. It is recommended that you use email for debt settlement – it is fast and gives you a written record of your settlement efforts.
It’s a good idea to record your debt collector call. Missouri law says you can record a call with the consent of one party. You’re the one giving consent to record the call. If you register the phone call, you’ll have a record of the conversation with the debt collector.
The debt collector may renege on their promise to settle the debt in the future if you have the recording to refer back to.
Debt settlement FAQs for Missouri
There are a lot of questions that people have when it comes to settling debts in Missouri. Here are a few of the more common ones.
To settle a debt, what percent should I offer?
Generally, the more you offer, the more likely you will get a creditor to settle a debt. However, most people need help to pay their deficit to 80% or 90%. It is best to offer what you can afford. Your creditor will probably provide a counteroffer, so you will likely have to go through several rounds of negotiation before you reach a decision.
Should a debt be settled or litigated?
In the case of debts, it is always better to settle them — unless there is a strong argument that the obligation is invalid. If someone steals your personal information and signs up for a credit card in your name, you are a victim of identity theft. You wouldn’t want to pay back a debt that isn’t yours. Your creditor should be pursuing the person who stole your details.
Is it possible for me to settle a debt on my own?
The answer is yes, you can handle debt settlement by yourself. It will take some effort and work, but you can do it and save money on the fees