Consider debt settlement to save money and avoid going to court if you have been sued for debt in New Jersey. You can settle a debt at any stage of the debt lawsuit process. Just follow these steps:
- Reply to the lawsuit with an Answer.
- Determine how much you can pay and send an offer.
- Get a written agreement from your lawyer.
There is no doubt that debt can be a significant burden to bear, especially if it prevents you from living the kind of life you want to live. You may have been able to make minimum payments for a while, but sometimes things happen that make things hard for you to stay on track.
There is a possibility that you will be sued for unpaid debts by a creditor or a debtor in the worst cases. If you receive a notice in New Jersey that you are being sued for a debt, you may wonder what to do. Many people ignore court summons, so the judge orders a judgment against them for not responding.
A judgment against you is the last thing you need, but if your creditor or debt collector obtains a judgment against you, they may garnish your wages or freeze your bank account. In the event of a judgment against you, you will not be able to control when you pay; instead, they will withdraw money from your account until they receive the amount they are owed.
This article will help you to understand what you need to know about the debt settlement process in New Jersey and what you can do to avoid a default judgment. One of those options is debt settlement.
Let’s get started.
Here are 3 steps to settle your New Jersey debt
If you wish to settle your debt in New Jersey, you can take three proactive steps.
- An answer to the debt lawsuit.
- Start negotiations with a settlement offer.
- Make a written settlement agreement.
Each of these three steps will be discussed below.
Submit An Answer To The Debt Lawsuit
You will receive a Summons and Complaint when someone sues you for debt. The Summons is your official lawsuit notification and outlines the case details. A copy of the Summons and Complaint will be sent to you, detailing why you’re being sued, including the amount owed, interest and fees, and details like a lack of payment history.
Default judgments in New Jersey happen when you fail to respond to debt collection lawsuits within 35 days.
The legal system requires people to respond to a complaint (called an Answer) to avoid default judgments. Your creditor will only win if there is a statement for the judge to review.
You still want to file an Answer with the court and send a copy to the opposing party, even if you plan to settle your debt before your court date. By filing an Answer, you are showing your creditor or collector that you are familiar with the legal system and that you won’t accept their judgment without a fight.
During your Answer, you will have the opportunity to explain why you have yet to pay your bill. You can use several defenses as a reason for not paying your bill. Some of the most common include insufficient documentation of the debt and a need for a business relationship with the debt collector.
It is essential that no matter what defense you use, you remain factual throughout.
Start the negotiation process by making an offer
You will need to decide how much of your savings you can divert towards debt settlement over the next few weeks and what means of making extra money you can rely on. If you have an income, then you will be able to pay your debt collector. Consider your savings and decide how much money you can divert towards debt settlement over the next few weeks.
Moreover, it would help if you also researched your creditor or debt collector to understand what they might accept as a settlement amount. All creditors and debt collectors are different; some are much more lenient than others.
If you wish to initiate a settlement, it is recommended that you offer a minimum of 60% of the amount of the debt. For example, if a creditor sues you for $3,000, you should offer $1,800. If you cannot afford 60% of the debt’s value, show what you can. A higher offer will likely lead to a satisfactory outcome, but a startlingly low proposal may allow for further growth.
Before you reach an agreement with your creditor, you’ll have to negotiate several times. Make sure it’s something you can afford. If you can’t pay according to the terms, the deal will fall through, and the case will move forward.
Obtain a written settlement agreement
When settling with a creditor, it is essential that you have a written contract in place, ensuring that both you and your creditor or debt collector understand the terms of the settlement and agree on them.
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Besides including essential information like the settlement amount, the form of payment, and the due date, the agreement should also include clear language that specifies that you will not be pursued for further collection of the remaining debt balance.
The lawyer will draft the settlement agreement for the creditor or debt collector as a general rule. Be sure to review all the details carefully before signing anything. It is recommended to have the document notarized so that you will have a witness to the process.
For instance, Jack is being sued by Velocity Investments in New Jersey for a debt of $6,000. Although Jack knows he owes the debt, he only has enough money to pay off $4,500. Jack responds to the debt lawsuit, which gives him time to get in touch with Velocity and come up with a settlement. He explains his financial situation and sends a settlement offer of $3,000 (50% of the debt). After several negotiations, Jack can reach a settlement agreement of $3,900 in the form of a lump sum. With the debt settlement, Jack can save thousands of dollars and avoid going to court.
How do New Jersey debt collection and debt settlement laws work?
It is important to note that New Jersey adheres to federal regulations outlined in the Fair Debt Collection Practices Act (FDCPA), which stipulates that creditors and collection agencies must follow when attempting to collect debts. Apart from the statute of limitations, New Jersey provides no additional state protection for debtors.
Here is an example of a debt settlement in New Jersey that you might be interested in seeing.
As part of the FDCPA, debt collectors are required to follow specific rules. They cannot engage in any of the following actions:
- Untimely calls, such as before 8 a.m. or after 9 p.m.
- Call or write obscene or threatening language.
- Contact the debtor pretending to be someone else.
- Threaten a debtor with jail if they don’t pay.
- More than seven calls a week about a debt.
Consumers can report violations to the Consumer Financial Protection Bureau if debt collectors or creditors break the FDCPA.
There are statutes of limitations in New Jersey that restrict how long a debt collector can sue for unpaid debts. Most debts, including credit cards, mortgages, personal loans, and medical debt, have a six-year statute of limitations.
The Federal Trade Commission recently amended the Telemarketing Sales Rule, so that debt settlement rules now apply to all debt relief companies and organizations. In terms of debt settlement practice, this rule applies to all 50 states, including New Jersey.
Any company that provides debt relief services, like debt settlement companies, can’t:
- Debt settlement companies cannot charge upfront fees before the debt has been effectively settled.
- Defendant fails to disclose certain information about its services before enrolling consumers. This includes how much the service costs, how long it takes to see results, how much money must be saved before a settlement offer is made, consequences that may occur if the consumer fails to make payments on time, customer’s rights, and other essential terms.
- A debt settlement company cannot make false or unsubstantiated claims about its services.
Which companies in New Jersey offer debt settlement?
Debt settlement companies negotiate with creditors on behalf of their clients and can often reduce the amount owed. This can make it easier to pay off debts, as the total amount owed is reduced. Additionally, debt settlement companies can advise on managing finances and creating a budget. This can help to ensure that debts do not accumulate again in the future.
It is possible to resolve your outstanding debts with the help of a debt settlement company. Here are some recommendations.
- Freedom Debt Relief
- National Debt Relief
- Accredited Debt Relief
- Citizens Debt Relief
How do you start a debt settlement?
You can settle your debts independently, but you need to save money and contact your creditors individually. You can either speak on the phone, email, or write a letter.
Whenever you are ready to start the negotiation process, it is strongly recommended that you use email to begin the process. Email is quick and provides a written record of the conversation with your debt collector. Reaching a settlement agreement within a day or two of negotiations may be possible.
You can, however, speak with a debt collector if that is what you prefer. The best thing you can do is to record the conversation so that you can have a record of what you said. According to NJ Rev Stat 2A:156A-3, you only need the consent of one party to record the conversation. In this case, you will be the one giving consent.
Debt settlement FAQs
A debt settlement process needs to be clarified, and there are many questions from people in New Jersey who are interested in learning more about it. Here are some of the most common questions people have about the process:
How much is a reasonable offer to settle a debt?
The amount you should offer to settle a debt depends on your financial situation. If you start your negotiation with a minimum of 60% of the total value of your debt, it will be more likely that a creditor or debt collector will accept a more extensive offer. However, if that is not possible, you should offer whatever you can and explain your financial situation to the creditor or debt collector.
In New Jersey, how long can you be chased for debt?
There is a six-year statute of limitations for most consumer debts in New Jersey. Once you have passed the statute of limitations on your debt, your lenders will no longer be able to sue you. However, they may report your account negatively to credit reporting agencies until you either repay or settle your debts.
In New Jersey, can I go to jail for not repaying my debt?
A person cannot be sent to jail if they fail to pay off their debts in New Jersey. Non-payment of debts is a civil matter, not a criminal one. However, creditors may obtain a judgment against you, allowing them to garnish your wages and freeze your bank accounts.
It is possible to settle your debt in New Jersey
Most people feel relief once they are free from unmanageable debt, and you can too. Even if you want to avoid approaching your creditor about settling, it’s one of the best ways to get out of debt.
Settling debt is much less expensive than paying the total amount and can help you free up the money needed to pay off other debts. It also helps to avoid the negative impact that unmanageable debt can have on your credit score.