They know that you owe money to a debt collector or creditor can be highly frustrating, primarily if you cannot repay it in full. Despite making payments for months or years, you may not notice a significant reduction in the outstanding balance.
You can settle your debt if you struggle to meet your basic needs. Many creditors and debt collectors are willing to pay for a portion of the original debt amount, especially if you explain your financial circumstances and obstacles.
With a debt settlement company, the average consumer can settle their debt at 50% of the original amount. It can be challenging to reach such a significant settlement, but there is still a good chance you can.
This article explains how to settle a debt in Alaska and respond to a lawsuit regarding a debt.
For debt settlement in Alaska, follow these three steps

To avoid court and settle your debt, you’ll need to take these three steps:
- 1. If you receive a lawsuit for debt, you need to respond.
- Offer a debt settlement.
- Make sure you get a written debt settlement agreement.
1. If you receive a lawsuit for debt, you need to respond
When you are sued for a debt, you will receive a Summons and a Complaint. This is a court document that initiates a debt collection action. In the Summons, you are notified of the case. At the same time, the reasons behind the lawsuit are explained in the Complaint: the amount you allegedly owe, the owner of the debt, and any interest or fees associated with the case. You should carefully review the Complaint and prepare an answer.
Answers respond directly to Complaints. Include any reasons you have for not repaying the debt. Your concerns, such as a mistake in the debt amount, should be included.
Even though you intend to settle the matter before your court date, submitting an Answer will protect you from a default judgment if your efforts fail. The judge will review the answer when you appear in court and hear your arguments.
2. Offer a debt settlement
The next step is determining how much you can afford to pay to resolve the matter.
By checking your savings, determine how much money you can come up with before your court date. Consider asking your family or friends for help if you don’t have much money to offer in a settlement.
In addition, you should investigate past settlements that your creditor or debt collector has reached with other consumers. If you do this, you will be able to determine the percentage they are most likely to accept.
A debt settlement offer should start with at least 60% of the total debt value. For example, if you owe $3,000, you would offer $1,800. Please explain any factors affecting your financial situation if you cannot afford 60%.
The creditor will consider your offer and decide whether to accept it or provide a counteroffer. Let them know if the counteroffer exceeds your budget. It may be possible for you to come up with a creative solution, such as spreading out your payments over several months.
Don’t accept an offer from the debt collector you know you cannot afford. Be prepared to negotiate with the debt collector. If you fail to comply with the terms, the collector will use your failure to comply as further evidence that you are unwilling to repay the debt, and the court will likely grant the judgment against you.
3. Make sure you get a written debt settlement agreement
Only repay the debt collector once you have a written debt settlement agreement.
Even after receiving a settlement, some debt collectors resume collection activities. If you are contacted by the collector again, you will have a written agreement to refer to.
It is important to note that the sample agreement requires you and your opponent to sign before a notary public. As long as you abide by its terms, getting the agreement notarized adds credibility to the contract and protects you from further legal action.
Let’s take a look at an example.
For example, Jane was sued by LVNV Funding for a debt of $2,000 on her credit card. Her lump-sum payment of $1,500 was within her means, but she needed to figure out how to proceed. A few days after sending the Answer form to LVNV Funding, Jane offered $1,000. A settlement agreement was reached after a few rounds of negotiations for $1,500 (only 75% of the original debt amount).
How does Alaska’s debt collection and debt settlement system work?
In a recent amendment to the Telemarketing Sales Rule, the Federal Trade Commission expanded debt settlement regulations to include all debt relief companies and organizations. This Rule applies to all 50 states, including Alaska, in debt settlement practices.
Companies providing debt relief services, such as debt settlement companies, are prohibited by the new Rule from:
- Fees should be charged upfront. A consumer can only collect fees after the debt has been effectively settled.
- The company must disclose certain information about its services before a consumer enrolls. The terms 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 if payment is not made on time, and customer rights.
- Provide false information about their services. A debt settlement company cannot make unsubstantiated or false claims about its services.
In addition, Alaska recognizes the Fair Debt Collection Practices Act (FDCPA), the federal regulation that governs debt collection. The Fair Debt Collection Practices Act (FDCPA) imposes specific requirements on debt collectors. As an example, debt collectors are prohibited from:
- Only contact consumers before 8 a.m. if it is after 9 p.m.
- Call consumers repeatedly or allow the phone to ring continuously.
- Continue to contact consumers after receiving a written request to stop.
- To convince consumers to repay the debt, use threatening or profane language.
- To collect a debt, they misrepresent who they are.
Consumers in Alaska are protected from debt collectors by other laws. Additional restrictions are provided by the Alaska Unfair Trade Practices and Consumer Protection Act AS 45.50.471 – AS 45.50.561. It is specifically prohibited for debt collectors to:
- A criminal charge or jail sentence will be imposed if the debt is not repaid.
- Attempt to garnish your wages without a valid judgment.
- Even though their letters are not legal documents, they claim they are.
- Make you believe they have taken legal action against you when they have not.
- Pay a debt on a disputed account.
According to Alaska law, 09.10.053, all debts incurred due to medical expenses, credit card debt, auto loans, and mortgages have a three-year statute of limitations. If your debt has passed the statute of limitations, your creditor will not be able to pursue legal action against you.
If they continue to contact you or send you collections notices, they can continue to report your account to the credit reporting bureaus.
How do I choose the best debt settlement company?

You can negotiate a settlement with your creditors with the assistance of a debt settlement company. However, you should be aware that some of these sites are scams that attempt to steal your money. The following are a few reputable debt settlement companies that you may wish to consider:
- Freedom Debt Relief
- Century
- National Debt Relief
- Accredited Debt Relief
- Citizens Debt Relief
- CuraDebt
How should you begin the negotiation process with a debt collector?
If you’re ready, you can begin negotiating a debt settlement with your creditor via email, mail, or phone. You have a written record of your negotiations when you use email since it is quick and ensures that you have a written record. Before your court date, you should avoid sending mail if you negotiate a settlement.
The negotiation process can also be conducted over the telephone. If you decide to do so, it is recommended that you record the conversation to prevent the debt collector from arbitrarily changing the terms of the agreement or claiming there has never been a settlement.
It is allowed in Alaska, per Alaska Statue 42.20.310, for people to record conversations if the other party (in this case, you) consents to the recording. In other words, you do not need permission from a debt collector or creditor to record a telephone conversation. Consent is required only from you.
Alaska debt settlement FAQs

It is common for people to have many questions regarding the debt settlement process. Here are a few of the most common questions we receive.
How much should I offer to settle a debt?
We recommend offering at least 60% of the debt’s value as a starting point. However, if you do not have that amount available, you may suggest what you can afford. You may receive a counteroffer from your debt collector.
Is It Better To Pay off or Settle a debt?
The best way to pay off a debt is to pay it in full. When you pay off your debt, your credit report looks better, even if you did not pay according to your payment schedule. However, if you cannot pay off a debt, a settlement can prevent a potential lawsuit and wipe your account clean.
How much should I offer if I want to settle an old debt?
If your debt is very old, your creditor is aware that it is unlikely that they will be able to recover the entire amount. In a settlement, you can offer as little as 30% of the outstanding debt to clear up your account. Even if the statute of limitations has expired, settling the debt will prevent further collection efforts.