By enabling consumers to pay off long-standing debts, debt settlement continues to assist countless consumers in regaining their financial stability. Your credit score is often affected by delinquent accounts in Louisiana, reducing your chances of obtaining a loan or a new credit line.
Debt settlement offers can be initiated by either the creditor or the debtor. Creditors begin this process to close the account rather than make a reasonable profit. Having a large number of open debt accounts gives the company a negative image in the eyes of investors.
Conversely, when a debtor initiates a debt settlement, they often seek to reduce their debt burden, improve their credit rating, and manage their finances more effectively. We will discuss the steps involved in settling a debt with a creditor and provide additional information about debt settlement in Louisiana.
Louisiana debt settlement steps
It is possible to be forced into a corner by a creditor, and ignoring their attempts to collect is no longer an option-especially if they have taken you to court. You may be liable for a default judgment if you fail to address a lawsuit in time, allowing the creditor to access your bank account, garnish your wages, or place a lien on your property. It is possible to avoid such a situation.
To settle a Louisiana debt, you must follow these three steps:
- Respond to the debt lawsuit with an Answer.
- Offer a settlement to begin the negotiation process.
- Make sure that the debt settlement agreement is in writing.
1. You must respond to the debt lawsuit with an answer
Answering the court is a step you must pay attention to while you focus on resolving the debt. In this case, your settlement efforts will be in vain, as the court will assume that you ignored the matter. Therefore, you should respond to the lawsuit before making a settlement offer.
When responding to the creditors’ claims in the Complaint document, Louisiana law provides three options for you – admit, deny, or deny for lack of knowledge. Though it may be tempting to accept all charges as accurate, a more effective strategy is to curb some of them – this way, the burden falls on the creditor to provide evidence and proof.
Your affirmative defenses are listed in the following section of the lawsuit. These reasons may strengthen your defense if you are required to appear in court by the creditor.
If you fail to file your Answer with the court within twenty-one (21) days, the creditor may receive a favorable judgment against you.
2. To begin negotiations, offer a settlement
Once the Answer has been successfully filed, choose the most favorable method to negotiate a settlement. The debt settlement process can be conducted independently or by hiring a company. Consider the following factors before settling on a plan:
- Calculate how much you can offer the creditor: Before making an offer to a creditor, you should determine how much you can save. It is safe to begin negotiations if you have already held between 60 and 80% of the original debt. If you do not possess this amount, you may reduce your monthly expenses and add any extra income you receive for this purpose.
- Determine how much your creditor is willing to accept: If a debt settlement company has already established a working relationship with the creditor, they can best advise on how much to offer the creditor. Generally, an original creditor accepts between 60 and 80% of the original debt, while a debt collection agency that has purchased the debt can take between 10 and 60%. Your initial settlement offer should be significantly less than what you can pay. In this way, you can continue to work toward a settlement if they counteroffer for a higher percentage.
Your first settlement offer should be sent once you know how much you can afford to pay and how much the creditor may accept. Most likely, this will initiate the negotiation process. Before reaching an agreement, you may have to go through several rounds of offers and counteroffers.
3. The debt settlement agreement must be in writing
It is unUnfortunately; several consumers have been defrauded by debt collectors who promise to remove the debt from their credit report or withdraw a lawsuit once they make the settlement payment. In response, these debt collectors do not keep their end of the bargain and ask you to pay the balance for them to fulfill their obligations.
So that you don’t find yourself in a difficult situation, request the creditor sign a written settlement agreement. This way, should they not abide by their reconciliation agreement, you have proof and evidence at your disposal with which you can appeal in court or contact the necessary authorities. Utilize this debt settlement agreement as an example of what must be included.
Louisiana debt settlement laws can protect you
A recent amendment to the Telemarketing Sales Rule by the Federal Trade Commission has expanded the scope of debt settlement regulations to cover all debt relief organizations and companies. The Rule applies to all 50 states, including Louisiana, relating to debt settlement.
Companies that provide debt relief services, namely debt settlement companies, are prohibited from:
- Fees must be paid in advance. Before the debt has been effectively settled or resolved, debt settlement companies are not permitted to collect consumer fees.
- The company must disclose certain information about its services before a consumer enrolls. Among these terms are the cost of the service, the length of time it takes to see results, how much money must be saved before a settlement offer can be made, what might happen if the customer fails to make payments on time, the customer’s rights, and other essential terms.
- They misrepresent the services they provide. Debt settlement companies cannot make false or unsubstantiated claims about their services.
Louisiana protects its citizens from unscrupulous debt settlement practices with the Louisiana Fair Debt Collection Practices Act and the Louisiana Debt Adjustment Act. By these guidelines, debt settlement companies are limited in offering consumer services. As an example, debt settlement companies should:
- To avoid deceiving the debtor, they should clearly state their offer.
- Make sure your license is up-to-date and legal.
- It is only appropriate to charge upfront fees by reaching a settlement agreement with the creditors.
- You should provide a debtor with a settlement agreement contract that they may cancel if they have a good reason to do so.
Report debt settlement companies that violate these laws to the Louisiana attorney general’s office, and they will be prosecuted.
Which debt settlement company is the best?
A good debt settlement company will not charge an upfront fee before negotiating a favorable deal with the creditor. Additionally, they will guide you through the entire process and provide you with a plan that will assist you in managing your debt. You may wish to consider the following companies:
- New Era Debt Solution: The company provides several debt solution options and recommends the one best suited to your needs.
- United Settlement: Before discussing the settlement process, this company’s debt experts determine the state of your finances.
- Century: Certified debt specialists assess your debt situation before preparing a debt settlement plan and only charge a fee once the project has been implemented.
Contact the debt collector using the best method
It is often unpleasant to converse with a debt collector because they are aggressive in controlling the conversation and coercing you into making payments. Because you will be offering to pay off the debt, it may be a more pleasant experience this time. Creditors can be contacted in three main ways for debt settlement:
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- Phone: Phone conversations are only sometimes the best for settlement talks because there’s no proof of the deal unless you record it. Due to Louisiana’s one-party consent statute (LA Rev Stat 15:1303), you can record the conversation without informing the debt collector.
- Mail: It takes longer to negotiate by mail due to the time it takes to send and receive correspondence from both parties. A paper trail of the agreement process is better than a phone call.
- Email: Communication is instantaneous with this method, and an agreement can be reached in the shortest amount of time. Furthermore, you have a written record of all the information.
Louisiana debt relief options
In addition to debt settlement, there are other debt management options that you can evaluate to determine if they are appropriate for your financial situation. Consolidation of debts is one option, which combines several debts into one loan, and bankruptcy is another option, which eliminates most unsecured debts at the expense of most of your assets. Check out this complete guide on how to get Louisiana debt relief for more information on these options.
Here are some frequently asked questions
In case the debt settlement contract is incomplete, what should I do?
Contact the creditor or debt settlement company if a detail needs to be added to the contract before it is signed. You may only pay once the agreement contains all the required information to avoid being deceived.
What is the best way to negotiate with creditors?
You should first send a Debt Settlement Letter to the creditor requesting a lowered percentage of the original debt. The other party may make a counteroffer, and you may accept the counteroffer or make another offer. It is common for debt settlements to go through several rounds of negotiation. Keep in mind that you should be at most what you can afford. Most creditors will accept a reasonable offer to avoid going to court.
Is it possible for me to settle a debt on my own?
Yes, you can negotiate directly with creditors if you possess good negotiation skills and understand how debt collectors operate. Specific legal language and documentation must be present to prevent creditors from taking advantage of consumers.