If your creditor is suing you for unpaid debt in Montana, you’re probably wondering how to deal with it. Deb settlement in Montana may be an option. If you wish to settle a debt lawsuit in Montana, you must respond, send a settlement offer, and obtain a written settlement agreement.
You are not alone if you have debt from credit cards, personal loans, or a mortgage in Montana.
When creditors cease receiving payment on an outstanding obligation, they may charge off the account and send it to collections or file a lawsuit against the consumer.
It can seem like the end of the world when you receive notice of a lawsuit against you. Nobody wants to go to court or be slapped with a judgment against them.
There is a possibility of settling the lawsuit before your court date, which can avoid a judgment and prevent further collection activities against you. Let’s look at how Montana’s debt settlement process works.
Here are three steps to settle your Montana debt
You can contact the creditor or debt collector suing you at any stage of the lawsuit process to discuss debt settlement. Just follow these three steps:
- Respond to the debt lawsuit with an answer.
- Determine how much you are willing to offer as a settlement.
- Make sure the debt settlement agreement is in writing.
1. Respond to the debt lawsuit with an answer
Your creditors or debt collectors file complaints (also known as Petitions in some states) as the first step in the legal process. A complaint outlines why the creditor filed a debt lawsuit against you. Typically, your creditor will state that you have not been paying your debts for a specified period. In addition to your loan balance, they list any accumulated interest and fees.
The most common mistake people make is failing to respond to the Complaint. Even if you intend to settle the debt before your court date, you must send a legal response, known as an Answer, to your creditor and the court.
The Montana Supreme Court allows you 21 days to respond to a debt lawsuit before the court can enter a default judgment against you. A default judgment will enable creditors and debt collectors to garnish your wages and seize your assets.
To avoid a default judgment, you should do everything possible to respond to the case.
Your Answer responds to each claim against you and states your defenses to the case. Several reasons are available, including improper validation of the debt, lack of proper jurisdiction over the claim, or an expired statute of limitations.
2. Decide how much you can offer in a settlement
You must determine how much you can afford to pay in a debt settlement. Take a look at your savings account and assess how much you will have from your upcoming paychecks.
It would help if you started with an offer of approximately 60% of the value of the debt. That amount is sufficient for the creditor to realize that you are serious about resolving the matter before going to court. Most debts can be settled at 50% of the original amount, but that only sometimes makes it easy.
You should explain your financial situation to your creditor so they understand what you are going through. If you cannot repay 60%, you should offer what you can.
It is common to go through several rounds of negotiation before you arrive at a settlement with your creditor.
A creditor or collector will continue its lawsuit against you if you accept a contract you cannot afford. If you agree to an agreement you cannot afford, they will use proof of the failed settlement to further their claims against you.
3. Make sure you have a written settlement agreement
Make sure to get your settlement agreement in writing before sending any money to your creditor. This ensures that you and your creditor are on the same page.
Debt collectors are known to settle a debt verbally, then continue with legal action even after agreeing, and having everything in writing prevents them from going back on their word.
Ideally, your agreement should indicate how much you will pay, when the payment is due, and where the money will be sent. In addition, it should state that the settlement should waive any further rights of the creditor or collector.
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The credit reporting agencies must be informed that the account has been settled once you have fulfilled your bargain. All further collection efforts will then cease once you have fulfilled your obligations.
Generally, the creditor or debt collector will draft the debt settlement agreement for you. Be sure to carefully review the document before signing it.
The notarization of the agreement adds a level of legal protection.
Let’s examine a hypothetical example of how a Montana debt can be settled.
For instance, Credit Associates in Montana is suing Jeff for $3000 in overdue credit card debt. Jeff responds with an answer to the lawsuit, claiming that the debt was not sufficiently validated. This gives Jeff time to look over his finances and devise a plan to settle the debt. Jeff sends a settlement offer of 60% of the debt’s value in a settlement, or $1,800. Credit Associates counters with an offer of $2,000. Jeff looks into his finances and decides he can afford the settlement. Credit Associates drops the lawsuit against Jeff once they sign a settlement agreement, and all credit reporting bureaus are informed that the account has been settled.
Montana’s debt collection and settlement laws protect you
Montana’s policy is to abide by the Fair Debt Collection Practices Act (FDCPA). This act details the activities that debt collectors cannot take against a consumer under the FDCPA, including the following:
- Calling a debtor at odd hours, such as before 8 a.m. or after 9 p.m.
- Assuming the identity of someone they are not, such as a law enforcement officer
- The use of abusive, threatening, or obscene language against a consumer
- Providing the consumer with a threat of jail if they do not pay the debt
- Making contact with people the consumer knows and informing them that they owe a debt
- Calling the debtor at work unless the debtor requests otherwise
You may wish to consider filing a complaint with the Federal Trade Commission (FTC) if your creditor or debt collector harasses you in any way. The FTC will investigate your complaint and determine whether they must take action against the creditor.
According to Montana Code 27-2-202 (2020), creditors may pursue the repayment of written agreements for eight years and an oral contract for five years after the deal is signed.
According to MT Code § 27-2-201 (2013), judgments obtained in debt collection lawsuits are subject to a 10-year statute of limitations for collection.
Lastly, the Federal Trade Commission recently amended the Telemarketing Sales Rule to expand debt settlement regulations to all debt relief organizations and companies. All 50 states, including Montana, are subject to this Rule.
As a result of this new Rule, any company providing debt relief services, namely debt settlement companies, cannot:
- Fees should not be charged upfront. Debt settlement companies cannot collect consumer fees before the debt is effectively settled.
- Please disclose certain information about its services before enrolling a consumer. As part of this process, consumers will be informed of the costs of the service, how long it takes to see results, how much money they will need to save before a settlement offer can be made, the consequences that may occur if they fail to make payments on time, as well as their rights.
- Fraudulent or unsubstantiated claims cannot be made about a debt settlement company.
Which debt settlement companies are the best?
Various debt settlement companies can assist you with resolving your accounts. However, there are many scams out there, so you should do your research before selecting one.
National Debt Relief
National Debt Relief is one of the most popular debt settlement companies. Thousands of people have obtained a new financial start through debt settlement relief. Many people have saved over 50% of the total value of their debts. They charge a fee between 15% and 25%.
Freedom Debt Relief
As another large debt settlement company in the U.S., Freedom Debt Relief requires you to have $7,500 in unsecured debt to qualify for their program. Unsecured debt includes credit cards, personal loans, and medical debt. The fees range between 15 percent and 25 percent of the total value of your debt, and the program lasts for up to four years.
Century Support Services
Century Support Services is another debt relief company that is popular with customers. Since 2012, the organization has helped customers resolve more than $1.7 billion in debt. Century Support Services charges clients between 18% and 25% depending on the debt they seek to settle.
How should I start negotiating a debt settlement with my creditor?
You may begin your debt settlement journey by contacting the creditor or debt collector by phone, email, or letter.
Email is recommended since it is fast and allows for a written record of conversations.
You can contact them over the phone if you prefer. In some cases, sneaky debt collectors will use strategic methods to get you to admit to owing a debt. This may not be advantageous to you if you face a lawsuit. If you choose to contact your debt collector, it is also recommended to record the conversation.
The Montana code 45-8-213 requires that all parties agree to record a phone conversation. Before registering the call, you will need the explicit consent of the other party.
FAQs about Montana debt settlement
If you have never tried debt settlement, you probably wonder about it. Here are a few of the most common questions you may have.
In Montana, when is a debt uncollectible?
If the statute of limitations has not run out, your creditor can pursue a debt lawsuit against you. When a debt passes the statute of limitations, it does not magically disappear. Your creditor can still contact you and send you letters. You will cease all collection activities after repaying or settling the debt.
In a settlement, what is the best percentage to offer?
The higher the offer, the more likely the creditor will agree. It is recommended to begin negotiations at 60% of the total amount of your debt.
Is it possible to settle my debt on my own?
Indeed, you can handle your debt settlement. Make sure you understand the process before you begin negotiations with the creditor. Only make payments to the creditor once you have a signed settlement agreement.
If you face a lawsuit, debt settlement is worth it
Consider debt settlement over allowing your creditor to obtain a judgment against you in a debt lawsuit. Getting your debts settled in a settlement means that your creditors will not be able to pursue any more collection activities against you in the future. You can resolve the matter and improve your financial situation.
Additionally, settling debts can result in significantly lower balances than what you may owe in a judgment. This can help you get back on track with your finances faster and ensure your credit score isn’t damaged.