Consumers in Rhode Island have access to several debt settlement companies that can assist them in reducing their debt. It is legal and supported by the government for legitimate companies to use proven methods. To ensure that consumers are not scammed, they operate under strict laws.
debt settlement involves contacting your creditors and offering to pay a small percentage of your debts. In response to their counteroffer, you may increase your offer by a small margin and wait for their response. Upon reaching an agreement and paying off the debt, the credit reporting agencies will report the debt as settled and dismiss any lawsuits brought against you.
You will learn how to go about the debt settlement process in Rhode Island and what you need to know to ensure the entire process is successful. It adheres to state debt settlement laws in this article.
follow these three steps

The delinquency of accounts is a significant setback for creditors. They often would instead pay for less than lose all their money. It is a good idea to make a settlement offer if you have missed payments for several months.
If you have been served with a lawsuit, you may not have any choice but to settle the case. Alternatively, the creditor may be able to garnish your wages or access your bank account. To avoid such a situation, follow these steps:
- Answer the debt lawsuit.
- Make an offer to settle the dispute.
- Make sure the settlement agreement is in writing.
In the following sections, we will discuss these three steps in more detail.
1. Answer the debt lawsuit
Filing an Answer is to inform the court that you are aware of the lawsuit and are prepared to appear in court to defend yourself. The court may decide in favor of the creditor or debt collector if you fail to submit an Answer. Therefore, it is advisable to file the Answer before initiating negotiations.
RI Gen L 33-23-1 states that you have 20 days to file an Answer, or you may lose the case automatically when a default judgment is entered against you. If you fail to respond promptly, you may be subject to wage garnishment and property seizure.
To draft your Answer, you should address each of the allegations listed in the Complaint. You can respond in Rhode Island in three ways: admit, deny, or deny for lack of knowledge. Even if the allegations are true, do not admit to all of them. Creditors or collectors should be required to prove their case in court.
The next step is to list your affirmative defenses. Your defenses may be helpful if the creditor wishes to continue the case in court.
By responding to your debt lawsuit, you will give yourself time to reach out about settling the debt.
2. Make an offer to settle the dispute
Following the Answer filing and receivership confirmation, you should choose the most advantageous method to negotiate for a settlement. If you have excellent negotiation skills, you may settle your debt on your own; however, if you hire a debt settlement company, you will be able to do everything exceptionally well with the help of professionals. Before sending an offer, consider the following factors:
- What is the maximum amount you can pay off? Only make a settlement offer if you have enough money saved for negotiation. The creditor may not take you seriously if you have to ask for additional time to obtain the funds. If you need to save enough money to pay off the debt, you may need to reduce your expenses for several months.
- What is the maximum amount that the creditor or collector will accept? If you offer a creditor a meager settlement amount, they will likely reject it and prefer to take their case to court. The original creditor should accept between 60 and 80% of the original debt. A debt collection agency that purchased the debt should accept between 10 and 60%. Negotiations can be conducted with the assistance of a settlement company.
When working with a debt settlement company, the average consumer will reach a debt settlement agreement for 50% of the original debt value.
It can be challenging to obtain a 50% settlement based on our experience. Send your first offer at around 60%. The following might be a good line to use:
“I see you’re suing me for [$__] for [case number]. I don’t have that kind of money and I don’t agree with the amount. But I do have [$__] that I can pay within 30 days to settle the debt in full. Let me know if you accept.”
To reach an agreement, you may have to go through several rounds of counteroffers.
You can explain your financial situation to the creditor or collector if you cannot afford to pay off a large portion of the debt. They will likely work with you if you demonstrate financial hardship.
3. Make sure the settlement agreement is in writing
After you have reached an agreement, it is essential to get the settlement agreement in writing. Debt collectors are known to scam you by accepting an offer verbally, then sneaking into court behind your back to continue the case. An unwritten agreement may lead to the creditor breaking their promise and asking you to pay the balance so that they may withdraw the court case or update your credit report.
Keep track of the negotiation process by requesting a written settlement agreement. You should only give the debt collector your money if you have agreed to the terms and received it in writing.
Rhode Island debt settlement laws can protect you

Debate management companies are prohibited from taking advantage of distressed consumers looking for a way out of debt through debt settlement laws and the Rhode Island Fair Debt Collection Practices Act. The law regulates how much they can charge, what promises they can make, and how they should treat consumers. In particular, the guidelines stipulate that debt settlement companies shall not:
- They will not be able to receive any payment until the debtor signs a contract with them
- Consultation fees exceeding $50
- Fees exceeding $10 per month
- Fees charged upfront without initiating a creditor settlement
The attorney general’s consumer protection division should be notified if you believe the settlement company you work with violates these laws.
Further, the Federal Trade Commission has recently amended its Telemarketing Sales Rule to extend its debt settlement regulations to all debt relief companies and organizations. This Rule applies to all 50 states, including Rhode Island, where debt settlement is practiced.
Companies that provide debt relief services, namely debt settlement companies, are prohibited from:
- There should be an upfront fee. A consumer must collect each fee before the debt has been effectively settled or otherwise resolved.
- 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 important terms.
- They misrepresent their services. A debt settlement company cannot make unsubstantiated or false claims.
How do I choose the best debt settlement company?
You should not trust a debt settlement company offering a deal too good to be true. Legitimate companies will not lie to you about your debt situation. They will implement a plan to get you out of debt before asking for money. You may wish to consider working with one of the following settlement companies:
- National Debt Relief: They offer you a free savings estimate and do not charge any upfront fees or force you to work with them after assessing your situation.
- Credit.org: Credit.org has helped consumers become debt free without filing bankruptcy for over forty-five years.
- New Era Debt Solutions: Here, you can get a free debt analysis and a recommendation on how to get out of debt quickly.
Contact the debt collector using the best method
Debt settlement involves communicating with the creditor until an offer is reached that is acceptable to both parties. Utilize a technique you are comfortable with and will provide you with results to achieve this. To communicate with creditors, choose one of the following methods.
- If you do not record the conversation, you will be unable to prove that a settlement agreement was reached over the phone. There is a high probability that the creditor will break their word. In Rhode Island, you can legally record a phone conversation if both parties consent (RI Gen L § 11-35-21).
- The mail method allows you to keep a record of the negotiation process. If both parties do not use certified mail, the process takes longer.
- Most debt settlement companies prefer this method since it yields immediate results. You can have a settlement deal within minutes or hours when you use the correct email address.
Rhode Island debt relief
To achieve debt relief, three main methods can be used; debt settlement, debt consolidation, and bankruptcy. Before deciding how you will manage your debt, it is essential to understand the other two methods deeper. This article will provide all the information you need regarding debt relief in Rhode Island. Additionally, you will find a list of organizations that can assist you.
Rhode Island debt settlement FAQs

In A Debt Settlement Agreement, What Should I Include?
- Details as they appear on your debt account
- What you settled on paying
- As a condition of payment, the creditor made a promise
- Relevant laws cited
- Both parties should sign
What is the process of debt settlement in Rhode Island?
The goal of debt settlement is to enable you to become debt free by paying off a debt for a lower amount than what you originally owed. A settlement may be the only solution for some consumers who can only generate part of the amount. You can also save money by settling your debt by paying off other debts simultaneously.
How legitimate are Rhode Island debt settlement companies?
It is important to note that not all debt settlement companies are legitimate. Some would like to take advantage of you for the little money you have left. In addition, some make outrageous promises to persuade you to deposit your funds, only to disappear after you have made several payments. Make sure you conduct an online investigation of any company you intend to hire for settlement.