When facing a debt lawsuit, it is natural for anyone to be concerned about their financial future. No one wants to suffer the consequences of losing a debt lawsuit, which may include garnishment of wages or the freezing of bank accounts by the creditor.
If you are facing a debt lawsuit in Utah, you have several options. Before your court date, you can settle your debt, which will allow you to save some money, resolve the issue, avoid a judgment, and begin again.
You must understand the rules concerning the collection and settlement of debt in Utah and the best steps to take before beginning the process. Throughout this article, we will explain everything you need to know about settling a debt in Utah.
Here are three steps to settle a Utah debt
To make debt settlement easy to understand, we have divided the process into three steps:
- Provide an answer to the debt lawsuit.
- Start the negotiation process by creating a settlement offer.
- Be sure to get a written settlement agreement.
1. In response to the lawsuit, provide an answer
When a debt collector or creditor decides to file a lawsuit against you, they will prepare a Summons and Complaint. In the Summons, you are notified of the lawsuit, while in the Complaint, the debt collector explains the reasons for the lawsuit. They will likely assert that you have not complied with your repayment agreement.
Debt collectors will also include the Complaint’s outstanding balance, interest, and fees.
It is common for people to make their first mistake by failing to respond to the Complaint. A default judgment may result if you fail to respond to a lawsuit. Since you have not defended yourself, your creditor may request that the court rule in their favor. Default judgments are the result of such a ruling.
Creditors and debt collectors can garnish your wages, seize your property, and even freeze your bank account in the event of a default judgment.
The creditor’s Complaint should still be responded to even if you intend to resolve the matter well before your court date. It is known as an answer when you respond.
The deadline for filing an Answer to a Utah debt lawsuit is 20 days. You have the opportunity to defend yourself in your Answer. Your response will outline your reasons for nonpayment of the debt and your defenses.
Answers are typically defended by stating that the debt collector has no business relationship with them and that the statute of limitations has expired. There are, however, many other defenses that may be appropriate for your situation.
2. Offer a settlement to start the negotiation process
It would help if you determined how much you can pay in a settlement as your next step. If you are planning on saving any more money over the next few weeks, you should review your savings and determine whether you can do so.
Consider selling a few items in your home that you no longer required if you have little money available. You may also turn to friends and family for assistance or take on a few odd jobs to earn quick cash.
It is recommended that you begin the negotiation process by offering approximately 60% of the total value of your debt. If you owe a creditor $3,000, you will contribute to paying $1,800 to settle under the 60% guideline.
You should provide an offer that you can afford if you cannot afford to pay 60% of your debt. If a debt collector or creditor is collecting you, you should explain your financial situation to them. You can work out a payment arrangement with them.
It is common to go through several rounds of negotiations with your creditor once you begin negotiating with them. Make sure that you can afford any offer before accepting it. If you cannot pay it, the deal will fall through, and your creditor will proceed with the litigation.
3. Make sure you have a written settlement agreement
Before transferring any money to your creditor, make sure you have a written agreement with them. A written agreement protects you if the creditor or debt collector decides to renege on their contract.
You should include specific information in your agreement, such as how much you will pay to settle the claim, when the payment is due, and where the funds should be sent. Creditors should be waived any further rights to the remaining debt balance under your contract.
You can prepare your settlement agreement before you begin negotiations with your creditor. You will insert the relevant information before signing and sending the contract to them once you have reached an agreement.
See If You Qualify for Credit Card Relief
See how much you can save every month — plus get an estimate of time savings and total savings — with your very own personalized plan.
The agreement includes a place for a notary to sign for both parties. You must notarize your contract to ensure that you and your creditor have a witness to the terms of the agreement.
For example, in Utah, Emily is being sued by Bonneville Collections for a credit card debt of $3,000. Because she has 20 days to respond before losing automatically, she drafts and files an Answer. Emily discovered that she had enough money to pay off up to 80% of the debt immediately after taking a closer look at her finances. Initially, she offered Bonneville Collections 60% as a settlement offer. After a few negotiations and counteroffers, Bonneville Collections settles for $2,250, or 75% of the debt value. Saving money, avoiding judgment, and resetting her finances are all benefits Emily receives.
How do Utah’s debt collection and debt settlement laws work?
Debtors in Utah are primarily protected by the federal government’s Fair Debt Collection Practices Act (FDCPA). There are specific limitations imposed on debt collectors by the FDCPA. Following the law, debt collectors and creditors are prohibited from:
- It may be necessary to contact a person at the debtor’s workplace if they request that they do not do so.
- If someone fails to pay a debt, they’ll go to jail.
- You should call the debtor at odd hours of the day, such as after 9 p.m. and before 8 a.m.
- Debtors should not be treated in an obscene or threatening manner.
- The debtor should be informed that legal action is being taken if they do not have the right to do so.
Utah has statutes of limitations that limits the time a creditor may pursue legal action against a debtor. According to UT Code 78B-2-307 (2015), creditors can sue debtors for verbal or open accounts for four years. By Utah Code 78B-2-309 (2015), written accounts must be collected within six years of their creation.
Your court can dismiss a lawsuit filed by a creditor if the lawsuit is filed outside the state’s statute of limitations. You still owe the money even if you ignore the case. Your creditor may continue to report your account to the credit reporting agencies, send collection notices, and contact you.
Lastly, the Federal Trade Commission has recently amended its Telemarketing Sales Rule to apply to all debt relief organizations and companies. This Rule applies to all 50 states regarding debt settlement practices, including Utah.
Companies that provide debt relief services, such as debt settlement companies, are prohibited from:
- Fees should be charged in advance. Debt settlement companies cannot charge consumers fees before the debt is effectively settled.
- The company must disclose certain information about its services before a consumer enrolls in the program. It includes how much the service costs, how long it takes to see results, how much money the consumer must save before a settlement offer is made, the consequences of not making payments on time, customer’s rights, and other essential terms.
- They misrepresent the services they provide. Debt settlement companies cannot make false or unsubstantiated claims regarding their services.
How do I choose the best debt settlement company?
Several debt settlement companies can assist you with the settlement process. The following are some of our top recommendations.
Accredited Debt Relief
When a consumer begins debt settlement with Accredited Debt Relief, they will make monthly payments to the company. It is common for accredited debt relief programs to last between two and four years and to charge a fee of 15% to 25% of the total debt owed by the individual.
Freedom Debt Relief
The Freedom Debt Relief Company is one of the oldest debt settlement companies in the United States. With over $10 billion in debt settled since 2002, the company has helped thousands of consumers. Freedom Debt Relief charges fees between 15% and 25%, similar to Accredited Debt Relief.
How should I contact my creditor?
You can contact your creditor by phone, email, or letter if you are ready to begin the debt settlement process.
To communicate with creditors, we recommend using email since it provides a written conversation record. Furthermore, you will avoid being put on the spot by a debt collector, which can occur during a telephone call.
Alternatively, you may contact the debt collector by telephone. If necessary, we recommend that you record the conversation so that you can refer to it later. You may register a telephone call following Utah Code 77-23a-4, provided that one party, in this case, you, consents to its recording.
Utah debt settlement FAQs
It is normal for people to have questions about debt settlement in Utah, especially if they have never tried it before. The following answers to some of the most common questions people ask.
How much debt should you offer to settle?
You should offer at least 60% of your debt as a settlement. It is okay to offer less if you have a little available. Make an offer that you can afford. If you explain your financial circumstances to the debt collector, they may be able to work with you.
In Utah, when does a debt become uncollectible?
Regardless of how old the debt is, it is still collectible as long as it remains unpaid and unsettled. Once the statute of limitations expires, however, debt collectors will not be able to pursue legal action against you for the debt. Obligations that are open or verbal have a four-year statute of limitations, while written ones have a six-year statute.
Is it possible to settle my debt?
You can handle your debt settlement. You will need to study the way it works before you can begin attacking your debts one by one. Through debt settlement, you can save money and alleviate your financial problems, but it will require some effort.
With a little effort, it is possible to get out of debt
You can improve your financial situation with the help of debt settlement if you want to improve your financial situation. You can avoid bankruptcy and slowly rebuild your finances if you work hard, save money, and negotiate honestly with creditors and debt collectors.