Is debt preventing you from achieving financial freedom? Do you wish to avoid bankruptcy to get out of debt? You may need to settle your debts to become debt-free. The advantage of this method is that you can pay off the most urgent debts for a lower amount than you originally owed.
To use debt settlement effectively, you should understand what percentage of the outstanding debt creditors will accept and hone your negotiation skills. The other option is to hire a debt settlement company to communicate with creditors or collectors on your behalf and recommend the best deal.
The following article explains how to settle your debts using three steps. The first step applies to people sued, while the others apply to everyone. Additionally, we will provide you with additional information to ensure you get the best Maine debt settlement deal.
Here are three steps to settle your Maine debt
If you are being sued for debt in Maine, you can work out a settlement with your creditor or debt collector at any lawsuit stage. It is even possible to settle before a lawsuit is filed.
To settle a debt in Maine, follow these three steps:
- Answer the debt lawsuit as soon as possible.
- Offer a settlement to begin the negotiation process.
- Make sure you have a written settlement agreement.
1. Answer the debt lawsuit as soon as possible
You will only be able to make a settlement offer if you first respond to the lawsuit with an answer. If the creditor discovers that you did not file your Answer, they may not be able to settle with you as they may receive a default judgment. When a creditor or collector gets a default judgment, they are entitled to everything they requested in their initial complaint. They may use wage garnishment or seizure of property to collect their money.
Under Maine law (Me. R. Civ. P. 105), you have 21 days to respond to a debt collection lawsuit before you lose automatically by default. Start the settlement process by filing an Answer to avoid a default judgment.
Answer documents should focus on responding to each claim against you and asserting your affirmative defenses.
In the first section of your Answer, you will respond to the allegations made by the creditor against you. It is possible to answer in Maine in three ways; admit, deny, or deny for lack of knowledge. It is unnecessary to admit to all the allegations, even if they are true. When a claim is denied, the creditor is forced to prove the claim in court. They may drop the case if there is insufficient evidence to support their claims.
You must state your affirmative defenses in the second section of your Answer. You are not liable for the debt if you have any of these legal grounds. Should the creditor still want to go to court after rejecting your settlement offer, these reasons can be helpful to your case.
Even though you have 21 days to respond to your Maine lawsuit, you should ideally respond sooner to negotiate a debt settlement before the court date.
2. Offer a settlement to begin the negotiation process
To negotiate with the creditors, select the method you wish to use once the Answer has been filed in the case. You may hire a debt settlement company or do it yourself. The following two factors should be considered regardless of your choice:
- Identify how much you can pay the creditor: You must have some cash on hand when you approach the creditor. You could save a portion of your income (by cutting expenses), receive a gift, or earn investments.
- Estimate how much a creditor will accept: Starting negotiations at a meager amount may result in the creditor rejecting the offer. It would help if you made a reasonable offer that the creditor is likely interested in exploring. It is generally accepted that an original creditor will accept a settlement offer of between 60 and 80%. A debt collection agency that purchased the delinquent account may take a settlement offer between 10 and 60%.
Therefore, we recommend starting at around 60% for your first debt settlement offer. In addition to providing more room to negotiate, this will also demonstrate to your creditor or debt collector that you are serious about settling.
Here is an example of what your offer might sound like:
“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.”
The creditor or debt collector will come back with a counteroffer. Before reaching an agreement, you may have to go through several rounds of negotiations. Don’t give up hope, and be prepared for this.
The most important thing is to avoid agreeing to terms you cannot afford. Make sure you are confident you will be able to pay the settlement if you accept it.
3. Make sure you have a written settlement agreement
So that they are not obligated to fulfill their end of the bargain, debt collectors prefer to agree over the phone. Creditors are less likely to break promises and close your account if you have a written agreement.
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An agreement should include important information such as how much the creditor accepted, the promise the creditor made, your account details, and any applicable laws that force the creditor to comply with the terms of the agreement. To give you an idea of what to look for, here is an example of a debt settlement agreement.
Here’s how a Maine debt can be settled.
In the example above, Ted received a debt collection lawsuit from Educap for a $9,670 student loan. In response to the lawsuit, he answers the form well before the Maine deadline of 21 days. Ted had more time to negotiate with his creditors before the court date. Educap accepted a payment of $6,100 (63%) as full payment for the debt following several negotiations.
Maine debt settlement laws can protect you
Thanks to Maine’s debt settlement laws and Fair Debt Collection Practices Act rules and regulations, thousands of their citizens have not been scammed by debt settlement companies. Charges, services, licensing, and penalties for violations are addressed in the various chapters. According to Title 32 ME Rev Stat 6174-A on orders, debt settlement companies should not:
- Charge more than $75 for set-up
- Fees exceeding $40 per month
- Negotiations result in a reduction of more than 15% of the debt amount
- For joint obligations, charge only one fee
Any debt settlement company that violates these laws should be reported to the consumer protection unit of the attorney general’s office. In response, they will take action.
In addition, the Federal Trade Commission has amended its Telemarketing Sales Rule to extend debt settlement regulations to all debt relief organizations and companies. This Rule applies to debt settlement practices in all 50 states, including Maine.
Under the new Rule, debt relief companies, such as debt settlement companies, cannot:
- Fees should be charged upfront. Consumers can only be charged fees by debt settlement companies after the debt is effectively settled or otherwise resolved.
- Provide consumers with incomplete information about its services before they enroll. Consumers will learn how much the service costs, how long it takes to see results, how much money must be saved before a settlement offer is made, the consequences of not making payments on time, and their rights.
- They misrepresent the services they offer. A debt settlement company cannot make false or unsubstantiated claims about its services.
How do I choose the best debt settlement company?
The best debt settlement companies must recommend a plan for settling your debt before they charge you a consultation or service fee. Consider checking the Better Business Bureau profile of the settlement company and the Fair Trade Commission’s list of banned debt management companies before hiring them. You may want to consider working with the following companies:
- CountryWide Debt Relief: The majority of the work is carried out by this company after you have discussed your debt situation with them and what you are looking for.
- Credit Associates: After an initial free debt health check, the experts recommend the best course.
- Freedom Debt Relief: With this company, you are given actionable steps to save money for debt settlement and enroll yourself in their debt management program after the settlement process is complete.
Contact the debt collector using the best method
Attempting to have a meaningful conversation with a debt collector can be a pain in the neck. They will do most of the talking until you submit to their demands. The situation may be different this time since you wish to offer to pay the debt. Choose one of these communication methods for your negotiation:
- You can settle for the phone within minutes by getting instant feedback. Recording the conversation is the only way to prove the agreement. Due to Maine’s one-party consent law (15 ME Rev Stat 709 and 710), you can record your phone calls.
- Using the mail as a negotiation method ensures that you have solid evidence of the transaction. Although the process takes longer due to the delay between sending and receiving mail, it is still possible to complete it.
- Email is the most popular debt settlement method because it’s quick, efficient, and leaves a paper trail. Contact the company’s customer service department if you need the company’s email address.
The best way to get Maine debt relief
There are other ways to manage your debts and achieve financial freedom other than debt settlement. If you do not have the funds to make a settlement offer or have little to no income to save, consider other options, such as debt consolidation and bankruptcy.
Maine debt settlement FAQs
Is it possible to settle more than one debt in Maine?
Yes, Maine law permits you to settle multiple debts as long as your creditors agree to the terms you offer. As a result, settling your debts will significantly damage your credit score, as new lenders will notice that you paid off your debts for a lower amount than what they originally owed.
Is it practical to settle debts on your own?
You can settle debt on your own if you have good negotiation skills and have a sense of how much the creditor is willing to accept. If you offer enough, they might put you off, or if you provide too much, you might lose some money.
Is it possible to settle a debt with a debt collector?
Sometimes, creditors may request half or 75% of what you owe them to close delinquent accounts. They may even go lower if you cannot meet their initial offer.