A Guide To Virginia Debt Settlement

When you are dealing with a debt lawsuit in Virginia, you can reach out to negotiate a debt settlement offer at any stage of the lawsuit process. Respond to the lawsuit, then send a settlement offer. When an agreement has been reached, get a written copy so you have a record of it. 

It can be troubling if you are being sued in court, especially if you cannot pay the bill before the court date. Although you might arrange a payment arrangement, many creditors do not prefer long-term repayment plans. Instead, if you win a lawsuit against your creditors, they will be able to garnish your wages and other methods of accessing your money.

There can be a way out of this situation to save you money, satisfy your creditor, and end the collection activities against you for good. It’s Virginia debt settlement.

There is a common practice among debt collectors and creditors in which they will accept a partial payment to avoid the cost of a court case and the future administrative burden of a judgment.

If you have been sued for debt in Virginia, then keep reading to find out how you can respond to the lawsuit and resolve your debt once and for all.

Debt settlement involves three steps

There are three specific steps involved in debt settlement, and they are as follows:

1. Respond to the lawsuit regarding the debt
2. Make a settlement offer to begin negotiations.
3. Do not settle your debt without a written agreement

In the following sections, we will closely examine each of these steps.

1. Respond to the lawsuit regarding the debt

Whenever someone initiates a debt lawsuit against you in Virginia, they will start the process by filing a Warrant In Debt with the court. Besides providing information regarding your overdue account, this document includes the amount you owe the creditor or debt collector, the interest or fees you may be responsible for, and all the claims being made against you.

You will likely receive a copy of the Warrant In Debt explaining that you must appear in court on a specific date. You will want to make sure that you evaluate every aspect of the case, noting any incorrect information, such as interest charges and the amount due.

In the first place, the first step in resolving your debt in Virginia is to appear in court on the scheduled date. If you do not appear in court, you will lose the case by default judgment, and the person suing you can garnish your wages.

In response to your Virginia debt lawsuit, you must appear in court and file a Grounds of Defense. Here you may have to assert your affirmative defenses and strengthen your case in court.

A creditor’s claim against you can be challenged in your answer using several arguments. Some of the most common ideas are the debt being outside the state’s statute of limitations or the debt collector having no connection with you or your business.

You can settle the lawsuit before it goes to court, but if you fail to do so, an Answer to the lawsuit can help protect you and give you time to negotiate a settlement.

2. Make a settlement offer to begin negotiations

To get a settlement, you must decide how much money you can afford to pay the debt collector. The more you have to offer, the better. Consumers usually are more successful when they begin by offering 60% of the value of debt. For example, if you owe a creditor $1,000, you will contribute $600 to settle the debt.

Some debt collectors and creditors will be more comfortable with you if you explain the financial difficulty you are experiencing. Feel free to share the challenges, such as a loss of a job or significant medical expenses if you cannot pay 60% of the debt’s total value.

If you don’t have much savings, consider other ways to get some quick cash. You can sell something you don’t need or ask a friend or family member to lend you money if you need it.

After you have submitted your offer to your creditor, you will need to negotiate with them. Refrain from being surprised if they reject your request and say they will come back with a counteroffer. You may go through several negotiation rounds before reaching a settlement that works for you.

3. Do not settle your debt without a written agreement

Make sure you get a written contract with your creditor or debt collector. A written agreement keeps you and your creditor or collector on the same page. You’ll be able to show a copy of the agreement to stop them in their tracks if they start collection activities for the same debt.

As soon as you’re done negotiating, you’ll insert the details pertinent to your contract before you send it to the debt collector or creditor.

As you’ll see from the settlement agreement example above, there’s a place where the notary can sign both for you and the creditor. The agreement gets even more credible and formal if it’s notarized. A witness will see you sign it.

Let’s take a look at an example.

In this particular case, Paul was sued by Encore Capital for $4000 of a credit card debt that had accumulated over four years ago. He responded to the lawsuit and gave himself time to negotiate with Encore Capital. Paul analyzed his finances carefully and determined he could afford to pay off $3,000 within the next 90 days (only 75% of the debt). He sent Encore Capital an offer of settlement. After some rounds of negotiation with Encore Capital, a satisfactory agreement was reached that Paul would immediately pay off $2,600. With the settlement agreement in writing, Paul saved himself hundreds of dollars and regained his financial independence.

How does Virginia collect and settle a debt?

It should be noted that the Virginia Debt Collection Act, VA Code 2.2-4800, is the state law governing debt collection in the state. However, the law does not offer additional protections not already included in the Fair Debt Collection Practices Act (FDCPA).

It is illegal for debt collectors and creditors in Virginia to take the following actions against a debtor:

• Calling the individual at odd times, such as after 9 p.m. without permission, is inappropriate.
• Misrepresent themselves as someone else, such as a law enforcement officer.
• Harass the debtor all day by calling them repeatedly.
• Keep in touch with the debtor more than seven times a week.
• Make the debtor pay by using threatening language.
• When a debtor asks them not to contact them at work, they should not call them.

In Virginia, debt collectors are required to comply with a statute of limitations. Under VA Code 8.2-725, sales contracts under the UCC are subject to a four-year statute of limitations, while VA Code 8.01-246 provides a five-year statute of limitations for written and signed debt. Generally, General District Court judgments are valid for up to ten years under VA Code 16.1-94.1.

In addition, the Federal Trade Commission recently amended its Telemarketing Sales Rule to apply to debt settlement companies and organizations in all 50 states, including Alabama.

Any company that provides debt relief services, like debt settlement companies, can’t:

• Debt settlement companies can’t charge upfront fees before the debt is settled.
• Before consumers sign up for the program, they only tell them some things about it. There’s stuff like how much the service costs, how long it takes to see results, how much money to save before a settlement offer’s made, what happens if the consumer doesn’t pay on time, customer rights, etc.
• Debt settlement companies can’t make unsubstantiated or false claims about their services.

How can I find the best debt settlement companies?

Several debt settlement companies can assist you in managing the debt settlement process. 

These companies specialize in negotiating with creditors to reduce the amount of debt owed or to restructure the repayment terms for a lower monthly payment. They can also help create a budget and advise on how to manage debt in the future.

National Debt Relief

In 2009, National Debt Relief was founded as one of the nation’s largest debt relief companies, helping more than $1 billion of debt be settled by its customers. It is estimated that individuals who qualify for National Debt Relief programs will pay between 15% and 25% of the total value of their debt as a fee for its services. 

The company prides itself on helping customers become debt free while maintaining their dignity, and they are committed to delivering a high standard of customer service.

Freedom Debt Relief

A second large provider of debt settlement services is Freedom Debt Relief. During the past few years, the company has helped over 650,000 clients resolve their debts. Those interested in the program should expect it to last between two and four years. Like National Debt Relief, Freedom Debt Relief charges clients a 15% to 25% fee for their services.

During the program, Freedom Debt Relief negotiates with creditors to reduce a client’s debt and create a payment plan that fits their budget. The fees are only charged after successfully resolving the debt. The fees are based on the client’s debt and the time needed to negotiate a resolution.

Century Support Services

Among the companies that provide debt relief services, Century Support Services is another one that has become popular with customers. Since 2012, the organization has helped customers resolve more than $1.7 billion in debt. The fee for Century Support Services varies from 18% to 25%, depending on the amount and type of debt. 

This fee structure is attractive to customers, as they can pay a fixed percentage of their debt, no matter how much they owe. This gives customers a sense of security and encourages them to take advantage of the services offered by Century Support Services to get out of debt.

Getting started with debt settlement by contacting your creditor

If you’re ready to start the debt settlement process in Virginia, you can reach out to debt collectors and creditors by phone, email, or postal mail.

Email is best for negotiating a settlement with your debt collector. That way, you’ll have a written record of the conversation.

According to VA Code 19.2-62, if you prefer to have a telephone conversation with the collector to negotiate the settlement, you can record the call and make the recording available to the collector. Virginia law only requires the consent of one party to register a phone call.

Consider recording your phone call in case the creditor tries to renege on the settlement. It will help you prove that you have already agreed with the creditor.

FAQs about Virginia debt settlement

If you still have some questions about settling your debt in Virginia, here are some answers to some of the most common questions people ask regarding the process.

What is better, settling the debt or going to court?

If you know, you owe the debt and have little recourse to paying it; you may want to settle the obligation. By determining the debt, you avoid a potential judgment, and any further collection activity against you will cease. However, if a debt collector sues you for a debt you have valid reasons for not paying, the best thing you can do is to fight the court case.

How much of the debt should you offer to settle?

Several factors determine how much to offer a debt collector as part of a settlement. You must decide what you can afford to pay for your debt. The more you offer, the more likely the debt collector will accept your offer.

In Virginia, when does a debt become uncollectible?

The statute of limitations in Virginia is five years for most debts, including credit cards, medical bills, and mortgages. Once the statute of limitations has expired, the creditor has no right to file a lawsuit against the consumer. A collector can pursue the debtor for up to ten years under a judgment.

You set yourself up for success by settling a debt

When you have never attempted debt settlement, the process may seem intimidating to you. After all, dealing with debt collectors is only on some people’s list of fun activities. However, once you arrange to settle your debts, you won’t have to worry about receiving upsetting letters or calls anymore. You can move forward with your life and recover financially once you have arranged to settle your debts.

Debt settlement allows you to negotiate with your creditors to reduce the amount you owe them, making it easier for you to pay off your debt. It is also a great way to save money since you can avoid paying additional late fees and interest charges. Additionally, settling your debt could help you rebuild your credit score.