Leslie Tayne's Blog

Being served with a lawsuit for unpaid debt can be scary and stressful. However, it’s important not to panic. What you do next is extremely important. And knowing how to answer a lawsuit for debt collection will mean the difference between successfully resolving your debt or facing severe financial consequences. 

So if there’s a debt collection lawsuit against you, take a deep breath because solutions are available. Then read on to find out how to answer the lawsuit and craft a game plan.

Debt Collection Process Basics

When you fail to pay a debt, the original creditor will attempt to collect it themselves. You’ll receive letters and phone calls requesting that you pay up. But if you’re unable or unwilling to pay the debt, the original creditor may decide to enlist a debt collector’s help.

The process usually follows these steps:

Default: When you stop making payments on a debt, it eventually goes into “default.” This essentially means that you have failed to pay a debt according to the terms of your contract. Default has major negative consequences for your credit and finances in general.Charge-off: If the debt remains unpaid for a significant period (generally 180 days or more for credit card debt), the original creditor may “charge off” the debt. This means they write it off as a loss for accounting purposes. However, this doesn’t mean the debt disappears. You still legally owe the debt.Collections: Once a debt is charged off, the original creditor often turns the account over to an internal collections department, hires a collection attorney, or sells the debt to a third-party buyer. The debt collector then takes over, attempting to recover the funds. You will likely receive many calls and messages regarding your unpaid debt.Legal action: If the debt collector is unsuccessful, they may sue you in court. And if the lawsuit is successful, ajudgment will be entered against you. That means the collection agency can take further action to collect the money you owe, including wage garnishment, putting a lien on your property, and more. So You’ve Been Served: How to Answer a Lawsuit for Debt Collection

If you get served a debt collection lawsuit, taking action immediately is important. Ignoring the lawsuit won’t make it go away. The debt collection law firm can obtain a default judgment against you if you fail to respond.

Carefully read the complaint (the document describing the reasons for the lawsuit). This should include the creditor’s name, the debt amount, and the reason the debt is owed. Then consult an experienced debt relief lawyer (many offer a free initial consultation). A lawyer can provide valuable legal advice, explain your rights under the Fair Debt Collection Practices Act (FDCPA) and similar protections, discuss your options, and even represent you in court. If you can’t afford a lawyer, you may be able to get help from a legal aid organization. 

Next, you’ll need to prepare an “answer” to the lawsuit. This document provides your side of the story. It’s your opportunity to admit or deny the allegations made by the plaintiff. You can also assert any defenses you have. Again, an attorney should help you craft your answer so it’s done right and is not rejected by the court.

Finally, you will file your answer with the court by the deadline stated in the summons. If you miss the deadline, you lose your opportunity to be heard and could face a default judgment. 

Let’s take a closer look at this process.

Understanding the Summons and Complaint

A lawsuit is initiated when the plaintiff (the party bringing the lawsuit) files a complaint in court. The complaint outlines the plaintiff’s allegations against the defendant (the party being sued), the harm allegedly suffered, and the legal remedy the plaintiff seeks.

Once the complaint is filed, a copy of it and a document called a “summons” must be served to the defendant. The summons informs the defendant that they are being sued, in which court the case was filed, and how much time they have to respond (usually, 20-30 days, depending on how and where you were served). The process of serving these documents is referred to as “service of process.”

How to Prepare Your Answer 

If you’ve been served with a debt collection lawsuit, preparing an answer is an important step:

Review the complaint: This document outlines the case against you. It states the claims being made, the evidence being used to support these claims, and the relief being sought.Consult a debt help attorney: The legal language in a lawsuit can be complex. It’s helpful to consult with an attorney to understand the lawsuit and how best to respond.Prepare your answer: In your answer, you’ll respond to the allegations made in the complaint. Typically, you’ll go through each paragraph of the complaint and either admit (if the statement is true and cannot be disputed), deny (if the statement is false), or state that you lack the knowledge to admit or deny (if you cannot truthfully admit or deny the statement).Raise any defenses: Include any defenses you may have in your answer. For example, if the debt is too old, you could assert the statute of limitations as a defense. You could assert identity theft or mistaken identity if the debt isn’t yours. You can assert payment as a defense if you’ve already paid the debt. These are just a few common defenses — your attorney will be able to determine the best approach. If you have claims against the plaintiff, you might also include counterclaims in your answer.File and serve your answer: You must file it with the same court where the lawsuit was filed by the deadline. After you’ve filed your answer, you’ll also need to serve a copy of your answer to the plaintiff or their attorney.Keep a paper trail: Keep copies of all documents related to the case, including the summons and complaint, your answer, and any other paperwork. Send all written communications by certified mail.What Happens After You File Your Answer?

After you respond (file an “answer”) to a lawsuit for debt collection, the lawsuit enters a phase called “discovery.” Here’s a general outline of what may happen:

Discovery Phase

Both parties exchange information that pertains to the lawsuit. This might include requests for documents, written questions to be answered under oath (interrogatories), or oral questions to be answered under oath (depositions).

Motions

After the discovery phase, or sometimes during it, one or both parties might file motions with the court. These can request a variety of things. For example, one common type of motion in debt collection lawsuits is for summary judgment, in which the plaintiff asks the court to decide the case in their favor based on the evidence presented without going to trial. This happens when you do not have a valid legal defense.

Pre-Trial Settlement Discussions

The parties may engage in negotiations to settle the debt out of court. If a settlement is reached, it will involve you agreeing to pay the plaintiff a reduced, lump-sum amount of money to resolve the case. Alternatively, you may be able to work out a reduced payment plan to satisfy the debt and end the debt lawsuit.

Trial

If the case isn’t resolved through settlement, and if no motion has disposed of the case, then the matter goes to trial. Both sides will present their case during the trial, and the judge will decide the outcome. This can take a long time and be costly.

Judgment

If you’re successful, the case against you will be dropped. However, if you lose at trial, a judgment will be issued against you for the amount the court determines you owe for the debt with costs. This means the debt collector has established a legal right to collect the debt in question. From there, they can garnish wages, levy bank accounts, or place liens on property, depending on your state’s laws.

It’s important to have legal representation if possible, throughout this process, as the laws and procedures can be complex. 

Hiring Legal Help for a Debt Lawsuit

Hiring legal help for a debt lawsuit can seem daunting, especially when you’re already under financial stress. However, you don’t necessarily need to face the lawsuit alone. 

Contact your local Bar Association for a referral, or use an online search legal directory to find reputable lawyers specializing in debt defense in your area. Some lawyers offer a free initial consultation for debt help, allowing you to discuss your case and understand the possible legal strategies without paying any attorney fees upfront.

When you’re meeting with potential lawyers to discuss your debt matters, present your debt collection case clearly and honestly, and be sure to ask lots of questions, such as:

What can you expect from the process?Have they handled similar cases with the creditor in the past?What were the results of those cases?What are their fees, and how are they structured?

Speaking of fees, legal debt help can seem expensive, especially if you’re already facing court costs. But it’s important to understand the costs upfront. Lawyers can charge by the hour, a flat fee for specific services or on a contingency basis. Ask for a written estimate of the potential costs when seeking assistance from a debt relief attorney.

If you can’t afford a lawyer, look into free or low-cost legal aid organizations that help connect legal professionals with people who can’t afford legal help. You can find these services through your state or local Bar Association or the Legal Services Corporation’s online directory.

Remember, you’re hiring a lawyer to work for you. They should be someone you feel comfortable with, who understands your situation, and who communicates clearly about the potential outcomes and strategies for your case. You should feel that you can work with them to resolve your debt.

How Tayne Law Can Help

Tayne Law Group is a New York-based debt relief law firm that has been helping clients find resolutions for their debt for more than 20 years. If you’re being sued by a creditor, have a debt collection matter, credit card debt, student loan, or business debt like an MCA, or think a collection law firm will sue you, call us today to discuss how we may be able to help you put together a strategy to resolve your debt and avoid a lawsuit.  Call us at (866) 890-7337 for a free phone consultation with our experienced and helpful staff. You can also fill out our short contact form, and someone from the office will contact you. We never sell or share your information, and all discussions are confidential.

The post How to Answer a Lawsuit for Debt Collection appeared first on Tayne Law Group.

If you lose a debt lawsuit, the creditor is awarded a judgment against you. This allows them to take additional measures to recoup their money if you don’t pay. So you might wonder: What happens if a defendant does not pay a judgment?

Ignoring a judgment is not a good idea. But if you have a judgment against you, there are options to resolve your situation. So read on to learn what happens if a defendant does not pay a judgment and what you should do in this situation. 

What Is a Judgment in a Debt Lawsuit?

A judgment is a decision made by a court regarding the claims in a lawsuit. If the court finds that you owe a certain amount of money to a creditor, the court will issue a judgment in favor of the creditor. This judgment is essentially a legal confirmation that the debt is valid and enforceable.

Once a judgment is obtained, the creditor has more tools to collect the debt if you don’t voluntarily pay the amount stated in the judgment.

On the other hand, if the court doesn’t find in favor of the creditor, then the lawsuit is typically dismissed. At that point, you’re no longer legally required to pay the claimed amount. However, this doesn’t necessarily mean that the debt isn’t valid. It just means the creditor hasn’t met the legal requirements to prove the debt in court.

Types of Judgments

Judgments typically fall into one of the following categories: 

Default Judgment

If you fail to respond to the lawsuit or don’t appear in court, the court may grant a default judgment in favor of the plaintiff (the creditor). This means the court accepts the plaintiff’s claims as true since you didn’t dispute them.

Summary Judgment

A summary judgment can be granted if the facts of the case are undisputed and the judge determines that the plaintiff is entitled to win as a matter of law. This can happen even if you answer and acknowledge the debt but argue it shouldn’t be paid for some reason. A summary judgment could be granted if the judge doesn’t accept your argument or you do not have a legal basis for a valid defense.

Vacated Judgment

After you have a judgment against you, you might have the option to file a motion in court to have a judgment vacated. You must show a valid reason why the original judgment should not stand. For instance, you weren’t properly served with the lawsuit, or if you can show there was a procedural error in the original filing.

Consent Judgment

 If you agree you owe the debt and are willing to make a payment plan, the creditor might agree to a consent judgment. This legally enforceable agreement allows you to avoid further legal proceedings.

Stipulated judgment

This is an agreement between the parties in a lawsuit that settles the dispute and is sanctioned by the court. The parties involved agree on the outcome, and the judge enters the agreement into the court record as a judgment.

Satisfied Judgment

Once a judgment debt has been fully paid, it becomes a satisfied judgment. This should be officially noted in the court records. It’s important for you to ensure this happens, as it impacts your credit record.

Unsatisfied Judgment

This refers to a judgment debt that has not been fully paid.

What Happens if a Defendant Does Not Pay a Judgment?

If the defendant in a debt lawsuit (AKA the “judgment debtor”), doesn’t voluntarily pay a judgment, the plaintiff (creditor) has options to try and collect the debt. This could vary depending on what state the judgment was entered in and where the defendant lives:

Wage garnishment. The creditor may be able to have part of the defendant’s wages garnished. Money is directly deducted from your paycheck until the debt is paid.Bank account levy. The creditor could levy your bank account, meaning they could take money directly from the account to satisfy the debt. Generally, there is no notice ahead of a bank account getting frozen.Property lien. The creditor can often place a lien on your property, such as a house or car. The lien must usually be paid off before you can sell the property.Seize assets. Sometimes, a creditor can get a court order to seize other assets or personal property you own, such as a vehicle or real estate, to satisfy the debt.

It’s important to note that not all of these collection methods are available in all jurisdictions. There may also be exemptions for some types of income and assets. For example, Social Security income, disability benefits, child support, and retirement income are typically exempt from wage garnishment.

If you consistently fail to pay a judgment, the court may find you in contempt, which could result in additional fines or jail time. However, this is usually a last resort and varies widely by jurisdiction.

Finally, a credit-related judgment can significantly impact your credit score. That can make it more difficult to obtain credit or loans in the future. Judgments also become part of public records, so anyone doing a background check can see it.

What Happens When a Defendant Does Pay?

Once the debtor pays the full amount owed according to the judgment, a few things should happen.

First, the creditor should provide the defendant with a receipt or written confirmation that they received the payment. Then the creditor is typically responsible for filing a “satisfaction of judgment” form with the court. This document serves as proof that the judgment has been paid in full. It’s important for the debtor to make sure this happens, as it’s the official record showing that they met their obligation.

Paid judgments should also be reported to the credit bureaus so that they can update the debtor’s credit report to show that the debt has been satisfied. However, the debt will generally stay on the credit report for seven years.

Finally, if the judgment led to a lien on the debtor’s property, the creditor should also arrange for the lien to be released once the debt is paid. The debtor should ensure this is done so they can sell or refinance their property without issues.

If the creditor doesn’t follow through with these steps, the debtor may need to go back to court or take other action to get the satisfaction of the judgment recorded and the lien released. It can be helpful to consult with a debt relief lawyer to understand the specific procedures in the jurisdiction where the judgment was entered.

Get Legal Help With a Judgment

Facing a judgment can be stressful. Having a debt help lawyer on your side can provide peace of mind that you’re taking all the right steps and not missing anything important. An experienced debt-help lawyer can offer valuable legal advice. They’ll help you understand the legal jargon, the court process, and your rights and obligations under the law. Plus, they could help you identify potential legal strategies or defenses you might not know. Sometimes, a debt settlement lawyer can negotiate a debt settlement or other agreement that avoids court. 

If you’re facing a debt lawsuit or already have a judgment against you, contact the financial law firm Tayne Law Group. We offer a free phone consultation so you can learn more about how we work and your options related to outstanding debt or judgments. 

Tayne Law has decades of experience dealing with the debt collection industry, collection law firms, collection lawsuits, and debt resolution options. We have helped clients protect their legal rights and identify ways to defend collection lawsuits, debts like MCA and credit card debt, student loans, and other debt collection issues successfully. See today which path is the right one for you. Call our award-winning law firm at (866) 890-7337 or fill out our short contact form for a free consultation. We never share or sell your information; all calls are confidential.

The post What Happens if a Defendant Does Not Pay a Judgment? appeared first on Tayne Law Group.

If you’ve considered a debt settlement before, you may be wondering, “What percentage should I offer to settle my debt?” While there is no one-size-fits-all answer to this question, there are a few guidelines that you can follow to help you come up with a number that works for you.

In light of that, we have created a resource on debt settlement below. Read it over to understand what factors creditors consider when negotiating a debt settlement and what percentage you should offer them.

What is a debt settlement?

Debt settlement generally involves contacting your lenders and asking them to accept a lump-sum payment in exchange for considering your debts settled. Typically, this lump sum payment is worth less than the total debt you currently owe.

Like any other financial decision, the decision to settle your debts comes with its pros and cons. On the one hand, if you choose to settle your debt, there’s a good chance that you will get away with paying less than you owe, and your settled account balances will be brought to zero, which means your creditors will stop calling.

However, on the other hand, it’s important to note that settling your debt will end up on your credit report and can hurt your credit score. Although it is hard to quantify how much of an impact settlement will have, Debt.org estimates that a debt settlement can lower your credit score by about 100-125 points if you have stellar credit to start. Still, settling your debt will likely have less of a negative impact than leaving your accounts delinquent and possibly facing debt collection or lawsuits from creditors.

What factors are considered when settling debt?

If you’ve gone over the pros and cons of settling your debts and decided that it is the right move for you, the next step is to better understand what factors are considered in a debt settlement. Knowing what matters to your creditors will give you a leg up when deciding how much to offer for your settlement. In light of that, we’ve looked closely at these factors below.

Your overall financial situation

The first thing that a creditor will want to look at when negotiating a debt settlement is the borrower’s overall financial situation. In particular, the creditor will likely want to verify how much cash you have on hand and look at your hardship or what made you need to settle your debts. This is not an easy process, and understanding what to say to a creditor is often best left to those who are experts in settling debt, like a debt solutions attorney.

In this case, the creditor will be more likely to settle for a smaller portion of your debt if you can prove that you are going through a period of financial hardship. Likewise, if it looks like you have plenty of money coming in each month and your debts are mostly the result of extravagances like shopping trips or going out to eat, your creditor will probably be less willing to strike a deal with you.

The age of your debt

Next, creditors are also going to consider the age of your debt. In this case, they are more likely to consider settling older debts. After a certain point, creditors begin to consider old dead uncollectible. If they can collect a portion of that debt through a settlement, in their minds, it will be better than not collecting anything at all.

However, if your debt is relatively new, it’s less likely that your creditors will be willing to accept a settlement. At this point, they are more likely to assume that you will keep making monthly payments to keep your credit score as high as possible. The lender may offer you a payment plan to make partial payments on your debt.

The creditor

It’s also important to take who you are negotiating with into consideration as well. If your debt is less than 180 days past due, you will likely negotiate with your original creditor, such as a credit card company. However, it’s more likely that you will be dealing with a debt collection agency beyond that point. In either case, each entity will likely have its own rules and regulations around settlement negotiations.

With that in mind, it’s a good idea to research who you’ll be negotiating with before you make the call. The Better Business Bureau (BBB) is a good place to gather that information.

There are resources to assist you if this is overwhelming to you, which is understandable since you may not know what to say to a debt collector. Do your research to find what debt solutions might be best to help you achieve your goal of settling your debt.

Note that not all debt can be settled. Each creditor has different rules when settling debts for less than the amount of debt owed. This can confuse the average consumer looking to settle their debt for less than what is owed.

What percentage should I offer to settle debt?

Last, but not least, it’s important to answer the question of how much a debt collector will settle for. While there is no hard and fast rule for debt settlements, the settlement amount is typically based on a percentage of the overall amount you owe. For example, the National Foundation for Credit Counseling (NFCC) reports that the typical credit card debt settlement percentage is worth about 40%-50% of the full amount.

However, the settlement agreement can change and vary depending on the creditor, the type of debt, the total amount you owe, and your circumstances. There is no set amount to settle your debt with collection agencies or debt collection law firms.

Still, it’s crucial to remember that your debt settlement offer is just a starting point when negotiating. No creditor or collection agency is required to settle with you, which means they may come back with a higher number or refuse to settle the debt at all. That’s part of why having a professional in your corner is a good idea as you undertake this process.

The bottom line on settling debt

Settling debt is often thought of as a last resort. However, it is certainly an option worth investigating if you are having trouble keeping up with your debts.

Now that you have a better idea of what percentage a collection agency will settle for, the next step is to figure out whether debt settlement is right for you. You can then decide whether your situation is best left to a financial professional so you can be sure you’re getting the best possible solutions to resolve your debts.

If you are ready to talk to someone about your debt relief options, contact Tayne Law Group today, which has been settling debts for over 20 years and has won many awards. Reach out at (866) 890-7337, or fill out our short contact form, and we’ll respond as soon as possible.

FAQWhat is a good debt settlement percentage?

A “good” debt settlement percentage could be between 30% and 50% of the original debt. However, this can vary depending on factors such as the debt’s age, the borrower’s payment status, and the creditor’s willingness to negotiate.

How much will creditors negotiate on a debt settlement?

The amount that creditors are willing to negotiate on a debt settlement can vary greatly. Some may be willing to accept as little as 30% of the original debt, while others may demand 70% or more. Factors influencing these decisions include the size and age of the debt, the debtor’s financial situation, and the creditor’s assessment of the likelihood of receiving full payment. Professional assistance from a debt relief lawyer can often help in these negotiations.

Is it better to pay a collection in full or settle for less?

The decision to pay a collection in full or settle for less depends on your individual circumstances. Paying in full will usually positively impact your credit score, as it indicates that you’ve fully met your financial obligation. However, if you’re unable to pay the full amount, settling for less can be a viable strategy. Remember that a settled debt is noted on your credit report and can lower your credit score, but it may still be better than having an unpaid debt.

Does a settlement hurt your credit?

Yes, a settlement can hurt your credit. Settling a debt typically means you’re paying less than the original amount. This can lead to a lower credit score. A settled debt will usually stay on your credit report for seven years from the date the account first became delinquent. However, the impact on your credit score diminishes over time, especially if you work to build good credit.

The post What Percentage Should I Offer to Settle Debt? appeared first on Tayne Law Group.

When you let credit card debt go unpaid for a long time, the creditor may decide to sue you for the amount owed. And if you lose the lawsuit, you will have a judgment against you. So if there’s a lawsuit against you for your credit card debt, knowing how to stop a judgment for credit card debt is crucial. Otherwise, you could face severe consequences for your finances and credit score.

Trying to figure out what to do? Don’t worry. We’ll explain how to avoid getting sued by creditors and where to turn for help with delinquent credit card debt.

What Is a Judgment in a Credit Card Lawsuit?

A judgment is a formal decision by a court that the debtor owes the creditor a certain amount of money. Once there’s a judgment in place, the creditor can take stronger measures to collect the debt.

There are a few steps that take place before a judgment happens:

Delinquency and default: Once your credit card debt goes unpaid for 30 days, it’s considered “delinquent.” If you fail to pay at least the minimum on your credit card bill for an extended period, around six months, your credit account will be considered in default. Charge-off: If you allow your credit card account to default and still don’t attempt to pay off the debt, the credit card company may charge off the debt. This means they consider it a loss for their accounting purposes. However, this doesn’t mean you’re off the hook for the debt. Debt collection: Once the account has been charged off, the credit card company may send it to its internal collections department or sell it off to a third-party debt collector, debt buyer, or collections agency. The debt collector will then repeatedly attempt to collect your debt to get paid.Lawsuit: If the collector can’t get you to pay, they may sue you in court for the amount they claim that you owe. Judgment: If you don’t respond to the lawsuit, the court will likely issue a default judgment in favor of the credit card company. However, if you respond to the lawsuit and fight it in court, you could still end up with a judgment. This happens if the court determines you are fully responsible for repaying the debt. If a judgment is entered against you, the credit card company (or whoever owns the debt at that point) can then use various methods to collect the money.Consequences of a Judgment

The methods involved in collecting a debt after a judgment are much more aggressive. If you have a judgment against you for credit card debt, you could face any of the following consequences:

Garnishment of wages: The creditor may be able to garnish your wages until the debt is paid off. This means that a certain portion of your income is taken directly from your paycheck and given to the creditor.Levy of bank accounts: The creditor may also be able to take money directly from your account to pay the debt. You will have no warning of a frozen bank account.Lien on property: In some cases, the creditor may place a lien on your property, such as your home. If you try to sell the property, the lien must be satisfied to transfer the title. It’s typically paid off from the sale proceeds.Credit score impact: A judgment will also likely have a significant negative effect on your credit score. That can make it more difficult for you to obtain credit, rent an apartment, or even get a job in some cases.Legal fees and interest: The judgment may include court costs and interest, increasing the total amount you owe.Public record: Judgments usually appear on public records. Anyone doing a background check on you could find out about it.How to Avoid a Judgment for Credit Card Debt

First, if you’re served a credit card debt lawsuit, it’s extremely important to respond to the lawsuit by the deadline. This is your formal response to the lawsuit, which you will file with the court. Note this only sometimes means you show up to court. In many cases, it’s a written response. In it, you admit or deny each of the plaintiff’s claims. You can also assert any defenses you may have.

If you don’t respond or have a valid defense to the lawsuit, the court will likely grant a default judgment. This means the plaintiff automatically wins and can begin to collect the money. The timeline for responding will be outlined in the lawsuit. It’s typically within 20 to 30 days, depending on how you were served and where you live.

It’s highly recommended that you consult with an experienced debt relief attorney. They can help you understand the lawsuit, your rights, and the best strategies for a response. There may be free or low-cost legal help available in your community if you can’t afford a lawyer.

In addition to properly responding to the lawsuit, there are other steps you can take to avoid a judgment.

Verify the Debt

Ensuring the debt is yours, and the claimed amount is accurate is important. You can request this information from the creditor with a debt validation letter. If there are discrepancies, this could help in your defense. However, This must occur before you are sued and shortly after receiving your first communication from the collection agency or attorney firm.

Consider Debt Settlement

If you owe the debt and cannot successfully challenge the lawsuit, you can consider trying to settle out of court. This could involve negotiating with the creditor to pay a reduced amount or establish a manageable payment plan. It’s usually best to get help from a debt help attorney to ensure it’s done right and you don’t end up with a judgment anyway.

File Bankruptcy

If your financial situation is dire and there’s no other way out, you might consider filing for bankruptcy. This is a significant decision with long-lasting implications. It should only be considered after consulting with a bankruptcy attorney near where you live or a financial advisor that understands the ins and outs of bankruptcy law and how it will impact you. You have to qualify for bankruptcy by meeting a “means test” related to your income. The bankruptcy attorney can review the differences between a Chapter 7 and Chapter 13 bankruptcy and see what you qualify for.

Challenge the Lawsuit

There are several defenses to credit card lawsuits. For instance, you might challenge whether the plaintiff has the legal right to sue (standing) or the debt is too old (statute of limitations). It may also be possible to challenge the amount of the debt, especially if fees and interest have excessively accumulated or claims of fraud if it wasn’t your debt to begin with.

Credit Card Debt Lawsuit Defense

You must craft a defense if you challenge the credit card debt lawsuit. There are several potential defenses; the right one will depend on your situation. 

Should You Hire a Lawyer?

As we mentioned, working with an experienced debt help attorney is often a good idea. They will have a much better understanding of the legal process, best defenses to pursue, and working relationships with the creditor’s attornies. However, there are some challenges and drawbacks to hiring legal help.

Pros of Hiring a LawyerThey have the expertise. An attorney specializing in debt law can help you understand your rights, what defenses might be available, and how to best navigate the court system.You’ll have representation. A lawyer can represent you in court and negotiations with the credit card company or debt collector. They can often negotiate more effectively than you could on your own. Plus, they’ll make sure the agreement is in your favor.You can save a lot of time and stress. Dealing with a lawsuit can be time-consuming and stressful. Hiring a debt help lawyer can alleviate some of this burden, allowing you to focus on getting your finances and life back on track.The outcome will likely be better. A debt settlement lawyer may be able to get the lawsuit dismissed, negotiate a lower settlement, or establish a manageable payment plan.Cons of Hiring a LawyerHiring a lawyer can be expensive. If you’re already struggling with debt, the additional cost of attorney fees might be difficult to afford. However, some attorneys offer flexible payment options or might accept your case on a contingent fee basis.It’s not always necessary: You may not need a lawyer for small claims cases. Some legal procedures are designed to be manageable for individuals to handle independently.There’s no guaranteed outcome. Even with an experienced debt relief attorney, there’s no guarantee that you’ll win the case or get a significantly reduced settlement. 

Overall, the decision to hire an attorney specializing in debt relief and settlement is up to you. It should depend on your specific circumstances, including the complexity of your case, the amount of the debt, and whether you feel comfortable handling the matter on your own. If you can’t afford an attorney, you might qualify for free legal aid. Or you may be able to find resources to help you understand and respond to the debt lawsuit on your own.

Potential Defenses

You have the right to defend yourself in a credit card debt lawsuit. There are several possible defenses you can use, depending on your situation:

The debt isn’t yours: This can happen due to identity theft or a simple mistake. You can dispute the claim if you believe the debt doesn’t belong to you. Of course, you’ll need to provide evidence to support your claim.The statute of limitations has passed: Every state has a statute of limitations for how long a creditor has to sue you for unpaid credit card debt. If this time has passed, you can use this as a defense against paying old debt.The creditor can’t prove you owe the debt: The creditor must be able to provide detailed account records showing that you owe the debt and the amount is correct. If they can’t give this information, you can challenge the lawsuit on this basis.The creditor used unfair debt collection practices: If the creditor or debt collector violated the Fair Debt Collection Practices Act (FDCPA) or similar state laws, this could be a counterclaim. For example, if they have harassed you, lied to you, or made illegal threats, you may be able to counter-sue for damages.There were errors in the lawsuit or service of process: If there are significant errors in the case or you were not properly served with the lawsuit, these could be defenses.You’re being sued for the wrong amount: If you believe the amount the creditor claims you owe is incorrect — perhaps due to excessive fees, interest, or charges for items you returned or did not receive — you may be able to dispute the amount of the debt.What to do if You’ve Received a Judgment

You may be reading this too late, and there’s already a judgment against you. If that’s the case, it’s not the end of the world. You can still take steps to minimize the damage and move on from your debt.

Comply with the judgment: If the court has ordered you to do something, such as making a payment by a certain date or permitting wage garnishment, you must comply to avoid further legal consequences. Until you have a new action plan, ensure you follow the court’s orders.Consider an appeal: An appeal isn’t a chance to retry the case. Rather, it’s an opportunity to argue that legal errors were made in the initial trial that affected the outcome. In other words, you can’t appeal just because you’re unhappy with the decision. Negotiate a payment plan: If you cannot pay the full amount of the credit judgment at once, you could try to negotiate a monthly payment plan with the creditor. They might be willing to accept smaller, regular payments over time rather than trying to collect the full amount immediately. Alternatively, you may be able to negotiate a lump sum settlement that’s less than the amount owed.Consider bankruptcy: If you cannot pay the judgment and have substantial other debts, you may want to think about filing for bankruptcy. Even though it’s a last-resort option, it can provide a clean slate and allow you to move on from your debts if you qualify. It also has consequences, so speak with a qualified debt assistance attorney or bankruptcy lawyer to discuss all options.Where to Turn for Legal Help With Credit Card Debt

It’s possible to deal with credit card debt issues on your own. But you’ll likely save a lot of time, headache, and money by getting the assistance of a legal professional. An experienced debt relief attorney may be able to provide you with valuable legal advice and guidance, ensure your rights are protected, represent you in court, and more.

If you’re facing legal issues related to credit card debt and can’t afford a lawyer, there are resources available. For example, legal aid societies offer free legal services to those who qualify (typically low-income individuals). You can find a local legal aid society by visiting the Legal Services Corporation website. This is a nonprofit organization that helps provide legal aid to low-income Americans.

Many state and local bar associations also have pro bono programs where lawyers volunteer their time to help people who can’t afford legal services. You can check with the American Bar Association (ABA) for pro bono programs in your state.

Call Tayne Law Today

Tayne Law Group has assisted borrowers with debt management and resolutions for credit card debt, student loans, and personal loans for over two decades. We offer a free, no-obligation phone consultation with one of our experienced debt relief teams. During this consultation, you can learn more about your options and how our process works. Call us at (866) 890-7337 or fill out our short contact form, and we’ll be in touch. We never share or sell your information, and all conversations are confidential.

The post How to Stop a Judgment for Credit Card Debt appeared first on Tayne Law Group.

Defaulting on credit card debt is something you want to avoid. Of course, sometimes the unexpected happens, and you may face financial hardship, making it difficult to stay on top of credit card bills.

If that’s the case, learning how to prevent credit card default is important. Or if you’ve already defaulted on your credit card payments, how to resolve the problem and get your finances back on track. Here’s what you should know.

What Does it Mean to Default on Credit Card Debt? 

Before we get into what happens when you default on credit card debt, let’s take a quick look at what that means in the first place.

When you initially “default” on credit card debt, it means you’ve failed to make the minimum required payments for a certain period. That’s typically 60 to 180 days, depending on the credit card company’s policy.

The consequences of defaulting on credit card debt can be quite serious:

Consequences of Defaulting on Credit Card DebtLate fees and increased interest rates: If you miss a payment, the credit card company will likely charge you a late fee. Moreover, if your missed payment is more than 60 days past the due date, the company can increase your interest rate to a higher penalty rate. This can add to the overall balance you owe. It can make it even tougher to get your credit card debt under control.Damaged credit score: Late payments will also negatively impact your credit since payment history is the most significant factor in determining your credit score at 35%. Plus, a default will stay on your credit report for seven years.Collection efforts: If your account remains in default for an extended period, the credit card company might eventually close your account. They can send your balance to an internal collections department or collection agency. The collector will then take over the efforts to recover the past due money you owe.Legal action: If collection efforts are unsuccessful, the credit card company or the collection agency might sue you for the unpaid credit card balance. If they win the lawsuit, they could pursue wage garnishment. They can freeze your bank account, or seize your assets to repay the debt.Increased financial stress: Defaulting on your credit card bills can lead to increased financial stress due to the constant calls from debt collectors, threats of lawsuits, and the impact on personal and financial relationships.How to Avoid Defaulting on Credit Card Debt 

If you’re finding it hard to meet your credit card monthly payments, here are some steps you can take to avoid defaulting:

Put together a budget. Defaulting on credit card debt is often a symptom of overspending. This is the case because you don’t have a clear idea of where your money is coming from and going. So start by assessing your income and expenses and then create a basic budget. This can help you adjust to free up funds for credit card payments.Prioritize payments. If you have multiple credit card debts, prioritize paying off those with the highest interest rates. Doing so will reduce the total interest you’ll pay over time. If the interest rates are about the same on all your credit cards, consider the smallest balances to pay off the debts sooner. Always make the minimum payments. Even if you can’t pay your balance in full, make sure to at least pay the minimum due. On-time payments will keep your account in good standing. Set up auto payments, so you remember to make the payments due on your credit cards.Contact your credit card issuer. If you need help making payments, contact your credit card issuer immediately. They may be able to offer you a hardship plan. These plans can include temporarily lowering your interest rate, reducing your minimum payment, or even deferring payments.Consider debt consolidation or a balance transfer. If you have debt on several credit cards, considerconsolidating your debt with a personal loan or transferring your balances to a card with a lower interest rate. Remember that you generally need good credit to qualify for these options.Increase your income. Increasing your income is another way to come up with more cash flow to put toward debt repayment. This could mean asking for a raise, getting a part-time job, freelancing, or selling unwanted items.Limit new credit card spending. If growing credit card debt is a concern, it’s important to stop using credit cards until your debt is under control.Already in Default? What to do Next

If you’ve already gone into default with credit card debt, don’t panic. There are some steps you can take to get the situation under control. 

Contact Your Credit Card Issuer

As we mentioned, contacting your card issuer is important if you need help keeping up on payments. The credit card company may be willing to work with you to create a modified payment plan. After all, they’d rather receive some money than none at all.

Consult with a Credit Counselor

Non-profit credit counseling organizations can offer you advice and guidance when you’ve defaulted. They can help you create a budget and plan to get your finances back on track. 

In some cases, they may also negotiate with your creditors on your behalf to reduce interest rates and waive fees. This is known as a Debt Management Plan (DMP). Under a DMP, you deposit money each month with the credit counseling organization. The organization uses your deposits to pay your credit cards. This is done according to a payment schedule the counselor develops with you and your creditors. 

Negotiate a Settlement

If your debt is substantial and there’s no way you can pay it back within a reasonable amount of time without facing major financial hardship, consider offering to settle the debt for less than you owe. 

Often, debt settlement involves paying one lump sum, a fraction of the total amount owed. In other cases, the credit card issuer or debt collector may allow you to split that payment into installments. Either way, creditors only consider debt settlement if you’re far behind on your payments and it’s clear you won’t be able to pay back the whole amount. Sometimes, creditors would rather accept a settlement than spend time, money, and other resources pursuing a debt lawsuit. Or they may be worried they will get nothing if you file bankruptcy.

Negotiating a settlement is challenging, however, as it requires a lot of skill, time, and patience. Suppose you’re not confident negotiating with your credit card company or debt collection agency. In that case, hiring an experienced debt settlement attorney is a good idea. They can negotiate on your behalf and ensure you get the best deal possible. This is done while still satisfying your creditors and working through the challenges that came from you being behind with your credit card company.

Get Legal Help

If you’re being sued by your credit card company or a collection agency, consider getting the right legal help. An experienced debt relief lawyer can uphold your rights, help you navigate the legal process, and even settle out of court or file a counterclaim.

Call Tayne Law Today

Defaulting on credit card debt comes with some severe consequences for your finances. However, it’s not the end of the world and can be worked through with the right help. If you have an experienced, reputable debt lawyer on your side, you can come to a resolution that fits your budget and gets the debt resolved once and for all. 

So if you’re struggling with credit card debt and don’t know where to turn, the experienced professionals at Tayne Law Group, P.C. are here to help. We can help you find the best option for you and your situation. Call us for a free phone consultation at 866-890-7337 or fill out our short contact form, and we’ll get in touch to discuss the options that we may be able to offer to help resolve your credit card debt, student loan matters, or business debt like MCAs. All conversations are confidential, and we never share or sell your information.

The post Defaulting on Credit Card Debt: How It Happens and What to Do appeared first on Tayne Law Group.

Understanding business debt collection laws is necessary for small- to medium-sized business owners navigating the complexities of commercial debt. These laws protect companies and customers. They also uphold a just and proper atmosphere for all those engaged in the debt recovery process. This blog post will delve into various aspects of federal and state-level legislation governing commercial debt recovery.

We’ll discuss the Fair Debt Collections Protection Act and state-specific regulations that may impact your approach to collecting outstanding debts. Additionally, we’ll explore ethical guidelines for commercial debt collection agencies (DCAs), including their code of ethics and validation procedures.

Furthermore, our exploration will cover limitations on collection methods imposed by law. These include legal restrictions on collection efforts and prohibitions against excessive fees. We’ll also provide insight into early delinquency cycle actions like sending soft reminders or formal written notices.

Lastly, we’ll explore options such as debt restructuring or seeking professional counseling services for debtors unable to repay their obligations. Finally, we’ll discuss handling outstanding debts after a business closure. This includes the accountant’s role in addressing these issues and minimizing negative impacts on credit ratings.

Federal and State Business Debt Collection Laws

– medium-sized business owners must understand federal and state debt collection laws to protect themselves against unfair debt recovery practices.

Fair Debt Collections Protection Act: Prohibits abusive or deceptive tactics when collecting consumer debts.Corporate entity regulations: Some states have enacted similar protections for commercial entities, so check your state’s specific debt collection laws.

Don’t let bad debt hurt your business’s cash flow – familiarize yourself with the debt collection process, payment plans, and legal action options.

Commercial Debt Collection Ethics: What You Need to Know

Commercial debt collection agencies must adhere to a strict code of ethics that emphasizes professional behavior, honesty, and politeness when attempting to collect unpaid debts.

Code of ethics: Prioritizes professionalism, honesty, and courtesy when pursuing payment for overdue accounts.Violations: If a DCA violates ethical guidelines, business owners should document the violations, report them to the appropriate state agency or attorney general’s office, and consider filing complaints with consumer protection organizations like the Fair Debt Collection Practices Act.Legal action: If a debtor requests that a DCA stop contacting them, the DCA must comply or face legal action.State laws: Commercial debt collection laws vary by state, so business owners need to familiarize themselves with the laws in their state. Claims court: Business owners can take legal action against debtors in small claims court for debts under a certain amount.Payment plans: Offering payment plans can be a helpful way to collect debts while maintaining a positive relationship with the debtor.Cash flow: Collecting outstanding debts is crucial for maintaining a healthy cash flow for small business owners.Validating Debts Before Proceeding with Actions

Collection agencies must validate debts before taking action, including threatening lawsuits or providing financial information about a company’s situation.

Legal grounds for lawsuits: Debt collectors must have legitimate reasons and evidence to support their claims before initiating legal action against debtors. [source]Consequences for false information: Providing misleading data can result in severe penalties under the Fair Debt Collection Practices Act (FDCPA) and other applicable state laws, including fines and potential suspension of their license to operate as a collection agency. [source]Limitations Placed Upon Commercial DCAs

Commercial debt collection agencies (DCAs) are hired by creditors to collect repayments from businesses that owe money on loans or other obligations. These agencies must follow strict guidelines that govern their communication methods and the fees they can charge. The guidelines ensure that DCAs maintain a professional and ethical approach when contacting debtors. They also ensure the fees they impose are reasonable and fair.

Allowed communication methods: Collectors can use phone calls, letters, and emails to contact debtors but must follow timeframes and communication guidelines.Prohibited practices regarding fees: DCAs cannot charge unreasonable amounts for collecting debts, as this would violate fair debt collection laws.Legislation governing debt collection: The Fair Debt Collections Protection Act provides guidelines for debt collection practices at the national level, with specific provisions relating to individuals rather than corporate entities.State laws: Besides federal regulations, state debt collection laws may apply to commercial debt collection agencies.Legal action: If a debtor fails to pay, a creditor may take legal action, such as filing a lawsuit in small claims court.Payment plans: Debtors may request a payment plan to repay the debt over time.Cash flow: Late payments can negatively impact a business’s cash flow and operating ability.Accounts receivable: Unpaid debts are considered accounts receivable and can affect a business’s financial statements.Collection agency associations: The Commercial Collection Agency Association is a trade organization for commercial collection agencies.Misleading practices: DCAs must avoid using deceptive tactics to collect consumer debts.Proactive Steps Against Aggressive Collection Agencies

Business owners facing unpaid bills should take proactive steps in the early stages of delinquency.

Soft reminders: Send friendly emails or make phone calls to remind clients of overdue payments.Formal written notices: Escalate to demand letters outlining consequences of non-payment and potential involvement of a debt collection agency.

Following the Fair Debt Collection Practices Act (FDCPA) and state debt collection laws is important to avoid legal action.

Business owners can also consider payment plans or small claims court before resorting to debt collection agencies.

Maintaining a positive relationship with clients is key to avoiding bad debt and ensuring healthy cash flow.

Restructuring Business Debt: Seeking Assistance

When a business owner can’t repay their debts, using personal funds is not the solution. Instead, they should seek assistance from creditors and explore options such as commercial debt counseling, consolidation, and settlement services.

Commercial debt counseling: Get help from professionals to manage outstanding debts and minimize financial strain on your business.Consolidation and settlement: Find relief from overwhelming debt burdens by consolidating multiple loans into one manageable payment. Negotiating with creditors for reduced balances is another option.

These proactive steps will protect your finances and give you the best chance of navigating challenging financial times. Learn more about small business debt relief and debt collection laws.

Dealing with Outstanding Business Debts After Closure

When a business shuts down with debts still owed, handling them properly is important to avoid damaging personal credit scores.

Accountant’s guidance: Seek advice from an accountant to manage debt repayment and negotiate with creditors, potentially reducing the amount owed or arranging better payment terms.Protecting personal credit: Working with an accountant can help protect personal credit scores from being negatively impacted by unpaid business debts.Legal action: Creditors may take legal action to collect debts, so it’s important to understand state debt collection laws and defend against any claims.Fair Debt Collection Practices Act: The Fair Debt Collection Practices Act protects consumers from misleading debt collection practices and outlines debtors’ legal rights

.

 Claims court: It can be a cost-effective way to collect debts owed, but it’s important to understand the process and follow state laws.Payment plans: Negotiating a payment plan with creditors can help manage debts and avoid legal action.Commercial collection agencies: Commercial collection agencies can help collect debts owed, but it’s important to choose a reputable agency and understand their fees and processes.FAQs concerning Business Debt Collection LawsWhat are the laws that apply to handling business debts?

The Fair Debt Collection Practices Act (FDCPA) governs debt collection, but businesses must also comply with state-specific regulations and commercial debt collection laws.

What happens when a business debt goes to collections?

Unpaid business debts can be sent to collections, where a commercial collection agency or attorney will attempt to recover payment through various methods, including legal action.

Can business debt go to collections?

Yes, collection agencies specialize in recovering delinquent accounts receivable on behalf of creditors.

What is Section 809 of the Fair Debt Collection Practices Act?

Section 809 of FDCPA outlines validation requirements for collecting debts, including providing written notice and opportunities for disputing or requesting verification of alleged obligations.

Let Tayne Law Help You

Tayne Law Group has assisted individuals and businesses with resolving their debt issues for over two decades. We offer a free phone consultation to learn more about how we can help. So contact our law offices if you’re facing constant calls and messages from debt collectors or are facing debt collections and need help with what to do next. Call (866) 890-7337 or fill out our short contact form. We never share or sell your information, and all conversations are confidential.

The post Understanding Business Debt Collection Laws for Small Business Owners appeared first on Tayne Law Group.

If you have delinquent debt sent to collections, you’re probably inundated with phone calls, letters, and messages from debt collectors demanding payment. It can be stressful to deal with credit card debt, medical debt, payday loans, MCA debt, and other types of debt that are in collections and dragging down your credit score. But if you know how to negotiate with debt collectors — or hire an attorney to negotiate on your behalf — you can potentially work out a deal that satisfies both parties and gets you out of debt faster.

Here’s what you should know if you want to negotiate with a collection agency and secure a settlement.

Know Your Rights

As a debtor, it’s important to understand your rights and protections regarding collection activities. That includes rights under the Fair Debt Collection Practices Act (FDCPA). This set of federal laws dictates what third-party debt collectors can and can’t do. Some of the major protections under this act include:

Communication. Debt collectors can’t contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m. unless you agree to it. They also can’t contact you at work if they’re told you cannot get calls there.Harassment or abuse. Debt collectors may not harass or use abusive practices toward you or any third parties they contact. That includes using threats of violence or harm or obscene or profane language.False statements: Debt collectors can’t lie when attempting to collect a debt. For example, they can’t falsely claim that they are law enforcement representatives or misrepresent the amount you owe.Legal actions. Debt collectors are only allowed to threaten you with legal action if they intend to do so.Dealing With Aggressive Debt Collectors

If you’re uncomfortable with how a debt collector communicates with you, send a written request asking them to stop contacting you. According to the FDCPA, once a debt collector receives this request, they can’t contact you again. That is, with two exceptions:

To tell you there will be no further contact.To inform you they or the creditor intend to take a specific action, like filing a lawsuit.

Note that stopping communications doesn’t mean you no longer owe the debt. You still must repay what you owe or face several potentially severe consequences.

If you feel your rights were violated, report the incident to your state’s attorney general’s office and the Federal Trade Commission (FTC). You can also file a complaint with the Consumer Financial Protection Bureau (CFPB). 

If the violations continue, you may want to consult with an attorney who is familiar with debt collection laws. If a debt collection agency violates the FDCPA, you can sue them for damages. In fact, you could potentially recover up to $1,000 if you prove a violation occurred, as well as other court costs and attorney’s fees.

Verifying a Debt

Verifying a debt is one of the first steps in negotiating with debt collectors. When a debt collector first contacts you, you have a right under the FDCPA to request a debt validation letter. This verifies the legitimacy of the debt and includes the amount owed, the name of the creditor to whom the debt is currently owed, and how to proceed if you dispute the debt. The debt collector is obligated to provide this information as long as you request it within 30 days of receipt of the initial communication from them. After receiving your verification request, the debt collector has to stop all collection efforts until they send you the validation. 

Once you receive the debt validation, review it carefully to make sure the debt is yours, and the amount is correct. If you still do not recognize the debt or find discrepancies, you may need to consult with a debt relief lawyer.

Keep a copy of all correspondence with debt collectors, so you have a record. It’s best to send any letters by certified mail with a return receipt requested.

How to Negotiate With Debt Collectors

Once you’ve verified your debt, you can start negotiating a solution to your outstanding debt with collectors.

Prepare for Negotiations

Start by getting a thorough understanding of your debt situation. This includes knowing who you owe, how much, and any interest or fees that may have accumulated. If you need clarification on any details, request them from the collector or the original creditor. It would help if you also gathered as much documentation surrounding your debts as possible, including statements, payment confirmations, and communications from creditors and collectors.

Next, assess your financial situation and determine how much you can realistically put toward debt payments. Whether it’s a lump sum or monthly installments, be honest about what you can afford to offer as repayment. This will be the basis for your negotiation of debt.

This could involve asking for a reduction in the full debt owed, proposing a payment plan, or requesting the removal of the debt from your credit report once it’s paid. Be prepared to explain why the collector should accept your offer.

Communicating the Right Way

When contacting debt collectors and beginning negotiations, it’s important to use the right communication methods. For instance, even if the conversation gets tense, maintaining your composure will help you stay in control. You should always be professional and courteous.

It’s also important to be honest in your conversations. Don’t make promises you can’t keep or misrepresent your financial situation. Let them know if you can’t afford to pay the amount they’re demanding. At the same time, however, you don’t want to provide unnecessary information that could be used against you. Be careful not to give the collector any additional personal or financial information they don’t need, including details about your income, expenses, or other debts. (Often, a debt relief attorney can negotiate without disclosing personal details and avoid disclosing certain information.)

Also, keep detailed records of your conversations, including the date and time, the person you spoke with, and what you talked about. This information can be important if there’s a dispute later on. Finally, whenever possible, communicate with debt collectors in writing for a record of what’s been said and agreed upon. Even if you negotiate over the phone, follow up with a letter confirming the agreement’s details.

Tips for a Successful Negotiation

When negotiating with debt collectors, there are a few tactics you can use to ensure you reach the best deal for you:

Start low. If you’re negotiating a settlement amount, starting with a low offer is best. The collector may counter with a higher amount, but this gives you some wiggle room to negotiate.Emphasize your hardship and desire to settle. Debt collectors will only agree to a settlement if it’s clear that you don’t have the resources to pay in full, but you are willing to pay something. Many debt collectors would rather agree to a settlement than spend time and money on a lawsuit or ongoing collections efforts. However, remember that’s not always the case, and they could still decide to pursue legal action. Only share what’s necessary. Remember, only provide information about your income, expenses, and other financial information that is directly requested. The collector could use this information to demand a higher payment and possibly to further collect on the debt or enforce a judgment against you.Be flexible. A lump-sum payment is common when settling debt, but it’s not the only deal you could work out. For example, a debt collector may also agree to a partial or reduced monthly payment plan, allowing you to pay less overall but spread out payments if you don’t have much cash. Consider hiring a professional. Consider hiring a debt settlement attorney if your debt is substantial and the negotiation process is overwhelming. They can guide you through the process and potentially negotiate a better deal on your behalf. After all, debt relief attorneys have plenty of experience with these types of debt negotiations and often know what offers work well.Finalizing the Debt Settlement Agreement

Once you’ve reached an agreement with a debt collector, follow these steps to wrap up the deal and begin getting your finances back on track:

Get the settlement offer in writing.

Before you make a payment, request a written agreement stating the terms of your settlement. This letter should detail the amount you agreed to pay, the payment date(s), and the payment settled the debt in full. This is your proof in case there are any disputes in the future.

Save all documentation.

Keep the debt settlement agreement letter and proof of your payments. You should hold onto this documentation for several years in case questions arise later. Also, this will be necessary if the debt appears on your credit report, and you need to dispute that.

Monitor your credit report.

Check your credit report a few weeks after settling the debt to ensure the account is reported as “settled” or “paid.” If the debt isn’t reported correctly, you can dispute the error with the credit bureaus (Experian, Equifax, and TransUnion) and provide them with your proof of settlement.

Understand the tax implications.

Keep in mind that settled debt might be considered taxable income. That means you may need to pay income taxes on the full settled amount for the year that it’s canceled. The IRS considers any debt forgiven over $600 as taxable, and you should receive a 1099-C form if this is the case. Consult with a tax professional or experienced debt settlement attorney to understand your tax and other financial obligations when settling debt and how to handle paying your tax bill.

Stay on top of your payments.

Reaching an agreement with debt collectors can take quite a bit of time and effort. Once you’ve reached a settlement, you can finally start working toward a debt-free future. So be sure to pay up according to your revised contract. Otherwise, you could end up right back where you started. Even one missed payment can cause problems.

Do You Need to Hire a Debt Help Attorney?

While you can negotiate with debt collectors independently, not everyone has the time, skills, patience, or desire. Suppose you have multiple debts with different creditors. In that case, if the amounts are large, or if legal action is threatened or involved, it’s probably a good idea to hire a legal professional with experience settling debts. While it might cost a little, the value of peace of mind and having the debt settled correctly is priceless.

A debt relief attorney can negotiate your debts on your behalf and represent you in court if you are sued or have been sued by a creditor. They can also ensure your rights are protected throughout the process. Plus, an experienced attorney may be able to secure a better deal than you could on your own.

Let Tayne Law Help You

Tayne Law Group has assisted individuals and businesses with resolving their debt issues for over two decades. We offer a free phone consultation to learn more about how we can help. So contact our law offices if you’re facing constant calls and messages from debt collectors or are facing debt collections and need help with what to do next. Call (866) 890-7337 or fill out our short contact form. We never share or sell your information, and all conversations are confidential.

The post How to Negotiate with Debt Collectors: A Step-by-Step Guide for Successful Debt Settlement appeared first on Tayne Law Group.

When you know you have debt that’s gone to collections, it’s a stressful financial situation. You might wonder what rights you have, whether debt collectors call your work and expose information to your employer, or what methods of contact are legal altogether. You’ll likely also see your debt in collections on your credit report.

It’s essential to understand your rights and what debt collectors can and cannot do so you can act accordingly with the support of federal and local debt collection laws to help protect you. If you’ve found yourself with credit card or other types of debt in collections, here are some facts to help you understand what you can do and what to consider in your long-term financial plan.

What happens when a debt collector contacts you for the first time?

When you receive contact from a debt collector, don’t panic. The call may come as a surprise and you might be caught off guard. The collector calling you may pressure you to pay the debt immediately, so you must know what rights you have before disclosing any information to someone calling you about a debt they claim you owe.

Often these calls come from unknown or restricted numbers. The first thing you should consider is confirming the debt collector’s information. Ask them to confirm the name of the debt collection agency they are working for, their main phone number, and their physical address.

Within five days of contacting you, debt collectors must also validate the debt with you. They’re required by law to tell you the current creditor’s name, the amount of the debt, and how to get the original creditor’s name. Consider requesting this validation of debt information in writing, called a debt validation letter. This way, you’re able to reference a paper trail of documentation related to the call and the debt if needed.

If a debt collector is unwilling or unable to provide any of the above information, you should consider this a red flag and not give any further information and hang up the phone.

Can creditors call your work, too?

Deb collectors may call a place of employment to pressure debtors to make a payment. According to the Fair Debt Collection Practices Act (FDCPA), a federal law, this is allowed as long as they don’t have prior knowledge that your workplace doesn’t allow calls of this nature.

If this happens and you receive a debt collection call at work, consider telling the collector that you can’t receive calls at work and not contact you during your working hours. This is one of your rights when you have debt in collections, and the creditor must oblige. If they persist in calling you at work after you told them not to, you should consider contacting the Attorney General’s office or the FTC to file a complaint against the debt collector and agency who called you.

One exception to be mindful of is when a debt collector has gotten a court order to garnish your wages. They can then contact your employer about the alleged debt to collect the monies you owe. This generally only happens if they’ve won a collection lawsuit against you. If you become aware of a debt case against you, consider having your own attorney in your corner to help guide you in the best direction to resolve the debt.

In what other ways can debt collectors contact you?

According to the Fair Debt Collection Practices Act, a debt collector could contact you via phone as long as they refrain from harassing, abusive, or unfair practices. However, with the rise of the digital age, you’re probably thinking about other communication means from debt collectors contacting you like texts, emails, and other e-communications like social media.

A recent ruling by the Consumer Financial Protection Bureau updated these rules to acknowledge that lenders can indeed use texts, emails, and even social media DMs to contact you about your debt. While these new communication channels are now fair game, it is essential to remember that all your previous rights with debt collectors still apply.

You can still consider telling a debt collector to stop contacting you, request that the debt be validated, and are not subject to any forms of harassment, vulgar language, etc., from a debt collector in the course of collecting a debt against you.

Leslie H. Tayne, Esq., founder and head attorney at Tayne Law Group, P.C., was featured on ABC7 with Nina Pineda discussing what the new CFPB rules mean for consumers when they take effect in 2021 and what you can do to opt out of digital communications from debt collectors.

How can you stop a collection agency from contacting you further?

As noted above, you do have the right to tell a debt collector to stop contacting you and get them to stop. You can do this a few different ways, including a long-term financial plan to pay off the debt.

Directly on the phone. When a debt collector contacts you, there is no need to wait if you want them to stop contacting you immediately. You can speak directly to the creditor the first time they call, and request no further contact from them.Write a letter. If you want to have a documented paper trail of this request, you can send a cease and desist letter to the debt collection agency. You’ll have to confirm the companies’ contact information to send the letter directly to write this.Create a payment plan. While other options provide a shorter-term solution, consider making a debt payment plan to begin paying off your debts and start on the path to debt-free living. You can even consider contacting a debt solutions law firm that will work with the collectors on your behalf to find a payment plan that works for you and one in which the creditor will be happy with too. Remember to work with a reliable and trustworthy firm for debt solutions to resolve the matter properly.The Bottom Line

When you’re struggling with debt, you may get calls from creditors and be unsure what to do next. Understanding your rights and the steps you can take to settle your debt in a way that works for you is essential.

If you’re unsure of where to turn for help on how to take these next steps or creditors are calling you, contact our team of debt relief professionals at Tayne Law Group, P.C. Contact us today at 631-470-8204 for a free, no-obligation phone consultation to help you understand your rights and get a strategy to resolve your debt that makes sense and protects your credit. Make the phone call today that can help stop debt collection calls and resolve your debt now.

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When you borrow money from a creditor, you have a legal obligation to repay it. As a result, having unpaid credit card debt can lead to a lawsuit from a credit card company you owe.

If you’re behind on debt, getting back on track is in your best interest before you’re taken to court. Debt settlement may be an option. Understanding how to settle credit card debt can help you see how you can get debt relief and avoid being sued.

What are delinquency and default?

Delinquency and default are used when a borrower is behind monthly payments, but they are not interchangeable.

Delinquency typically means the borrower has missed a single credit card payment. Depending on your creditor, the days past your due date when you become officially delinquent may vary.Default is when you have several missed payments over some time. Default, therefore, is a step beyond delinquency. Once again, your lender determines the amount of time at which you go into default. It may only be 30 days for some, while it may be several months for others.

Understanding where you stand on your debt can help you determine whether you’re at risk of being sued and whether you should consider settling your debt.

Should you settle your debt?

How can you know when you should settle your debt or if you’ll be able to? If you’re past due, it may be worth a shot in these cases:

Your debt is in collections: If you are delinquent or in default, your original creditor may have sent your debt into collections, selling it to a third-party agency. These are typically the companies you receive collection calls from. Receiving these calls can be stressful and can have a major impact on your quality of life. Settling your debt can help stop these calls.You’re struggling to manage it on your own: If your debt is at such a point that you’re having trouble fathoming how you will get out of it, debt settlement may be an option for you. Debt settlement is generally best suited for a large amount of debt.You’ve been sued for your debt: If you’ve been sued for your unpaid debt, settlement may be one of your only options. If the credit card issuer takes out a judgment against you — meaning you don’t show up in court or you lose the case — settlement is generally one way to satisfy the suit.You’ll have negotiating leverage: Additionally, having debt that you’re delinquent on or in default on can give you leverage in settling your debt. Often, creditors or collections agencies are more willing to settle if you haven’t made debt payments. The creditor may feel that settling is the only way to recoup any debt. They would rather receive a percentage of the balance than none of it. This isn’t always necessarily the case. It’s not advisable to go into default to gain negotiating leverage for a settlement agreement.

Keep in mind there are many consequences to owing the debt. Missed and late payments will be reported to the credit bureaus, appear on your credit report, and harm your credit score. You can also rack up late fees and other fees that cause your debt to grow. The lender may eventually charge off the debt, harming your credit history further.

How do you settle debt?

Knowing the ins and outs of how to settle your credit card debt, whether you’re doing it yourself or working with a professional, can help make the process run as smoothly as possible. Settling debt involves contacting the creditor with a settlement offer in mind. The creditor will require a description of the situation. They then may allow you to make a lump sum payment to settle the debt.

Persistence is key — the creditor may not agree to the offer on the first contact. While learning how to settle your debt is possible, a debt professional will likely have more success and help take some of the stress out of the process.

Should you work with a debt professional?

A debt professional will be well-versed in how to settle credit card debt. Working with one, such as a debt attorney, can have several advantages in the settlement process:

Experience with debt negotiation tactics: A debt professional will know what tactics work best when working with creditors. Professionals will understand the ins and outs of successful negotiating. As a result, they will likely be more successful than you would be on your own.Existing relationships with creditors: Debt professionals will likely have existing relationships with many creditors and lending companies. As a result, the creditor will know they’re working with a reputable source. When a creditor knows they’re working with a professional that will get them their money on time, they’ll be more likely to settle.Legal guidance: If you’re specifically working with a debt attorney, you’ll have built-in legal counsel if and when you’re sued for your unpaid debt. If you haven’t been sued before you begin the settlement process, there’s a chance you will be in the midst of it. This may happen because you will continue not to pay the debt. Having a debt attorney on your side can help you navigate the stressful and overwhelming legal process. This can help you avoid making costly mistakes.

A debt professional can help you deal with debt collectors and find the right repayment solution. That could include debt consolidation, a debt management plan, lump-sum settlement payment, or another repayment arrangement.

How do I know if a debt professional is reputable?

Lots of debt settlement companies exist. Working with the wrong debt relief company could cost you more and leave your debt unresolved. Some strategies exist to help you find a professional who knows how to settle debt and still has your best interest in mind.

Do your research: Read online reviews and ask around to family and trusted friends. You can glean much from what others say about a company or professional. You can also check if they’re accredited and have had any complaints with Federal Trade Commission (FTC).Know the red flags: Scam debt settlement companies are known for making promises they can’t keep. If a company advertises that they can settle your debt for a certain percentage or in a specified amount of time, they’re likely a debt settlement scam. Because every consumer’s financial situation is different, it’s impossible to make such a blanket statement. Scam companies may also have a PO box, rather than an actual address. They may also only have recorded phone menus that don’t allow you to speak to a real person.The bottom line

Knowing how to settle your credit card debt before going to court can help avoid more stress and expenses. Debt settlement is generally reserved for significant amounts of debt or when you’ve been sued for your debt. You can undertake this process yourself, but working with an experienced, trusted professional is generally in your best interest.

If you’ve been sued for debt or are wondering if credit card debt settlement is right for you, Tayne Law Group, P.C. can help! Our team of seasoned debt professionals can guide you through the process and help get your finances back on track. Call us for a free consultation today at 866-890-7337 or fill out our short contact form and we’ll get in touch!

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If you’re struggling with credit card debt payments, medical bills, personal loans, or other types of debt, a debt settlement process could solve your financial burden. When done right, debt settlement has many benefits. Done wrong, you could face challenges to your credit report and finances. You could find yourself with a judgment or lien placed against you by your creditors. Before you pursue this option, it’s crucial to weigh the major pros and cons of debt settlement first. 

The debt settlement process can speed up repayment and reduce the total amount owed while avoiding lawsuits or bankruptcy. However, some potential drawbacks include an impact on your credit, high fees, and even scams to watch out for. If you’re interested in settling debts, read on to learn the debt settlement pros and cons you should know about. You’ll also determine whether it’s the right move for your situation.

The Pros of Debt Settlement

By negotiating with creditors to settle for less than the full amount, you can quickly lower debt and save money. Let’s explore some key benefits of a settlement agreement.

Speeding up the Repayment Process

One major advantage of debt settlement is that it accelerates the repayment process. Rather than stretching out payments over a lengthy period, you can possibly arrange for one reduced lump sum payment. Alternatively, you can arrange an abbreviated repayment plan instead.

Reducing the Total Amount Owed

A successful negotiation can result in your creditor agreeing to accept less than what you originally owed. This means you will be out of debt sooner and also potentially save thousands on payments and interest charges.

Simplified Repayment Plan

Instead of juggling multiple creditors and payments, debt settlement allows you to consolidate your debts. You can consolidate into a single lump-sum payment or a series of negotiated settlements. This can simplify the repayment process and make it more manageable to handle.

Avoiding Lawsuits and Bankruptcy

When your account has been delinquent for an extended period, it eventually goes into default. Once you reach this stage, your creditors may sue you for the unpaid debt. Losing a debt lawsuit can result in having your bank account frozen, wages garnished, and assets seized. Plus, even if you win your case, you may have to spend a ton of time and money on going to court and associated fees with losing the lawsuit. By offering to settle the debt, your creditor may be willing to end the lawsuit and resolve matters out of court. It is advisable to use an experienced debt relief attorney who knows how to navigate not only debt settlement with the creditor but the Court process too. 

Bankruptcy is another lengthy and complex legal process that may be necessary if your debt is too burdensome to handle. However, seeking alternatives to bankruptcy options are solid solutions. These options can include debt settlement and negotiating resolutions with your creditors instead. In addition, by avoiding filing for Chapter 7 or Chapter 13 bankruptcy, you can keep your credit report and score higher since the reporting of a bankruptcy can stay on your which typically for seven to 10 years, helping you build up good credit faster.

The Cons of Debt Settlement

Despite its potential benefits, there are drawbacks associated with pursuing debt settlement as well.

Negative Impact on Credit Score

Part of negotiating a debt settlement is stopping payment to your creditors. If you’re in the position of needing to settle your debt, you probably already have a history of missed payments that have damaged your credit score. A lower credit rating makes it difficult to borrow money in the future. It can also prevent you from securing an apartment or getting certain jobs. Even so, eliminating your debt and getting a fresh start is one of the best ways to repair your credit immediately. If done right with an experienced debt settlement attorney, you might find your score actually goes up.

Accumulation of Late Fees and Interest Charges

In addition to negatively impacting your credit score, ceasing payments while negotiating a debt settlement can result in late fees and interest charges. These additional costs could offset any savings achieved through settling debts at a reduced amount.

Tax Implications

The forgiven debt amount through debt settlement may be considered taxable income in certain situations. That means you’d owe taxes on the settled amounts over $600 in the year it’s forgiven. Therefore, it’s essential to consult with a tax professional to understand the potential tax implications of debt settlement and a reputable debt relief attorney who can help to minimize this for you. 

Creditor Cooperation

There’s no guarantee that creditors will agree to settle your debts. They may pursue legal action or collection efforts to recover the full amount owed. It’s crucial to understand the likelihood of success and the willingness of your creditors to engage in debt settlement negotiations. It’s not uncommon for creditors not to work with debt settlement companies. Choosing the right solution is key to getting out of debt. 

Scams in the Debt Settlement Industry

Not all companies offering debt settlement services deliver on their promises; some may even take advantage by charging high upfront fees without providing any real results in return. Debt settlement companies pop up frequently, and just because they solicited you doesn’t mean they are legitimate. To protect yourself from scams within the debt relief industry, research providers thoroughly before enlisting their assistance and look into warnings issued against specific businesses by the Consumer Financial Protection Bureau (CFPB). Visit the CFPB enforcement actions pageto check for any recent actions taken against a particular provider you’re considering working with.

Avoid high upfront fees with guaranteed results: Be cautious of companies charging excessive upfront fees for their services, especially those accumulating rapidly with no real progress toward debt resolution. A reputable company should be transparent about its fee structure and provide clear evidence of successful negotiations. In addition, promises or guarantees made upfront can be a red flag. No one can guarantee any results with debt solutions before work starts since it’s a dynamic industry with many variables that impact the debt settlement process.  

Thoroughly research providers: Prioritize researching potential debt settlement providers to ensure they have a proven track record of success. Look for customer reviews, testimonials, and any possible complaints filed with organizations like the Better Business Bureau (BBB) and the type of business they are. Generally, an attorney will be held to a higher standard than just some company. Additionally, consult friends or family members who have used similar successful services for recommendations.

Debt Settlement Alternatives 

If you’re considering alternatives to working with a debt settlement company, several other viable strategies exist. Some popular options include:

Budgeting and Expense Tracking: By creating a detailed budget, tracking your spending habits, and cutting unnecessary expenses, you may be able to allocate more funds towards paying off your debts faster without seeking professional assistance. This will be helpful too in speaking with a debt relief attorney so you know what you can afford and how and what solutions make sense. DIY debt settlement: In some cases, it’s possible to negotiate lower interest rates or payment plans directly with your creditors without involving third-party debt settlement companies. This approach requires persistence and negotiation skills but could save money on fees associated with hiring professionals but can have many challenges since you are not an expert with creditors and the law.Credit Counseling: Non-profit organizations such as the National Foundation for Credit Counseling (NFCC) offer free credit counseling services to help you create a personalized debt repayment plan and provide financial education resources. A reputable credit counseling service can also set you up with a Debt Management Plan (DMP), an agreement between you and your creditors to repay your debts over time with reduced interest rates and waived fees. Be sure to research not-for-profits since the people are still paid for their work.Bankruptcy: While it should be the last resort due to the severe impact on your credit score, bankruptcy can provide a fresh start. Chapter 7 bankruptcy wipes out most of your debts, while Chapter 13 allows you to repay a portion of your debts over three to five years. You have to qualify for bankruptcy, and a reputable bankruptcy attorney can assist you in determining if filing is right for you. However, there are costs associated with this and less control over getting out of debt since you must file bankruptcy in court.

Evaluating all available options before committing to any specific strategy will ensure that you make the most informed decision when seeking relief from credit card debt, personal loan debt, or other types of consumer debt.

Comparing Debt Settlement vs. Consolidation

Both debt settlement and consolidation can help you get out of debt, but they take different routes to achieve their goals. This section will examine the distinctions between these two strategies and analyze their respective benefits and drawbacks.

Differences in Approach

Debt settlement involves settling your debts for less than the full amount owed. This process involves negotiating with creditors to reduce your overall balance. However, it may negatively affect your credit score as you stop making payments during negotiations.

Debt consolidation, on the other hand, combines multiple debts into one new, manageable payment with a potentially lower interest rate. This approach typically involves taking out a debt consolidation loan or transferring balances onto a low-interest credit card (balance transfer card). Again, the goal is to simplify monthly expense management processes while maintaining regular payments.

Pros and Cons of Each MethodDebt Settlement Pros:Potentially reduces the total amount owed through negotiation.A faster way to pay off debts compared to minimum payment plans.Simplifies the repayment process.Helps avoid debt lawsuits or filing for bankruptcy.Debt Settlement Cons:Negative impact on credit score due to stopped payments during negotiations.Creditors may not agree to a deal.Potential tax implications.Risk of scams within the industry.Debt Consolidation Pros:Simplifies monthly payments by combining them into one manageable sum.Lower interest rates, saving money over time.Debt Consolidation Cons:It may not address underlying spending habits that led to debt accumulation in the first place.Possible fees associated with balance transfers or loans can add to overall costs if not carefully considered.Must pay the full amount owed.FAQ: Debt Settlement Pros and ConsWhat are some pros and cons of settling your debt?

Pros of debt settlement programs include speeding up the repayment process, reducing the total amount owed, and avoiding lawsuits. Cons involve a negative impact on credit score, accumulation of late fees and interest charges, and results that can’t be guaranteed.

Is debt settlement good or bad?

Debt settlement can be beneficial for those struggling with unmanageable debts. However, weighing the pros and cons before deciding if it’s right for you is essential.

What are the consequences of settling a debt?

The consequences of settling debt may include a negative impact on your credit score due to the account being reported as “settled” rather than “paid in full,” possible tax implications on the forgiven portion of settled debt, accumulation of late fees and interest charges during the negotiation period, and potentially high service fees from providers.

Contact Tayne Law for Debt Settlement Help

Debt settlement can be a viable option for those struggling with personal debt. However, if you are considering debt settlement, weigh the pros and cons carefully before deciding. 

At Tayne Law Group, we offer a free phone consultation with one of our experienced debt relief attorneys. So whether you’re struggling to keep up with your bills, falling behind on payments, or don’t have any money left over after paying your bills, there’s a good chance we can help you. When you’re ready for a free consultation, contact our law offices by calling (866) 890-7337 or filling out our short contact form. We never share or sell your information, and all conversations are confidential.

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