How to Settle Credit Card Debt When A Lawsuit Has Been Filed?
Dealing with an outstanding debt that you can't pay is stressful. It's especially stressful to be served with a lawsuit as a result. However, it's important to know that being sued over credit card debt isn't the end of the world. You have many options. One of the many options you can consider is debt settlement. You need to know how to settle credit card debt when lawsuit has been filed.
The first step to dealing with a lawsuit is informing yourself. You need to learn as much as you can about how you can settle debt. You also want to learn about the other possibilities and options. You don't necessarily want to jump right into settling the debt. Do a little research before you jump to any conclusions.
Once you have managed to settle the debt, you will have resolved the issue. If the creditor agrees upon a settlement amount, you just have to pay it to put the matter behind you. Then, you can focus on rebuilding your credit.
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How Are Outstanding Debts Handled?
A creditor will usually wait quite a few months after a first missed payment before filing a lawsuit. In fact, some creditors won't file suit at all and will instead sell the debt to another company. However, an outstanding debt hasn't necessarily gone away if a lawsuit isn't filed immediately. A company that buys an outstanding debt can decide to file suit.
This means that a lawsuit can come some time after a consumer has stopped making payments on a credit card or loan account.
There are numerous factors that determine whether a lawsuit will be filed over outstanding debt. One important factor is how much the account holder owes. If an outstanding debt is small, it's unlikely that the creditor will file a lawsuit. That's because the legal costs of pursuing the lawsuit could be higher than the debt is worth.
Some credit companies and debt collection agencies are more likely to pursue debt through lawsuits than others. Each creditor makes its own decision on whether to file suit. Unpaid debt can pass through the hands of numerous creditors before a lawsuit is finally filed. If a credit company sells the debt, the debt is marked as "charged-off" on the consumer's credit report.
What Is a Collection Lawsuit?
In a collection lawsuit, the lawyer for a creditor files a lawsuit. These cases take place in civil court as opposed to criminal court. One thing it's important to know if you're facing such a lawsuit is that you can't go to jail as a result.
In the United States, those with unpaid debts can't be incarcerated over these debts.
Many consumers worry about the legal consequences of facing a collection lawsuit. While a consumer's wages can be garnished, he or she will never have to go to jail because of such a lawsuit.
After the lawyer files the case, the account holder will receive a summons to appear in court. This summons includes a copy of the complaint to explain in detail what the summons is for. The amount owed should be included in the summons and complaint copy. At this point, it's essential for the account holder to show up in court or make arrangements with the creditor beforehand.
If the account holder doesn't respond or show up in court, a default judgment usually occurs. The default judgement will inevitably be in the creditor's favor as a result. A default judgement will generally involve garnishing the account holder's wages or placing a levy on the account holder's bank account.
Understanding the Statute of Limitations
The statute of limitations is different from the amount of time a negative mark stays on a credit report. Your credit report could still show an outstanding debt even after the statute of limitations for collection lawsuits has passed.
One thing that consumers need to know is that there is a statute of limitations on debts. This means that the creditor only has so much time to file suit in pursuit of outstanding debts.
The length of the statute of limitations varies by state. In general, the statute of limitations on collection lawsuits ranges between three and ten years.
Consumers need to consider how much time has passed since they incurred the debt when they receive a collection lawsuit summons. Debt collectors can't collect after the statute of limitations has passed. The case should be immediately dismissed if the lawsuit was not filed in time.
Evaluating your options
Settling your debt is just one of several options when you're dealing with a collection lawsuit. Knowing how to settle credit card debt when lawsuit has been filed is important. However, it's also important to understand your other options. If you settle the debt, you might be wasting your money. You need to evaluate your particular situation. It could be that another option is more advisable.
The following are four options you have when you receive a collection lawsuit summons:
Fighting the lawsuit
It might be possible to successfully fight the lawsuit. Perhaps the creditor has a weak case against you. To win the lawsuit, the creditor needs to prove that the debt is yours. The creditor also needs to file suit within the statute of limitations. Fighting the lawsuit might be especially advisable if the amount owed is very high.
If you fight the lawsuit, you should hire an attorney. It's best to work with a legal professional who already has experience defending clients in similar cases. The resulting legal costs could be significant if you decide to fight the lawsuit. Yet in the long run, paying these legal costs might be less expensive than settling the debt.
Paying the full debt
If you have the funds available, you might want to just pay off the full amount of the debt. Paying off the full amount of the debt might result in less damage to your credit. Also, if you pay the full amount you won't have to worry about negotiating with the creditor. One great way to pay off the full amount is to refinance your debt. You might be able to get a good deal on a loan to pay off the debt. This could be a good solution if your credit is still in good enough shape to qualify you for a refinance loan.
Getting on a payment plan
Creditors are often willing to establish a payment plan to those who owe them outstanding debts. If you contact the creditor and request a payment plan, the creditor might agree to such an arrangement. With a payment plan, you can make small repayments rather than paying a lump sum. This is likely to be easier on your budget. However, you'll run into issues again if you fail to make one of your payments. This could result in another lawsuit and more bad marks on your credit report.
Negotiating a settlement
If you can afford to make a lump sum payment but not the full amount, you can negotiate a settlement. However, negotiating a settlement can be challenging. Of course, the creditor wants to get as much of the debt back as possible. When you are negotiating a debt, it can help to work with a lawyer or a debt settlement service provider. These professionals might have more success with minimizing both the settlement amount and the impact the outstanding debt has on your credit report.
Steps to Go Through to Settle Your Debt
Once you've decided to settle your debt, you need to understand the steps you'll go through. There are numerous things you need to do if you want to maximize the success of negotiating with your creditor. The more informed you are throughout the process, the better off you'll be.
1. Be sure to respond to all correspondence from the court promptly
Make it a priority to read and understand correspondence from the court. Remember that it's important to get in touch with your creditor before any court date. A default judgment could quickly be decided on if you fail to show up in court. After this happens, you probably won't be able to change it. This could result in a scenario where the full amount of your debt is taken from your wages and/or bank account.
2. Do all the necessary research
Research and carefully read over all correspondence from both the court and your creditor. Determine how much money you owe. Find out how long you've owed the debt for. Also, look for any instructions on how you should get in touch with your creditor. You should also research the creditor in general. Find out online how that creditor typically handles lawsuits and settlement negotiations. This can help you get a good idea of how much you need to offer for a settlement.
3. Get in touch with the creditor to begin negotiations
When you're prepared, you need to contact the creditor. When you contact the creditor, you'll need to have your account number and other account details available. Be courteous but firm when negotiating with the creditor. If you don't feel comfortable handling negotiations yourself, you might want to work with an attorney or debt settlement company. This way, you can have an experienced professional negotiate a settlement on your behalf.
4. Be Willing to Compromise
You can't be too rigid on the settlement amount. Your creditor has to agree to the amount. While you want to pay as little as possible to settle, your creditor wants to maximize the settlement amount. If the creditor has a strong case against you, your creditor will be unlikely to settle for a low ball offer. This makes it very important to be realistic and willing to compromise.
5. Work toward stronger credit in the future
You might currently be drowning in debt if you've had a collection lawsuit filed against you. That's not a fun way to live. Once you've reached a settlement, it's time to start changing your spending habits. Fortunately, there are a lot of resources that can help you to manage debt. One such resource is Debtry. You can use the resources offered on sites like Debtry to calculate your debt load. You can also use these resources for advice on how to handle debt or refinance debt. You need to make sure you don't miss any more payments in the future. That's why debt management resources are so important.
Finally,
Now you know how to settle credit card debt when lawsuit has been filed. You also understand what your options are when you are sued over a debt. Take this information and choose the best course of action in your situation. The important thing is to relax and not get too stressed out. You can overcome your current financial difficulties with a bit of time, effort, and patience.
It's essential for you to focus on the future. At present, your credit is probably damaged if you are facing a lawsuit. You can rebuild your credit and avoid future issues with debt down the road. This will put you on a better footing financially.
Dealing with credit and debt issues is stressful. You enjoy the greatest peace of mind in life when you're able to stay on top of your finances. Don't let financial issues create any more problems for you. Take control of your finances by setting a budget and a financial plan today!