While enrolled in a
debt settlement program, lawsuits are a possibility rather than a probability. However, in the event you are
served with a lawsuit, we want to inform you of some basic information pertaining to the legal process and what
you can do on your own to handle the situation. Keep in mind; laws very from state to state, county to county,
and city to city, so the information provided below should not be taken as legal advice, but as simple
explanations of terms and frequently used options to resolve the lawsuit.
THE BASIC LAWSUIT
A lawsuit is
initiated when the Plaintiff files a Complaint with the Clerk of the Court. That Complaint, along with a Summons
is served on the Defendant. You can be served in person, via mail, left attached to your door, etc. Once the
Summons and Complaint are served on the Defendant it is now your responsibility to take
As the Defendant you have
several options in dealing with the lawsuit. Please note, you always have the option to seek the advice of an
attorney in your area if you are not comfortable with the process.
The second option can be done with or
without filing an Answer. However, it is important to note that if an Answer is not filed, the Plaintiff’s attorney
can file for default judgment once the time-frame expires. Contacting the Plaintiff’s attorney to make arrangements
does not substitute for filing an Answer.
In most consumer
credit lawsuits the Plaintiff’s attorney will offer two options to resolve the case. The first option is a
settlement on the account for less than the balance owed. In doing a settlement, most attorneys offer between
65-80% of the balance. However, this amount can very drastically depending on each individual’s circumstance.
For example, if you are not employed they may accept less of a settlement than they would on someone who is
employed and making decent wages. Settlement typically require one lump sum payment for the agreed upon amount.
Sometimes, the Plaintiff’s attorney will allow you to make payments over a couple of months so it is important
to specify what you are able to do.
Once an amount is
agreed upon, it is MANDATORY that you get the agreement in writing
prior to making any payments. This is to protect you from any further collection attempts on the account. Make
sure that the letter states the account will be ‘settled in full’ upon clearance of the payments. All collection
law firms will send you this letter and it is standard procedure for them to do so.
As soon as the
payment clears the Plaintiff’s attorney will file all appropriate documents with the court to notify them that
the case has been settled. You should receive copies of these filings in the mail. Hold on to all documents you
receive just in case you may need to rely upon them in the future; though highly unlikely.
If coming up with a
lump sum settlement is not financially possible at the time you can request a monthly payment arrangement be set
up. Typical arrangements are on the FULL balance, plus interest and costs. However, as with the settlement
figure, this can be negotiated based upon your financial situation.
arrangements are set up on a Stipulated/Consent/Agreed Judgment. This means you will have to sign the agreement
and return it to the Plaintiff’s attorney to be filed with the court. Once the agreement is signed and filed it
is a legally binding agreement. That said, if you default on the agreement the Plaintiff’s attorney can take
further legal action against you to recover the money owed. It is important to remember, you are agreeing to a
judgment being entered against you. The judgment will remain in effect until the balance is
If the Plaintiff’s
attorney does not require you to sign the agreement it is still wise to ask for it in writing. Doing so will
clarify what you are agreeing to and give you all the necessary information for you to make timely