Advice to Settle a Lawsuit
How do I go about settling an account for which I have received a summons?
I received a summons for a credit card debt originally with bankofamerica...debt is currently 2860.00 being held by pinnacle collections. I want to pay off, just received my taxes but not sure how to start or how much to offer...PLEASE HElP - rachel. thank you!
Thank you for your question, Rachel. Settling with your creditors is a fairly straightforward process, but one which can be intimidating to many consumers due to the generally negative feelings most have toward debt collectors and to debt as a whole. This reluctance to work directly with their creditors leads many Americans to seek the assistance of debt resolution professionals, such as debt negotiation and consumer credit counseling firms. However, because of the small amount of your debt and the fact that the creditor has already filed a lawsuit against you, I do not think that employing a debt settlement or credit counseling program would be a cost-effective way to resolve this debt. Rather, I encourage you to contact the debt purchaser or its attorney directly to discuss the possible settlement of your account. To learn more about settling with your creditors, I invite you to visit the Bills.com Debt Negotiation page at http://www.bills.com/debt-negotiation-and-settlement/.
Creditors will often accept at little at 40% or less of the balance owed to settle outstanding debts. However, creditors usually demand a significantly higher percentage to settle accounts which are already in litigation. In my experience, most creditors demand 60% to 80% to settle accounts on which they have filed a lawsuit, though they will sometimes accept less if the consumer can demonstrate a significant financial hardship, such as a job loss, extended illness, etc. In order to settle your account, you should first call the company that has purchased your account and express your desire to settle the debt; if the creditor is represented by an attorney in the case against youÂ’re you should probably make your initial contact with the law firm. Generally, I advise consumers to not make the initial settlement offer, but to ask the creditor what it can accept to settle the outstanding debt. From there, you and the creditorÂ’s representative can discuss your financial hardship and inability to pay the full balance, and hopefully reach an amicable and reasonable settlement of the debt. If you are able to finalize an agreement with the creditor, you should request that the creditor send you a written settlement offer before you make payment. You should have funds available before you initiate settlement negotiations, as most creditors will expect payment of any settlement within a few days.
Since the creditor has filed a lawsuit against you for collection of this debt, you may want to consult with an attorney to assist you in defending yourself and in negotiating with the creditor; however, many consumers are able to resolve this type of case without the assistance of an attorney, so you will need to make this decision based on your own comfort level. To learn more about the various options available to assist consumers who are struggling to pay their debts, I encourage you to visit the Bills.com Debt Help page at http://www.bills.com/debt-relief/.
I wish you the best of luck in resolving this lawsuit, and hope that the information I have provided helps you Find. Learn. Save.
Dealing with debt
Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q4 2022 was $16.91 trillion. Housing debt totaled $12.26 trillion and non-housing debt was $4.65 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
Collection and delinquency rates vary by state. For example, in Mississippi, 17% have student loan debt. Of those holding student loan debt, 11% are in default. Auto/retail loan delinquency rate is 8%.
Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.