How Do I Negotiate a
Settlement in a Debt Case?
I AM BEING SUED. IS IT TOO LATE TO WORK OUT A SETTLEMENT AGREEMENT? No. The parties can agree to settle a case at anytime before the judge enters a final ruling.
WHAT ARE THE ADVANTAGES OF SETTLING A CASE?
The settlement amount is generally less than the amount being sought or the amount being claimed in the complaint.
It saves you time: you often have to return to court numerous times before a case is resolved by the court.
You can negotiate a payment arrangement over time (not the most favorable as this causes the debt to refresh as new debt), pay in full (with a possible agreement to stop negative reporting), or settle for less (which may not result in a deletion agreement, but will at least be paid)
You can avoid having a judgment entered, which often shows up on your credit report, and can put you at risk of having your bank account frozen.
WHAT ARE THE DISADVANTAGES OF SETTLING A CASE?
It is possible that you will end up with an unfavorable settlement because of pressure and deceptive tactics by certain creditors and their attorneys.
In some situations, you may not have a legal obligation to pay the debt, and if you proceed with the case, you may be absolved of the debt. For example, if you receive public assistance, supplemental security income, social security disability, or other government benefits, it is likely that the creditors cannot enforce a money judgment against you; therefore, it would be better to proceed with the case, rather than to settle.
WHAT ARE SOME THINGS I NEED TO BE AWARE OF WHEN NEGOTIATING A SETTLEMENT?
Make a budget and determine your BOTTOM LINE before going into a settlement conference.
Be aware that sometimes creditors will accept a settlement agreement of less money if you can give them the sum in one lump payment.
NEVER make the first offer. DO NOT share your bottom line right away.
Only agree to terms that you feel are reasonable or that you can comply with.
Never agree to a settlement out of fear or pressure.
Make sure that you understand EVERY TERM in the settlement.
Obtain any agreement in writing, and make sure that it is mailed to you.
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