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How to Negotiate a Credit Card Debt if You Are Being Sued

When you go past due on a credit card, the worst threat a creditor can make is that they will sue you.

If the creditor won’t work with you then there’s a good chance that lawsuit will show up at your doorstep one day.

Now you’ve got a real problem: instead of just getting collection calls and letters, you’re at risk of a judgment against you.

What do you do now? Is it too late to settle the credit card debt and make it go away?

If you’re organized and proactive, you can still settle the debt and avoid the judgment. Here are our best tips for making it happen.

Set Your Timer

You’ve got only a certain amount of time to file an Answer to the lawsuit. Miss that window of opportunity and the creditor will file for a default judgment.

The default judgment allows the creditor to start a wage garnishment and freeze your bank account. Once the judgment is in place, you’ve got not leverage to negotiate the debt.

Best to set your clock and keep a close watch on it. Every minute counts.

Assess Your Liability

Take a look at the lawsuit papers and take careful notes. Is the company suing you the one you borrowed money from? Does the amount of money they say you owe match up with your records?

These are a few of the questions you need to ask yourself as you try to figure out whether you have a good defense to the case.

Remember it’s no defense to just say that you can’t pay the debt – that’s a question of ability, not liability.

By reviewing the Complaint you can put together a list of defense that may be helpful when you call to negotiate the debt.

Review Your Financial Situation

You need to know what the creditor can take from you if they get a judgment against you. For example, they can’t take your home if you rent. And they can’t freeze a bank account if all you get is Social Security income.

If you’re working then you should calculate how much they can take in a wage garnishment. If that amount won’t make too much of a dent in your ability to live your life then you might not care about the judgment.

If the judgment would do too much damage to your wallet then you will need to figure out a way to offer a better deal to the creditor.

Make A Realistic Offer

In order for a creditor to accept a settlement, you’ve got to offer more than they’d get with a judgment. If you offer less, or make it more difficult for the creditor to get the settlement money, then they’ll deny the offer.

To put together a realistic settlement offer, look to everything you’ve got. Check bank balances, look around for things you may be able to sell, and decide how much money you can give for a settlement.

Your settlement offer can take the form of a lump sum or monthly installments, depending on the creditor. Some will take only a lump sum settlement, others will let you pay it out over time.

One thing’s for sure, though – cash is king. Offering a lump sum settlement will always get you a better deal than an installment plan.

Prepare To Defend The Lawsuit

Sometimes, settling a credit card lawsuit before filing the Answer just doesn’t happen. That doesn’t mean it won’t ever settle, though – it just means that the timing isn’t right.

Most creditors will give you a much better deal if you defend the lawsuit. If you defend the lawsuit, the creditor knows you’re serious.

When you fight the lawsuit, the creditor also starts to get worried about losing the case. The judge could decide that they don’t have enough proof to win, or that something else is wrong with their case. If that happens, you win and they get nothing.

No matter what you decide to do, there are always opportunities for you to settle a credit card debt.

Understanding the best time to enter into a settlement isn’t easy. If you take the time to map out a strategy then you stand a better chance of success.

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By |April 6th, 2015|

About the Author:

I've been a consumer protection lawyer since 1995, working to help people end their bill problems. I'm a faculty member at the Student Loan Law Workshop, a nationally recognized speaker, and a long-time member of both the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.
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