Debt Collection and Settlement: What You Can Do to Avoid the Courts

When dealing with debt collection, settlement could be a viable option. However, if you let the process go on for too long, it could wind up in the hands of the courts. Here are the basics of why you want to avoid the courts and how to do so effectively. 

Why Avoid Court Involvement

You need to understand why you do not want this process to go to court. Sometimes when negotiations get heated, parties threaten to see each other in court. This option will usually not result in a better outcome for you. First of all, you need to determine if you actually owe the debt. If you can determine that the debt is legitimate, you need to understand that the courts are not going to be able to help you. If the debt is legitimate, they will rule in favor of the creditor and make you pay. They can set up a payment plan or even garnish your wages. If you thought your take-home pay was small now, a wage garnishment can really leave you financially strapped. If you do not show up to the court date, you could even be held in contempt of court and have a warrant issued for your arrest. Therefore, it is definitely in your best interest to settle this problem before it ever gets to court. 

Leave Communication Lines Open

While it is tempting to avoid the calls of debt collectors, you will be better off if you communicate with them. Answer the phone when they call and respond to their letters. When they find that you are willing to talk with them, they are much more likely to be willing to work with you. Let them know that you want to work with them to resolve the matter. Be up front with them about your financial situation, and do not ever threaten them. 

Set Up Settlement Plan

Once you start to talk to the creditor, you need to negotiate a debt settlement plan. Talk to them about your available options. They will usually start by telling you how much you owe and then giving you a few different options. While they may request one payment amount, you could negotiate with them and then agree to a different amount. Tell them what you can afford, and see if they go for it. 

They may want to set up a monthly payment option to retire the entire debt. Or they may even be open to taking one lump sum payment for less than the total amount of the account. If this is the case and you have the money to do it, you could potentially save quite a bit of money. This would also allow you to eliminate the debt problem all at once. 


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