Avoid a Lawsuit and Make Good on Your Debts

Avoid a Lawsuit and Make Good on Your Debts

Owing money to creditors can be a stressful and challenging time; however, there are ways in which you can avoid a lawsuit and clear up your debts.

First, keep in mind that creditors do not like being ignored and forgotten. That is why they make many efforts to contact you, the debtor. So, be sure to read all of your mail. You have a much better chance of not being sued if you ensure that you read all the mail that comes to you and throughout this debt process, keep informed.

Second, if you have been good in paying off your accounts and just recently have fallen behind in your payments and also have a positive payment history, you can request a credit card agreement modification. This will give you temporary relief and provide a way for you to catch up on your payments. This could help greatly in preventing an impending lawsuit.

Third, you can also contact and communicate with your creditor or creditors. This will also help you to catch up; however, you must meet certain requirements. Fourth, think about a reduced settlement. Most creditors will accept less than the unpaid balance. If you can, offer a lump sum. If you are not able to pay a lump sum, you may find that some creditors will set up a three-installment payment plan for you.

If you find out or have received a notice from an attorney that a creditor will be litigating your account, you may still an option to avoid a lawsuit. As soon as possible, contact the attorney and discuss a pay off amount. Discuss also a reduced settlement. The creditor may not accept a reduced offer but at this point you have nothing to lose.

Basically, there are two types of agreements you can reach with creditors and they are debt settlement and debt management. Debt management is when you make a monthly payment—at a certain prescribed amount—for several months to a year—until your debt amount is paid in full.

A debt settlement; however, is when the person to whom you are in debt—forgives some of the debt—but asks you to pay down the rest in full, quickly. Actually, how you resolve your debt is up to you; however, you must know the limitations and procedures of resolving debt.