Debt Collection and Settlement: 3 Steps to Avoid the Courts

Successfully negotiating a debt collection settlement can help you get through your debt issues overall. When dealing with the debt collection process, you do not want to let it escalate to where the courts have to get involved. You should consider taking a number of steps before it gets to that point. 

Court Involvement

Before you decide what steps to take, you need to understand what can happen if the problem is left to the courts to decide. First of all, you will be sued by the creditor. They will file a lawsuit against you to collect the debt that is owed. If it goes to court and they can prove that you truly owe the debt, the judge will typically rule in their favor. When this happens, a number of things could happen. The court could order you to pay a certain amount, set up a payment plan for you, or even garnish your wages. All of these things take the control away from you to decide your own fate and gives it to a judge. Therefore, it is in your best interests if you do not let it get to that point. 

1. Contact the Creditor

The first step in the process is to contact the creditor that you owe. Many times, when a person falls behind on their payments, they do not want to talk to anyone about it. They ignore the daily phone calls from the collection agency and ignore the constant notices that they receive in the mail. While you might think that this will give you time to come up with a solution, it usually ends up working against you. When a creditor can not get in touch with you, it seems like you are not willing to work out a solution to the problem. The only logical step for them to get their money is to file a lawsuit and let the courts decide the matter. Therefore, you need to make contact immediately when there is a problem even if you do not have the money to pay the debt. 

2. Work With Them

After you make contact with the collection agency or creditor, you need to be willing to work with them. Let them know upfront that you want to work with them to resolve the issue of your debt. This will often diffuse any potential problems on the front end and allow you to work towards an amicable solution for both parties. 

3. Show Good Faith

Once you start working with the collection agency or creditor on a settlement, you need to be willing to show them some kind of good faith. Even if you can only afford to pay them a small amount upfront, you need to show them that you are serious about repaying the debt. This can be done by agreeing to some sort of payment plan and then living up to your end of the bargain.