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How to Legally Settle Debt in 5 Steps

Hannah Locklear | February 12, 2025

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: Follow these 5 steps to settle debt legally: Verify the debt, know your rights, assess what you can pay, make an offer (use SoloSettle), and get it in writing.

Debt can be overwhelming—not just for consumers but also for creditors and debt collectors trying to resolve outstanding balances. Every year, millions of Americans face debt collection lawsuits, yet many are unsure how to navigate the process.

Enter SoloSettle—a digital debt settlement tool that takes the stress out of the process for both sides. SoloSettle enables consumers to negotiate settlements directly with collectors online, eliminating the need for phone calls, court battles, and drawn-out disputes.

In a recent TV interview, Yale Levy, former debt collection attorney and SoloSuit’s Head of Business Development, discussed how SoloSettle is revolutionizing debt settlement. Watch the full interview below:

Debt collection is a widespread issue in the United States

As Levy explains in the interview, debt collection impacts millions of Americans who take on credit with the intent to pay but find themselves struggling due to life changes—divorce, job loss, medical expenses, and other financial hardships.

“Nobody likes to be in debt, and nobody likes to be sued for not having paid said debt. Yet every year it happens to millions of people in the US.”

Debt collection lawsuits are the most common type of civil case in the United States. In 2022, it’s estimated that more than 4.5 million Americans were sued for debt. Clearly, debt collection litigation is a pervasive issue that needs a modern solution.

Debt collectors and law firms spend significant time trying to contact consumers, but traditional settlement processes are slow, stressful, and inefficient. Phone tag, emotional conversations, and long wait times make resolution difficult. Hence, solutions like SoloSettle are shaking things up in the debt collection industry in an effort to streamline the settlement process and make it easier for everyone involved.

How does SoloSettle work?

SoloSettle digitizes debt settlement. The online settlement platform provides a professional space where consumers and collectors alike can negotiate, document, and finalize settlement.

““SoloSettle is a consumer-initiated settlement platform that allows a consumer that is behind on their bills to contact their collector, law firm, creditor, to try to amicably settle it digitally without ever talking on the phone with them, but by doing electronic communication and what kind of information,” - Yale Levy

Instead of making uncomfortable phone calls, consumers can:

  1. Create a free account on solosuit.com.
  2. Answer a few questions to generate a professional settlement offer.
  3. Submit the offer to their collector electronically.
  4. Negotiate digitally—without ever needing to talk on the phone.
  5. SoloSettle helps you document the settlement agreement and pay securely, preventing future disputes or issues.

“We take out the emotion, the fear, and the phone tag,” Levy said. “Consumers can settle from the comfort of their homes, even while watching TV.”

Settle with SoloSettle

Make an Offer

Follow these 5 steps to legally settle your debt

If you're facing debt collection, it's essential to settle your debt the right way to protect your finances and avoid legal trouble. Here’s how to do it step by step:

1. Verify the debt

Before agreeing to any settlement, make sure the debt is legitimate and belongs to you. Under the Fair Debt Collection Practices Act (FDCPA), you have the right to request debt validation from the collector.

Request a debt validation letter within 30 days of first contact. To validate the debt, the collector must verify the amount, original creditor, and other debt details are all accurate with documentation. If the debt is incorrect, dispute it immediately.

2. Know Your Rights

Debt collectors must follow legal guidelines when attempting to collect a debt. Be aware of your rights under the Fair Debt Collection Practices Act (FDCPA). Here are some common FDCPA violations you should look out for:

  • Call you before 8 a.m. or after 9 p.m.
  • Call you at work when your employer prohibits such communication
  • Tell your family or friends that you owe a debt
  • Continue to contact you when you have explicitly asked them not to
  • Take actions considered harassment or abuse under the FDCPA
  • Claim they will sell your debt in order to coerce you to pay
  • Cause your phone to ring repeatedly with the intent to annoy
  • Fail to disclose that they are a debt collector
  • Make false claims about who they are
  • Threaten to seize your house or other property
  • Threaten to take legal action that they cannot, or do not plan to, take

Understanding your rights prevents you from falling victim to illegal collection practices.

3. Determine how much you can pay to settle the debt

Before making a settlement offer, review your finances to determine what you can afford to pay. Consider:

  • How much you can realistically offer without financial strain.
  • Whether you should settle in a lump sum or monthly payments.
  • If settlement makes sense compared to bankruptcy or other options.

You can use this helpful formula to determine how much you can realistically afford to settle: Amount available to settle = (monthly income – monthly costs) + savings)

4. Make an offer (use SoloSettle to do it easily)

Now it’s time to negotiate—and SoloSettle makes this step easy. Instead of stressful phone calls, you can:

  • Send a settlement offer electronically in a professional, legally sound format.
  • Avoid emotional conversations and focus on numbers.
  • Receive responses faster and settle in as little as two days.

Pro tip: Start with an offer lower than what you can afford, leaving room for negotiation. Most collectors accept 30–60% of the original balance.

Step 5. Get the agreement in writing

Never pay a collector until you receive a written agreement outlining the settlement terms. This protects you from future disputes. Ensure the agreement includes:

  • The final settlement amount and payment terms.
  • A statement confirming the debt is considered paid after settlement.
  • A request to update your credit report (if applicable).

Here’s a sample debt settlement agreement to give you an idea of what yours should include. Once the agreement is in place, make your payment as agreed and keep records of all transactions.

SoloSettle offers a win-win solution

With some settlements closing in as little as two days, SoloSettle offers real benefits for everyone involved:

  • Consumers get a stress-free way to resolve debt.
  • Collectors see higher settlement rates without inefficient back-and-forth calls.
  • The economy benefits from faster debt resolution, helping individuals and businesses move forward.

The future of debt settlement

With regulatory changes affecting the Consumer Financial Protection Bureau (CFPB), the future of debt collection is uncertain. But SoloSettle is already filling the gap, providing a fair, transparent, and efficient solution for resolving debts.

For more tips on how to legally resolve debt, check out this interview with an attorney who used to be a debt collector:

How to Answer a Summons for debt collection in all 50 states

Here's a list of guides on how to respond to a debt collection lawsuit in each state:

The Ultimate 50 State Guide

Debt collector guides

Are you being contacted by a debt collector? We’re making guides on how to resolve debt with each one.

Arbitration

If the thought of going to court stresses you out, you’re not alone. Many Americans who are sued for credit card debt utilize a Motion to Compel Arbitration to push their case out of court and into arbitration.

Below are some resources on how to use an arbitration clause to your advantage and win a debt lawsuit.

Bankruptcy

Bankruptcy is a great way to legally resolve debt, but it's usually best to consider it as a last resort. Here are some bankruptcy guides to help you decide which debt resolution option is best for you.

Check your case status

Don’t have time to go to your local courthouse to check the status of your case? We’ve created state guides on how to check the status of your case throughout the US, complete with online search tools and court directories.

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Debt collection FAQs

Find answers to some of our the most commonly-asked questions about debt collection below.

Debt collection documents and templates

If you're dealing with debt, these documents and templates will help you respond, protect your rights, negotiate, and resolve your debts.

Debt relief

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Debt settlement is one of the most effective ways to resolve a debt and save money. We’ve created state guides on debt settlement. Find out how to settle in your state with a simple click and explore other debt settlement resources below.

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Facing an eviction? The following guides will help you navigate your situation with confidence.

Federal debt collection laws

Knowing your rights makes it easier to stand up for your rights. Below, we’ve compiled all our articles on federal debt collection laws that protect you from unfair practices.

Legal aid

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Medical debt

Having a health challenge is stressful, but dealing with medical debt on top of it is overwhelming. Here are some resources on how to manage medical debt.

Personal finance

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State debt collection laws

Debt collection laws vary by state, so we have compiled a guide to each state’s debt collection laws to make it easier for you to stand up for your rights—no matter where you live.

Statute of limitations on debt

Like all debt collection laws, the statute of limitations on debt varies by state. So, we wrote guides on each state’s statutes and more.

Stop collection calls

Do you keep getting calls from an unknown number, only to realize that it’s a debt collector on the other line? If you’ve been called by any of the following numbers, chances are you have collectors coming after you, and we’ll tell you how to stop them.

Wage garnishment

Forgot to respond to your debt lawsuit? The judge may have ordered a default judgment against you, and with a default judgment, debt collectors can garnish your wages. Here are our guides on how to stop wage garnishment in your state, plus other wage garnishment resources.

The Debt Hotline

Hosted by Team Solo, The Debt Hotline breaks down debt and personal finance topics with help from attorneys, financial experts, and industry pros. We respond to real questions to help you navigate debt with knowledge and courage.

Other debt resources


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