Sarah Edwards | December 06, 2022
Summary: If you’re trying to settle your debts and get a clean financial slate in Alaska, SoloSuit can help. We’ve put together everything you need to know about how to settle a debt, even if you’re facing a lawsuit from your creditor or debt collector.
Knowing that you owe money to a debt collector or creditor can be immensely frustrating, especially if you cannot fully repay the debt. You may struggle to make payments for months or years only to see little difference in the outstanding balance.
Fortunately, you can settle your debt if you are struggling to make ends meet. Many creditors and debt collectors are willing to settle for a portion of the original debt amount, especially if you explain your financial circumstances and obstacles.
In fact, the average consumer is able to reach a debt settlement at 50% of the debt when working with a debt settlement company. While it isn’t always easy to reach this great of a settlement, there is still a great chance you can settle and save.
In this article, we’ll walk through how to settle a debt in Alaska and how to respond to a debt lawsuit there.
If you’re facing a debt collection lawsuit in Alaska, there are three steps you’ll need to take to avoid court and settle your debt:
Below, we take a closer look at each of these steps. Alternatively, check out this video to learn more:
If you’re being sued for debt, you’ll receive a Summons and a Complaint. These are court documents that initiate a debt lawsuit. The Summons notifies you of the case, while the Complaint explains the reasons behind the suit: the amount you supposedly owe, who owns the debt, and any interest or fees associated with your case. You should review the Complaint carefully and draft an Answer to it.
An Answer responds directly to the Complaint. You’ll include any reasons you have for failing to repay the debt. If you have specific concerns, like the amount of the debt being incorrect, you should include them.
Even though you intend to settle the matter before your court date, an Answer will protect you from a default judgment in case your efforts fail. The judge will review the Answer and listen to your argument when you appear in court.
Learn more about how to respond to a debt collection lawsuit in Alaska here.
Your next step is to figure out what you can afford to pay in order to settle.
Check your savings and determine how much money you can come up with before your court date. If you don’t have much money to give in a settlement, see if family or friends can help.
You should also investigate past settlements that your creditor or debt collector has reached with other consumers. This will give you an idea of the percentage that they are most likely willing to accept.
Ideally, you’ll want to start your offer for debt settlement with at least 60% of the total value of the debt. For example, if you owe $3,000, you’d offer $1,800. If you can’t afford 60%, start negotiations with what you have available and explain any factors that are dragging you down financially.
Your creditor will consider your offer and decide whether to accept or provide a counteroffer. If the counteroffer is more than you can afford, let them know. You may be able to come up with a creative solution, like stretching your payments out over several months.
Be prepared to negotiate with the debt collector, but don’t accept an offer you know you won’t be able to pay. If you fail to adhere to the terms, the collector will use your lack of compliance as further evidence of your unwillingness to repay the debt, and the judge will likely grant the judgment against you.
Don’t repay the debt collector until you have a debt settlement agreement in writing.
Some debt collectors restart collection activity even after receiving a settlement. A written agreement gives you something to refer to if the collector comes after you again.
Check out this debt settlement agreement example to learn more about what to potentially include in yours.
You’ll notice that the sample agreement requires you and the opposing party to sign in the presence of a notary. Getting the agreement notarized adds additional credibility to the contract and protects you from further legal activity as long as you abide by its terms.
Now, let’s look at an example.
Example: Jane was sued by LVNV Funding for an old credit card debt of $2,000. She knew she could afford to pay off $1,500 in a lump-sum payment, but she wasn’t sure how to go about it. After responding to the lawsuit with SoloSuit’s Answer form, Jane used SoloSettle to send an offer of $1,000 to LVNV Funding. After a few rounds of negotiations, they reached a settlement agreement at $1,500 (only 75% of the original debt amount).
The Federal Trade Commission has recently amended the Telemarketing Sales Rule to expand debt settlement regulations to all debt relief organizations and companies. All 50 states, including Alaska, are governed by this Rule as it relates to debt settlement practice.
Under the new Rule, any company that provides debt relief services, namely debt settlement companies, cannot:
Alaska also recognizes the Fair Debt Collection Practices Act (FDCPA), the federal regulation that governs the collection of debts. Under the FDCPA, debt collectors must follow specific rules. For example, debt collectors are not allowed to:
Alaska has additional laws that protect consumers from debt collectors. The Alaska Unfair Trade Practices and Consumer Protection Act AS 45.50.471 - AS 45.50.561 provides additional restrictions. In particular, debt collectors cannot:
Under Alaska law §09.10.053, all medical debt, credit card debt, auto loans, and mortgages have a three-year statute of limitations. If your debt passes the statute of limitations, your creditor cannot pursue legal action to recover the money.
However, they can continue to report your account to the credit reporting bureaus, and they may continue to call you or send you collections notices.
You be the judge of that.
Many people prefer SoloSettle over traditional debt settlement companies. Here’s why:
There are lots of debt settlement companies that can help you negotiate a settlement with your creditors. However, beware that some are scammers trying to steal your money. Here are a few reliable debt settlement companies for you to consider:
If you’re ready to start negotiating a debt settlement with your creditor, you can begin the process via email, mail, or a phone call. We recommend email since it’s quick and ensures you have a written negotiation record. Mail is slow, so you should avoid it if you’re trying to negotiate a settlement before your court date.
You can also consider handling the negotiation process over the phone. However, if you do so, we recommend that you record the call so that the debt collector can’t arbitrarily change the terms of the agreement or say there was never a settlement.
Alaska Stat § 42.20.310 allows people in Alaska to record conversations as long as one party (in this case, you) consents to the recording. This means that you do not have to ask the debt collector or creditor for permission to record a phone call. Only you need to consent.
People typically have lots of questions about the debt settlement process. Here are a few that we often hear.
We advise that you start with an offer of at least 60% of the debt’s value. However, if you don’t have that amount available, you can offer what you can afford to pay. Be aware that your debt collector will likely present you with a counteroffer.
It’s better to pay off a debt in its entirety. Paying off your debt looks better on your credit report, even if you didn’t repay according to your payment schedule. However, if you can’t afford to pay off a debt, a settlement can stave off a potential debt lawsuit and wipe your account clean.
If your debt is very old, the creditor knows they’re unlikely to recover all of it. You may be able to offer as little as 30% of the debt to clear up your account in a settlement. Even though the debt may be past the statute of limitations, settling it will stop future collection calls and letters.
We have several other guides concerning debt relief in Alaska. Check out the following for more information:
While you may think that settling a debt before a lawsuit is a fool’s errand, it’s not. If you use the tactics in this guide, you can settle your debt in Alaska before your court date for less than what you owe.
SoloSuit makes it easy to fight debt collectors.
You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.
SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.
Here's a list of guides for other states.
Being sued by a different debt collector? Were making guides on how to beat each one.
You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now are are just look for support, we're here for you.
Is your credit card company suing you? Learn how you can beat each one.
Need more info on statutes of limitations? Read our 50-state guide.
Need help managing your finances? Check out these resources.
Out Debt Validation Letter is the best way to respond to a collection letter. Many debt collectors will simply give up after receiving it.
"Finding yourself on the wrong side of the law unexpectedly is kinda scary. I started researching on YouTube and found SoloSuit's channel. The videos were so helpful, easy to understand and encouraging. When I reached out to SoloSuit they were on it. Very professional, impeccably prompt. Thanks for the service!" - Heather