Sarah Edwards | December 13, 2022
Summary: If you’re being sued for unpaid debt in Colorado, you’re probably wondering if you can settle the claim before your court date. First, respond to the debt lawsuit with an Answer. Second, send your initial settlement offer to start negotiations. Finally, get your debt settlement in writing when you’ve reached an agreement. Debt settlement is possible — let SoloSuit show you how.
If you’re like many Coloradans, you’re paying back a personal loan, medical debt, or a credit card—or all three. While you try to stay on top of your obligations, you might get too caught up in debt and find it impossible to make your payments.
When you stop paying your creditors, they take notice. They’ll probably start calling you and sending you letters. If you don’t resume your payments, they may charge off your account, sell it to a collection agency, or file a lawsuit against you.
Being sued for debt is no joke. Luckily, you have resources that can help you fight back and win in court. One such resource is debt settlement.
This article will outline everything you should know about how to settle a debt in Colorado and what it’s like working with a debt settlement company.
If you’re the subject of a debt lawsuit, you face a judgment that allows your creditors to garnish your wages or freeze your bank account. A judgment remains a public record, and it will be visible to anyone who searches for it, including future employers and creditors.
You want to avoid a judgment at all costs. You can do so by defending yourself against the lawsuit and repaying or settling the debt before your court date.
If you’re ready to settle your debt, you’ll need to understand the process. Here are three steps to settle your debt in Colorado:
Below, we’ll break down each of these steps in detail. You can also check out the following video to learn more:
A debt lawsuit begins when your creditor or debt collector files a Summons and Complaint (also known as a Petition or Warrant of Debt in some states). The Summons is usually just an official notification of the lawsuit. A Complaint, on the other hand, lists the reasons for the lawsuit, such as nonpayment of debt. It also stipulates the total value of your debt, including any interest or penalties.
You’ll want to provide a legal response, known as an Answer, to the Complaint. While you plan on settling the claim before your court date, an Answer protects you in case your efforts fail. Your creditor won’t be able to ask the judge for a default judgment; instead, they’ll have to hear your side of the story first.
Your Answer contains your defense to the debt lawsuit. You’ll list reasons why the legal claim against you is unreasonable, such as improper validation of the debt or a lack of business relationship with a debt collector. If neither of those defenses is appropriate to your claim, search for one that is.
Learn more about how to respond to a Colorado debt lawsuit here.
In Colorado, you have 21 days to respond to a debt lawsuit before you lose automatically by default judgment. So be sure to respond before the deadline, giving yourself time to work out a settlement.
Respond to your debt lawsuit in Colorado online in minutes.
Your next step is determining how much you can afford to pay on the debt. Evaluate your upcoming paychecks and check your savings. If you don’t have much money to use toward a settlement, consider taking on a few odd jobs or asking friends and family for help.
After you’ve calculated how much you can pay, do some research on your creditor or debt collector. Determine how much they might accept as an offer. Here are some questions to consider:
The answers to these questions will have a huge effect on how much your creditor or collector is willing to accept as a settlement.
While the average consumer reaches a settlement of 50% the original debt amount when working with a debt settlement company, it isn’t always easy to get a settlement at that rate. Even 60% is more likely.
So, after you’ve determined how much you can afford to pay off and what is likely to be accepted, send an offer. Consider starting at around 60% of the debt value. Next, the creditor or debt collector will consider whether a judgment is worth pursuing or whether a lump-sum payment is more cost-effective.
You’ll probably go through several rounds of negotiation before you arrive at a deal. Don’t accept any offer that you can’t afford to repay. If you do and fail to make your payment, your creditor will continue the lawsuit against you — and probably win.
SoloSettle takes care of the settlement negotiation process for you.
We recommend that you get your settlement agreement in writing. A written agreement ensures that you and your creditor fully understand the terms of your contract, including the amount you’ll pay, when it’s due, and how you’ll transfer the money.
Your contract should stipulate that your payment resolves the debt. Your creditor won’t be able to pursue you for the remaining balance through a legal claim, and they’ll halt further collection activities.
We recommend including space for the notarization of the agreement for both parties. Notarizing the deal ensures that there are witnesses to the contract and adds an additional layer of legal credibility.
Typically, the creditor or collector will draft the settlement agreement for you. Just make sure to review it carefully before you sign it. Below is a debt settlement agreement sample:
Note that each state has different requirements for settlement agreement documents.
Let SoloSettle manage your debt settlement agreement for you.
Now that you’re familiar with the steps to debt settlement, let’s walk through an example.
Example: Kayla receives a subpoena asking her to appear in court for a debt lawsuit brought by her creditor, XYZ Financial. She took out a personal loan a year ago and stopped making payments when she ran into financial trouble. XYZ Financial is suing her for the remaining balance of the loan, which is $2,000. Kayla files an Answer with the court, alleging that XYZ Financial hasn’t validated the loan balance. Next, she decides to negotiate a settlement with XYZ Financial for 60% of the loan’s value, or $1,200. XYZ Financial considers her offer and counters it with $1,400. Kayla agrees to the settlement and drafts an agreement. Once she and XYZ Financial sign the contract, Kayla transfers the money. XYZ Financial drops the lawsuit against her and reports the account settled to the credit reporting bureaus.
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 Colorado, 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:
Colorado also adheres to the Fair Debt Collection Practices Act (FDCPA), which prohibits creditors and debt collectors from taking specific actions against a debtor, including:
In addition to the FDCPA, the Colorado Fair Debt Collection Practices Act limits the actions of debt collectors. According to the law, debt collectors cannot:
Under CO Rev Stat § 13-80-101 (2016), oral and written contracts have a statute of limitations of three years. CO Rev Stat § 13-80-103.5 (2016) limits the collection of debt on accounts to six years.
Learn more about the statute of limitations on debt in Colorado here.
If you want assistance settling your debts, we can recommend a few companies.
SoloSettle helps individuals facing a debt lawsuit negotiate a settlement for their obligations. We speak directly with your creditors and debt collectors on your behalf to reach a settlement agreement. Once we have a deal that you approve of, we’ll help manage your debt settlement agreement and facilitate your payment.
Many consumers prefer SoloSettle over traditional debt settlement companies for a few reasons:
Below is a review from a real SoloSettle customer:
“I'm very thankful for SoloSettle.. Having a third party negotiate the settlement was instrumental in resolving this case and saved me from two giant headaches: 1) I didn't have to deal with the plaintiff's lawyer and 2) I didn't have to go to court. I also love that the payment was processed through SoloSettle. I was nervous about sharing my personal financial data with the other side, but SoloSettle protected that for me. I hope I never get sued again, but if I do, I would use SoloSettle again in a heartbeat.
SoloSettle really saved me a ton of time and heartburn and kept me from having to be my own lawyer in court.”
Want help settling a debt lawsuit? Learn more about SoloSuit’s solutions.
National Debt Relief is one of the nation’s largest debt settlement companies. Clients must have $7,500 in unsecured debt to qualify. They’ll agree to make monthly payments, which National Debt Relief will use to settle debts with creditors. Programs last between two and four years.
Freedom Debt Relief is one of the larger debt settlement organizations. Since 2002, the company has helped thousands of people resolve their debts through settlement. To qualify for debt settlement, consumers must have a minimum of $7,500 in unsecured debts. Fees range from 15% to 25% of the total settlement value.
You can contact your creditor via email, phone, or letter to begin the debt settlement process.
We recommend email since it’s fast, convenient, and verifiable. You’ll be able to consider each message from your creditor before writing your reply.
However, a phone call can speed up the debt settlement process if you don't have much time. You can usually work out an agreement in under an hour if your creditor is willing to settle.
If you decide to call your creditor, we recommend recording the conversation. Under CO Rev Stat § 18-9-303, you can record your phone call with the creditor without informing them.
You may have other questions concerning debt settlement in Colorado. Here are a few of the most common we hear.
If at all possible, you should offer at least 60% of the total value of your debt. That’s enough for your creditor to know you’re serious about resolving your obligations. If you can’t afford 60%, offer what you can and explain your financial situation. Your creditor might be willing to compromise and accept a lesser amount.
Oral and written contracts have a statute of limitations of three years, while debts on account have a statute of limitations of six years. Once your debt passes this limit, creditors can no longer pursue a lawsuit against you. However, they can report your account to the credit bureaus. They can also send you letters and call you.
You should make every attempt to repay your debt. Repaying your debt keeps you on good terms with your creditors and looks better on your credit report. However, settling your debts can help you resolve the issue and avoid a judgment if you're facing a debt lawsuit or extenuating financial circumstances.
SoloSuit has several other articles concerning Colorado's debt relief and debt collection laws. Here are a few you can review:
If you’re facing a debt lawsuit, you’ll want to settle your creditor’s claim before it becomes a potential judgment. Contact your creditor and negotiate a settlement you can afford. Make sure to get the agreement in writing before transferring any money.
Explore SoloSuit’s debt settlement solutions.
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.
>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate
>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)
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.
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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