Sarah Edwards | December 16, 2022
Summary: You have 30 days to respond to a debt lawsuit in Alabama, but you can reach out to your creditor or debt collector to settle a debt at any stage of the lawsuit process. To settle a debt in Alabama, you should first respond to your lawsuit with a written Answer, send a settlement offer to start negotiations, and get the settlement agreement in writing. SoloSettle takes care of the settlement process for you.
Have you received a Summons in the mail for a debt lawsuit? Getting sued for a debt you owe in Alabama can be frightening and anxiety-provoking, especially if you’re concerned about repaying the debt before your court date. You may wonder where you’ll come up with the money or if you can fight the lawsuit in court.
No one wants to lose a court case. If you lose, the court will grant your creditor a judgment, allowing them to up the ante on their collections efforts against you. They’ll be able to freeze your bank account, garnish your wages, and potentially even seize your property.
The best option is to repay your debt before your court date. If you can’t afford to do that, try to settle the debt with your creditor or the debt collector. Luckily, we’ve got the ultimate guide to debt settlement in Alabama.
Let’s jump right in.
Follow these three steps if you’re facing a debt lawsuit in Alabama and want to settle your debt.
You can settle your debt in Alabama on your own with the help of SoloSettle and avoid working with a debt settlement company.
Below, we’ll break down each of these three steps in detail. You can also learn more by watching this video:
Whenever a creditor decides to sue a debtor in court, they’ll begin the process by filing a Complaint. You’ll receive a copy of the Complaint and a Summons to appear in court. A Complaint lists your creditor’s grievances against you, including the amount you owe and any interest and fees. The Summons will include your court date and location.
Many consumers fail to act when they receive a court Summons. They’ll ignore the lawsuit, usually because they don’t know how to respond. This is a big mistake...
It’s important to respond to the lawsuit with a written Answer, even if you plan to settle the debt well before your court date. If you don’t file an Answer in time, you’ll probably lose the case automatically when the court orders a default judgment against you.
In Alabama, you have 30 days to respond to a debt collection lawsuit.
Even if you reach out to the creditor or debt collector suing you to settle the debt and come to an agreement, you could still lose the case.
The courts will not know about your settlement or any disputes about the debt unless you give them that information. So be sure to Answer your lawsuit before you take any other action. This will give you time to negotiate a debt settlement offer without worrying about losing.
Your next step is to decide how much you can afford to pay your creditor in a settlement. Examine your savings, and figure out how much money you can stow away before your court date.
If you need financial help to settle the debt, consider selling something you don’t need, taking on a part-time job, or asking friends or family for assistance.
We see the most success at debt settlement when consumers offer around 60% of the value of their obligation. For instance, if you owe $5,000, you’ll need to have $3,000 saved to offer in a settlement.
If this number is out of reach, offer what you can. Some creditors and collectors will be more lenient if they understand your situation and if you’re willing to work with them toward a solution.
You’ll likely go through several rounds of negotiations before reaching an agreement that you can live with. That’s okay; just keep working with the creditor until you come to a deal.
Before paying a dime on your debt settlement, make sure to get the terms of the settlement agreement in writing. The contract should clearly state that your payment constitutes settlement for the total value of the debt and that the creditor or collector is waiving all rights to collect the remainder of the debt from you.
There should also be clear instructions for transferring the money to the debtor, such as making a payment online or sending a check to a P.O. box.
Generally, creditors and debt collectors will take charge of drafting and filing a debt settlement agreement into the case. Be sure to review the document carefully before signing. Below is a debt settlement agreement example:
Note that the settlement agreement requires a notary’s signature. This signature adds an extra layer of protection to your agreement. Someone will witness the signing of the contract on both sides, which gives you additional credibility in case the debt collector tries to pursue collection activity against you again.
Once you have a signed agreement, abide by its terms. Pay your creditor on time and with the correct amount. They should provide you with a receipt, and you should keep a record of your payment.
Be advised that all states have unique requirements as far as the legalities of a debt settlement agreement goes.
Now, let’s explore an example of someone who settled their debt in Alabama.
Example: Jeff was sued by a debt collection agency for $5,000. He uses SoloSuit to respond to the lawsuit, buying himself some time to work out a debt settlement plan. After taking a close look at his finances, Jeff determines he can afford to pay off 75% of the debt ($3,750) immediately. He decides to start a little lower than that, using SoloSettle to send a settlement offer of 50% of the debt ($2,500). After a few rounds of negotiations, the debt collection agency accepts a settlement of 70% of the original debt value, or 3,500. Jeff saves a lot of money and doesn’t have to worry about dealing with these collectors any more.
Alabama does not have additional protections beyond those of the FTC’s Fair Debt Collection Practices Act (FDCPA). However, all creditors and debt collectors must abide by the act's rules in their collections practices. Some of the protections that the FDCPA offers include:
In addition to the FDCPA, creditors and debt collectors can only pursue collection activities against a consumer if the debt hasn’t passed Alabama’s statute of limitations.
According to AL Code § 6-2-37 (2019), creditors can pursue open accounts from consumers for up to three years; however, debts involving contracts not under seal are eligible for legal action for six years under AL Code § 6-2-34 (2021).
Finally, creditors can pursue consumers for contracts under seal for up to 10 years, according to AL Code § 6-2-33 (2019).
Once a debt passes Alabama’s statute of limitations, creditors can still report the consumer’s account to credit reporting agencies. They can still call and send letters. However, if they attempt to bring the claim to court, the consumer can ask the judge to dismiss the case because it’s after the statute of limitations deadline.
Finally, 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 Alabama, 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:
You be the judge.
Many consumers prefer SoloSettle because our goal is to empower you to negotiate and reach a debt settlement on your own.
SoloSettle makes negotiating easy by providing a structured process. You can use our web-app to send and receive offers from collectors. It will draft offers for you and protect you from the potential lies and bullying of debt collectors. Most importantly, SoloSettle makes sure all of the proper legal language is included to protect your rights when communicating with the creditor or debt collector. When a settlement agreement is reached, SoloSettle manages the settlement agreement documentation for you and protects your sensitive financial information from the collectors, preventing them from over-charging you.
Check out this 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.”
Below are other debt settlement companies with fair reputations to consider:
You have a few options if you’re ready to start the settlement negotiation process with your creditor. You can call them, email them, or send them a letter.
We recommend emailing or calling your creditor if you're facing time constraints. An email is quick, and you’ll have a written record of the conversation and negotiation process.
However, if you’d prefer to call the debt collector, you can do that, too. We suggest recording the conversation so that you have proof in case the debt collector later tries to renege on the deal. In Alabama, you only need consent from one party to record a phone conversation, according to AL Code § 13A-11-30.
You probably have a few questions if you’re considering debt settlement in Alabama, and we have answers to some of the most common questions we hear.
According to America Fair Credit Council’s Regan Report, the average consumer can reach a debt settlement of 50% when working with a debt settlement company.
However, we recommend starting with 60% of the total value of your debt in a debt settlement offer. If the creditor disagrees, they will provide you with a counteroffer. Explain your financial situation to the debt collector if you can't afford the counteroffer. They may be willing to work with you.
Ultimately, you have to calculate how much you can afford to pay off. If 60% is not feasible, offer less and explain your financial situation to the creditor or debt collector. Chances are they’ll be willing to work with you.
Yes, it is possible to handle the debt settlement process independently. Do some reading first (SoloSuit has many guides to help you) to learn how it works. Then, start negotiating your first debt with your chosen creditor.
Anyone can attempt to negotiate a debt settlement with their creditors if they cannot pay their bills. However, if you’re interested in qualifying for a specific program with a debt settlement company, you may need to carry a certain amount of debt. Each program varies, but most companies require at least $7,500 in unsecured debt to enroll.
If you’ve got more questions about debt settlement in Alabama, SoloSuit has answers. Check out these convenient guides:
You can settle your debt in Alabama before your court date by engaging with your creditor and attempting to work out an agreement. Most debt collectors are open to settlements if you’re willing to communicate with them. Get started and consult our other resources if you have further questions.
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