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How to Settle a Debt in Minnesota

Sarah Edwards | March 08, 2023

Sarah Edwards
Legal Expert
Sarah Edwards, BS

Sarah Edwards is a professional researcher and writer specializing in legal content. An Emerson College alumna, she holds a Bachelor of Science in Communication from the prestigious Boston institution.

Edited by Hannah Locklear

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: You have 21 days to respond to a debt lawsuit in Minnesota, but you work out a debt settlement at any stage of the lawsuit process. Just be sure to respond to the lawsuit before the deadline, send an offer to the creditor or debt collector, and get the agreement in writing. SoloSettle can help you with all these steps and more.

You're probably very stressed if you’re struggling to stay on top of your bills. Falling behind on your obligations can leave you wondering if you’ll ever be able to recover your finances or if things will just get worse.

When you stop paying your bills, creditors will call you and send you letters. If you don’t resume your payments, they’ll probably charge off your account and sell it to a debt collector. Some creditors will take legal action against you and start a debt lawsuit.

If your creditor wins a debt lawsuit against you, they’ll obtain a judgment. A judgment allows the debt collector to garnish your wages, freeze your bank account, and generally wreak havoc on your life.

You don’t want to lose control of your finances, so it’s best to repay or settle your debt before your court date. Resolving the matter stops a potential judgment and removes your further obligation toward the debt.

In this article, we'll discuss how to settle a debt in Minnesota. Let's jump right in.

There are 3 steps to debt settlement

When you want to get your debt settled before your court date in Minnesota, you’ll need to take three specific steps:

  1. Respond to the lawsuit with an Answer before the deadline.
  2. Make an offer to start negotiations.
  3. Get the settlement agreement in writing.

Keep reading to learn more about each step in detail. Don't like reading? Check out this video instead:

1. Respond to the lawsuit with an Answer before the deadline

Your creditor will initiate a debt lawsuit by filing a Complaint in your local court. The Complaint will indicate you owe an unpaid debt and list the amount due. It will also include any interest or penalties associated with the obligation.

While you intend to settle the lawsuit before your court date, you should still respond to the lawsuit. A legal response, known as an Answer, protects you in case your efforts at settling the debt fail. It ensures the court will have to hear your side of the story rather than just granting your creditor a default judgment.

You have 21 days to respond to a debt lawsuit in Minnesota. If you fail to respond before the deadline, you will lose by default. This could lead to wage garnishment and your property getting seized.

Your Answer document should list your responses to each claim against you. You should also include a section to assert your affirmative defenses.

There are several defenses you can use in an Answer. You could claim the statute of limitations has expired or that your creditor hasn’t properly validated your debt. If neither of those defenses applies to your case, try to find something else that fits.

Make the right defense the right way with SoloSuit.

2. Make an offer to start negotiations

Next, you’ll want to determine how much you can pay your creditors. Evaluate the money you have in savings and upcoming paychecks. If you don’t have much cash available, consider selling a few items you don’t need or seeking help from friends and family.

Ideally, you’ll begin the negotiation process with an offer of 60% of the total amount of the obligation. We recommend that amount because it’s enough for your creditors to weigh the value of a lump-sum payment against collecting the full value of the debt over a more extended period.

If you can’t come up with 60% of the value of your debt, explain your financial circumstances to the creditor. They may be able to find another arrangement for you or accept less in a settlement.

You might go through several rounds of negotiation before reaching a deal. Keep a cool head during the process. Don’t accept an offer that you know you won’t be able to follow through on. If you do and fail to make your payment, the creditor will continue the lawsuit against you.

SoloSettle takes care of the settlement negotiation process.

3. Get the settlement agreement in writing

Don’t send any money to your creditor without obtaining a written agreement. A written contract ensures that you and your creditor understand the terms of the deal and there is no misinterpretation.

Your agreement should list the amount you’ll pay, when it’s due, and how you’ll transfer the funds. It should also state that your creditor waives any further collection rights to the obligation.

We recommend that you notarize your agreement. You can include a space for both you and your creditor to have a notary witness.

You can prepare your agreement before you start the negotiation process. That way, you only need to insert the applicable settlement information into the contract before sending it to your creditor to sign.

Here is a debt settlement agreement example to give you an idea of what to look for in yours.

Now, let’s walk through an example of how to settle a debt in Minnesota.

Example: Amelia is getting sued by LVNV Funding for an old credit card debt in Minnesota. They claim she owes $5,000. She uses SoloSuit to respond to the lawsuit. This gives Amelia time to look into her options for settling the debt before court. Next, she uses SoloSettle to send a settlement offer to LVNV Funding. She starts low at 50% of the debt, or $2,500. After a few rounds of negotiations, LVNV accepts an offer of 65%, or $3,250. Amelia saves money, avoids going to court, and gives herself a financial reset.

What are Minnesota’s debt collection and debt settlement laws?

Minnesota adheres to the Fair Debt Collection Practices Act (FDCPA). Under the FDCPA, debt collectors cannot take specific actions against consumers, including:

  • Call consumers before 8 a.m. or after 9 p.m.
  • Tell consumers they’ll go to prison for nonpayment of debt.
  • Contact the debtor at their workplace if the debtor requests them not to.
  • Publish the debtor’s obligation in a public place, like a newspaper or social media.
  • Harass a consumer through repeated phone calls throughout the day.

In addition to the FDCPA, Minnesota has its own debt collection laws. Under MN Stat § 332.37 (1996 through Reg Sess), debt collectors cannot take specific actions, like:

  • Employ a sheriff or law enforcement officer to collect a debt.
  • Communicate with a debtor using legal stationery unless a lawyer writes the letter.
  • Use a name that implies the debt collector is a governmental agency.
  • Falsify collection documents with the intent to deceive a debtor.

Like other states, Minnesota has a statute of limitations for debts. This statute caps the time a collector has to pursue a lawsuit. MN Stat § 541.05 (1996 through Reg Sess) has a statute of limitations of six years for written and oral debts.

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 Georgia, 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:

  • Charge upfront fees. Debt settlement companies cannot collect any fees from a consumer before the debt has been effectively settled or otherwise resolved.
  • Fail to disclose certain information about its services before a consumer enrolls in the program. This includes how much the service costs, how long it takes to see results, how much money must be saved before a settlement offer is made, consequences that may occur if the consumer fails to make payments on time, customer’s rights, and other important terms.
  • Misrepresent their services. No false or unsubstantiated claims can be made regarding a debt settlement company’s services.

What’s the best debt settlement company?

SoloSettle empowers consumers by helping them negotiate a debt settlement on their own terms. The web app allows you to send and receive offers from creditors and debt collectors. Each offer includes all the proper legal language to protect your rights as you communicate with creditors and collectors.

After you get a settlement deal, SoloSettle takes care of the settlement agreement documents and protects your financial information, preventing the creditor from overcharging you.

Settle with SoloSettle

Make an Offer

Below are some other trusted debt settlement services.

National Debt Relief offers debt settlement programs to individuals with at least $10,000 in unsecured debt, like credit cards and medical bills. Once you enroll in the program, you’ll make monthly payments toward settling your obligations. Programs last between two and four years, and fees range from 15% to 25% of your total enrolled debt.

Pacific Debt is a smaller debt settlement company, but it operates in 36 states and has flexible repayment terms. To qualify, you’ll need at least $10,000 in unsecured debt. Debt settlement fees range from 15% to 25% of your outstanding obligation, and programs last up to four years.

Freedom Debt Relief is another large provider of debt settlement services. Since 2002, the company has regularly assisted thousands of people with debt settlement. To qualify for their program, you must have at least $7,500 in debt and agree to a monthly payment schedule.

Accredited Debt Relief is a debt settlement company that helps individuals resolve unsecured debts. Like Freedom Debt Relief, those who sign up for the program will complete it within two to four years and pay fees ranging between 15% and 25%.

What’s the best way to contact my debt collector?

If you’re ready to start your debt settlement journey, you can contact your creditor via email, letter, or phone call.

We recommend emailing since it’s quick and you’ll have a written conversation record. You also won’t be put on the spot by questions, and you’ll have a chance to think about your answers.

Some people prefer speaking with their creditors. If you call your creditor, you will likely resolve the situation in less than half an hour. However, you should consider your non-negotiable terms before making the call.

We recommend you record your conversation if you decide to call your creditor. Under MN Stat § 626A.02, only one party must consent to record a phone call. You’ll be the one granting consent.

FAQs about how to settle debts in Minnesota

You may have other questions about settling a debt in Minnesota. Here are a few we frequently hear.

Q. What percentage of debt should I offer to settle?

We recommend offering at least 60% of the total value of your debt in a settlement. That’s enough to show your creditor you seriously want to settle. If you can’t afford that much, offer what you can, but explain your financial circumstances. They may be more lenient if they understand the situation.

Q. Is there a time when debt becomes uncollectible in Minnesota?

The statute of limitations on debt in Minnesota is six years. After that, your creditor cannot sue you. However, they can still report your account adversely to the credit reporting bureaus and send you collection notices.

Q. Can I do my own debt settlement?

Yes, it is possible to do your own debt settlement. However, you’ll need to read up on the process before starting. Before transferring any money to your creditor, get your settlement agreement in writing.

How to get debt relief in Minnesota

We have some additional guides on debt relief and debt collection in Minnesota.

Debt settlement is possible in Minnesota

While facing a debt lawsuit is scary, you can avoid a judgment by negotiating a settlement with your creditor. Make sure to file an Answer and get your agreement in writing before sending your money.

If you need help negotiating a settlement with your creditor, check out SoloSuit.

What is SoloSuit?

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.)

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