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How to Settle a Debt in New Jersey

Sarah Edwards | August 24, 2023

Sarah Edwards
Legal Expert
Sarah Edwards, BS

Sarah Harris 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: If you’ve been sued for a debt in New Jersey, consider debt settlement as a way to save money and avoid going to court. You can settle a debt at any stage of the debt lawsuit process. Just follow these steps: respond to the lawsuit with an Answer, determine how much you can pay and send an offer, get the agreement in writing. SoloSettle takes care of the debt settlement process so you don’t have to.

Owing debt is hard, especially if it prevents you from living the kind of life you’d like to lead. You might have been able to make minimum payments for a while, but sometimes things happen that make you fall off track.

In the worst cases, a creditor or debtor will sue you for unpaid debt. If you receive a notice that you’re being sued for debt in New Jersey, you may be wondering how to handle it. Many people simply ignore a court Summons, and as a result, the judge orders a judgment against them.

A judgment is the last thing you need. If your creditor or the debt collector obtains a judgment against you, they can garnish your wages or freeze your bank account. You won’t be able to control when you pay; instead, they will take money from you until they collect what’s due.

Fortunately, you have options you can explore to avoid a default judgment. One of those options is debt settlement. In this article, you’ll learn what you need to know about the debt settlement process in New Jersey.

Let’s get right to it.

Settle your debt in New Jersey with these 3 steps

In New Jersey, you can take the following three proactive actions to settle your debt.

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

Below, we’ll take a closer look at each of these three steps. Otherwise, you can watch this video to learn more:

1. Respond to the debt lawsuit with an Answer

Whenever someone decides to sue you for debt, they’ll begin by filing a Summons and Complaint with the court. The Summons is your official notification of the lawsuit and outlines all the case details. The Complaint lists the reasons you’re being sued, such as the amount you owe, any interest and fees, and details like a lack of payment history. You’ll receive a copy of the Summons and Complaint.

In New Jersey, you have 35 days to respond to a debt collection lawsuit. Failure to do so will result in a default judgment.

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People unfamiliar with the legal system may be unaware that they must file a response to the Complaint (known as an Answer) to avoid a default judgment. If there is no statement for the judge to review, they’ll rule in favor of your creditor because they assume you have no defense.

While you intend to settle your debt before your court date, you still want to file an Answer with the court and send a copy to the opposing party. An Answer shows your creditor or collector you are familiar with the legal system and won’t take their judgment sitting down.

In your Answer, you’ll explain why you haven’t paid your bill. There are multiple defenses available you can use. Some of the most common include a lack of business relationship with the debt collector and insufficient documentation of the debt.

Whatever defenses you use, make sure you remain factual.

Draft and file an Answer to your New Jersey lawsuit in minutes online.

If you need help drafting an answer, watch our video below:

2. Make an offer to start the negotiation process

Your next step is determining how much you can afford to pay your debt collector in a settlement. Consider your savings and decide how much money you can divert to debt settlement over the next few weeks. If you have a means of making some extra money, use it.

You should also do some research on your creditor or debt collector to gauge how much they might accept as a settlement. All creditors and collectors are different, and some are more lenient than others.

We recommend you offer at least 60% of the debt’s value in a settlement to begin. For instance, if the creditor is suing you for $3,000, you’d offer $1,800. If you can’t afford 60% of the debt’s value, offer what you can. A higher offer is likely to lead to a satisfactory result, but startling low can give you room to grow.

You’ll probably go through several rounds of negotiation with your creditor before reaching an agreement. Make sure that your final deal is something you can afford. If you can’t pay according to the terms of the agreement, the deal will fall through, and the court case will proceed.

SoloSettle takes care of the settlement negotiation process for you.

3. Get the settlement agreement in writing

You should not send your creditor any money without a written agreement. A written contract ensures that you and your creditor or debt collector understand and agree on the settlement terms.

Your agreement should include essential information, such as the settlement amount, the form of payment, and the due date. There should also be clear language that stipulates no one will pursue you for further collection of the remaining balance.

Typically, the creditor or debt collector’s lawyer will draft the settlement agreement. Be sure to review everything carefully before signing. We also recommend notarizing the agreement so you’ll have a witness. Here’s a debt settlement agreement example, with a preview attached below, so you have an idea of what to look for in yours.

Debt Settlement Agreement example

Now, let’s take a look at an example of debt settlement in New Jersey.

Example: Jack is being sued by Velocity Investments in New Jersey for a debt of $6,000. Jack knows he owes the money, but he only has enough money saved up to pay off $4,500 (which is 75% of the debt). Jack uses SoloSuit to respond to the debt lawsuit, giving him time to reach out to Velocity and work out a settlement. He explains his financial situation and uses SoloSettle to send a settlement offer of $3,000 (50% of the debt amount). After a few rounds of negotiations, Jack reaches an agreement to pay a lump-sum of $3,900. Settling the debt saves Jack thousands and helps him avoid going to court.

What are the New Jersey debt collection and debt settlement laws?

New Jersey adheres to the Fair Debt Collection Practices Act (FDCPA), which outlines federal regulations that collection agencies and creditors must follow when attempting to collect a debt. New Jersey has no additional state protections for debtors other than the statute of limitations.

Under the FDCPA, debt collectors must abide by specific rules. They cannot do any of the following:

  • Call a debtor at untimely hours, such as before 8 a.m. or after 9 p.m.
  • Use obscene or threatening language when calling or writing a consumer.
  • Pretend to be someone else when contacting a debtor.
  • Tell a debtor they’ll go to jail if they don’t repay their debt.
  • Call a debtor more than seven times a week concerning a debt.

If a debt collector or creditor violates the provisions of the FDCPA, they can face fines and penalties. Consumers can report violations to the CFPB.

New Jersey has statutes of limitations that limit the time a debt collector has to file a lawsuit for unpaid obligations. Under NJ Rev Stat § 2A:14-1 (2013), the statute of limitations is six years for most debts, including credit cards, mortgages, personal loans, and medical debt.

As for debt settlement laws, 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 New Jersey, 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 are the best debt settlement companies in New Jersey?

Debt settlement companies can help you resolve your outstanding obligations. Here are a few of our recommendations.


SoloSettle, powered by SoloSuit, helps people settle their debts when they’re facing a lawsuit. Our service includes end-to-end negotiations, which means that you don’t need to worry about speaking with the debt collector yourself or writing a settlement agreement.

We also facilitate your settlement payment; you won’t have to give any debt collectors your personal information.

Many consumers prefer SoloSettle over traditional debt settlement companies for a few reasons:

  • You can settle debts of any size with SoloSettle. Many debt settlement companies require you to have a debt over $15k.
  • SoloSettle actively attempts to settle your debt, whereas many debt settlement companies take a more passive role, waiting for settlement offers to come to them.
  • SoloSettle is offered by SoloSuit, a trusted brand and a legitimate company. Many traditional debt settlement companies are actual scams.
  • SoloSettle has legal defense built in with SoloSuit. While settling, you can use SoloSuit to block lawsuits if you need. Most debt settlement companies don’t provide legal defense; if you’re sued for a debt you are on your own.

If you’re still not convinced, 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 options for debt settlement companies in New Jersey:

What are the best ways to start the debt settlement process?

If you’d like to settle your debts on your own, you’ll need to save up some money and contact your creditors individually. You can call, email, or send a letter.

We strongly recommend email to start the negotiation process. Email is quick and gives you a written record of the conversation with your debt collector. You may be able to reach a settlement agreement within a day or two of negotiations.

However, if you prefer speaking with a debt collector, you can do so. You should record the call so that you have evidence of your conversation. According to NJ Rev Stat § 2A:156A-3, the consent of just one party is needed to record the discussion in New Jersey. You’ll be the person giving consent.

FAQs on debt settlement in New Jersey

Debt settlement is confusing, and we hear lots of questions from people in New Jersey interested in the process. Here are a few of the most common:

Q. What is a reasonable offer to settle a debt?

The amount you should offer to settle a debt depends on your financial situation. A creditor or debt collector is more likely to accept a larger offer than a smaller one. We recommend starting your negotiation with at least 60% of the total value of your debt. However, if that’s not possible, offer what you can and explain your financial situation.

Q. How long can you legally be chased for debt in New Jersey?

New Jersey has a statute of limitations of six years for most consumer debts. Once your debt passes the statute of limitations, your lenders can no longer file a lawsuit against you. However, they can continue adversely reporting your account to the credit reporting agencies until you either repay or settle it.

Q. Can I go to jail for not repaying a debt in New Jersey?

No one can send you to jail for failing to repay a debt in New Jersey. Nonpayment of debt is a civil matter, not a criminal one. However, creditors can obtain a judgment against you that allows them to garnish your wages or freeze your bank account.

How to get debt relief in New Jersey

SoloSuit has multiple guides concerning debt relief in New Jersey. If you’re looking for additional assistance, check out the below articles:

Facing financial challenges can be overwhelming, but you don't have to navigate them alone. The Debt Lawyer specializes in offering comprehensive bankruptcy solutions for residents of New Jersey and New York with a team of seasoned team of legal professionals dedicated to providing personalized guidance every step of the way. Whether you're considering filing for bankruptcy or just seeking clarity about your financial situation, you have resources.

Settling your debt in New Jersey is possible

While you may feel nervous about approaching your creditor for a settlement, it’s one of the best ways to move on from a debt you can’t afford to repay in full. Most people feel a complete sense of relief once they are free from unmanageable debt — and you can, too.

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