How to Settle a Debt in New Mexico

Sarah Edwards | March 09, 2023

Edited by Hannah Locklear

If you’re struggling to keep up with your debts, you’re in a difficult spot. It can be tough to keep everything flowing smoothly. You might stop paying your creditors if something like a job loss or medical scare happens.

When a creditor doesn’t receive your regular remittance, they’ll take notice. They’ll begin calling you and sending you letters, urging you to get back on schedule. If you don’t, they may charge off your account, sell it to a debt collector, or pursue a legal claim against you.

If your creditor starts a debt lawsuit against you, they will seek a judgment. A judgment will allow them to reclaim the money due to them by seizing your property, garnishing your wages, or freezing your bank account. You want to avoid a judgment at all costs.

To prevent a judgment, you’ll need to settle the claim with your creditor before your court date.

There are 3 essential steps to debt settlement

The debt settlement process can be simplified with the following steps:

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

Keep reading to learn more about each of the steps. Watch the following video to explore even further.

1. Respond to the debt lawsuit with an Answer

Your creditor will begin the legal process against you by filing a Complaint. A Complaint indicates the reasons for the lawsuit, such as your nonpayment of an obligation. It will list the amount you owe, including the principal balance and any accumulated interest.

In New Mexico, you have 30 days to respond to a debt lawsuit before you automatically lose when a default judgment is entered against you.

Most people make their first mistake by failing to respond to their creditor’s Complaint. While you intend to settle the claim before your court date, you should always protect yourself by filing an Answer. An Answer allows you to defend yourself against the lawsuit if your settlement efforts fail.

In your Answer, you’ll indicate why you believe the claims against you are false. For instance, you may state that your creditor hasn’t properly validated the debt or that the debt has passed the statute of limitations.

Make the right defense the right way with SoloSuit.

2. Make an offer to start negotiations

You’ll want to determine how much you can afford to pay toward a settlement. Add up how much cash you have in savings and how much you can set aside from upcoming paychecks. If it’s not enough to settle your debt, take on a few odd jobs or ask friends and family for assistance.

Ideally, you’ll want to offer at least 60% of the value of your debt in a settlement. That amount is enough to show creditors you’re serious about resolving your obligation. They’ll consider the amount you offer and weigh it against their chances of winning the lawsuit.

You might go through a few rounds of negotiations with your creditor before coming to an agreement. Remember that negotiation is a part of the process. Don’t back down from your nonnegotiable terms, and don’t accept a deal you know you can’t afford.

If you make a deal and can’t fulfill the terms of the agreement, your creditor will continue the legal process, and they’ll likely win.

SoloSettle takes care of the settlement negotiation process.

3. Get the settlement agreement in writing

Once you have a deal with your creditor, get the terms of the agreement in writing. This ensures that you and your creditor understand the terms of the agreement before moving any further.

Your contract should indicate how much you’ll pay to the creditor, when it’s due, and where you’ll send the money. It should also stipulate that your creditor agrees to release their claims over the remaining obligation amount and that they’ll dismiss the lawsuit upon payment.

You can prepare your settlement agreement before the negotiations with your creditor. That way, you only need to insert the applicable information once you have a deal.

We recommend asking your creditor to notarize the agreement. Notarizing the agreement ensures there are witnesses to its signing, which gives it extra legal protection.

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

Now, let’s look at an example of how to settle a debt in New Mexico.

What are the debt collection and debt settlement laws in New Mexico?

New Mexico adheres to the Fair Debt Collection Practices Act (FDCPA). The FDCPA limits the actions debt collectors and creditors can take against consumers. A few of the actions the FDCPA prohibits include:

• Calling the consumer at odd hours, like before 8 a.m. or after 9 p.m.
• Telling the debtor they’ll go to jail if they don’t repay a debt.
• Using templates designed to look like legal processes when communicating with a debtor.
• Contacting the consumer at work if the debtor asks them not to.
• Using obscene or threatening language when attempting to collect a debt.
• Calling the consumer more than seven times over seven days.
• Misrepresenting who they are when speaking with a debtor.
• Publishing information about the consumer and the unpaid debt through any medium.

In New Mexico, there are laws that limit the time a creditor has to take legal action against a consumer for a debt. Under NM Stat § 37-1-1 (2019), oral contracts have a statute of limitations of four years, while written contracts have a statute of limitation of six years.

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 New Mexico, 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 is the best debt settlement company?

Several debt settlement companies can assist you through the settlement process. Here are a few of our top recommendations.

SoloSettle

SoloSettle, powered by SoloSuit, is unique among debt settlement companies because it offers settlement services to those facing debt lawsuits, and it does not have a debt amount requirement. Where most debt relief companies require your debt to be at least $10,000 or more, SoloSettle can help you settle a debt of any size.

As a tech-based approach to debt settlement, SoloSettle’s software sends and receives offers to and from creditors and debt collectors until you reach an agreement before the court date. Once you approve the settlement, SoloSettle manages the payment process, so you won’t need to give away your bank details or financial information.

National Debt Relief

National Debt Relief is one of the nation’s largest debt settlement organizations. Individuals who sign up for the program make monthly payments, which the company saves toward debt resolution. People who agree to the program can save up to 50% off their debts.

Freedom Debt Relief

Freedom Debt Relief is another large debt settlement organization. The company helps individuals settle multiple unsecured debts, like credit cards, medical debt, and personal loans. To qualify for the program, you must have at least $7,500 in outstanding debt and agree to pay the company 15% to 25% in fees.

Accredited Debt Relief

Once a consumer starts debt settlement with the help of Accredited Debt Relief, they’ll make monthly payments to the company. Most Accredited Debt Relief programs last between two and four years and have fees of 15% to 25% of the individual’s total debt.

How do I contact my creditor?

If you’d like to try settling your debt yourself, you can call, email, or write to your creditor.

We recommend emailing the creditor since it’s fast, easy, and provides a written conversation record. You’ll have time to consider your creditor’s messages before responding.

However, some people prefer to speak with creditors directly. If you choose a direct conversation, you should determine your nonnegotiables before the call. For instance, you could decide how much you can afford to pay and when you’ll have the money available.

We recommend recording the conversation if you decide to make the call. Under NM Stat § 30-12-1, only one person must consent to record a phone call. You’ll be the person granting consent.

FAQs about settling debts in New Mexico

You likely have other questions about debt settlement in New Mexico. Here are a few questions we hear frequently.

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

We recommend offering at least 60% of your debt’s value in a debt settlement. That amount is enough for your creditors to seriously consider whether the cost of collections activities outweighs a payment from you. If you can’t afford that much, offer what you can and explain your financial circumstances to your creditors.

Q. How long before a debt is uncollectible in New Mexico?

New Mexico limits legal action against debtors to four to six years. After that time, your creditors can no longer file a debt lawsuit against you. However, they can still report your account to the credit bureaus.

Q. Can I do my own debt settlement?

Yes, you can do your own debt settlement. Spend some time learning how the process works before contacting your creditor. You’ll need to know how much you can afford in debt settlement, and you should never send money until you have a written, signed agreement with your creditor.

How to get debt relief in New Mexico

SoloSuit has additional guides concerning debt relief and the debt collection process in New Mexico. Check them out below.

• How to Get Debt Relief in New Mexico | SoloSuit Blog
• Statute of Limitations on Debt Collection in New Mexico | SoloSuit Blog
• How to Answer a Summons for Debt Collection in New Mexico (2020 Guide) | SoloSuit Blog
• New Mexico Court Case Search - Find Your Lawsuit | SoloSuit Blog

Debt settlement can help you avoid a judgment

If you’re facing a debt lawsuit in New Mexico, you’ll want to avoid a potential judgment. Debt settlement can allow you to do just that. Make sure to file an Answer to your creditor’s Complaint, then start your negotiations. Once you have a deal, get it in writing before sending your money to the creditor.

SoloSuit can help protect you from debt lawsuits and debt collectors — learn more today.

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.)

How to answer a summons for debt collection in your state

Here's a list of guides for other states.

All 50 states.

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Guides on how to beat every debt collector

Being sued by a different debt collector? Were making guides on how to beat each one.

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• Sherman Financial Group
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Is your credit card company suing you? Learn how you can beat each one.

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