Sarah Edwards | March 09, 2023
Summary: You have 30 days to respond to a debt lawsuit in New Mexico, but you can reach out at any stage of the lawsuit process to discuss a debt settlement plan. Just be sure to file an Answer to the suit before the deadline, send a settlement offer to kickstart negotiations, and get the agreement in writing. SoloSettle can help you with all these steps and more.
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.
The debt settlement process can be simplified with the following steps:
Keep reading to learn more about each of the steps. Watch the following video to explore even further.
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.
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.
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.
Example: Clara is being sued by Empire Collection Agency in New Mexico for $3,000, the balance of an unpaid loan she holds. Clara uses SoloSuit to file an Answer to the lawsuit before the 30-day deadline. This gives her time to work out a settlement plan with Empire. She determines she can afford $1,800 in a debt settlement. Next, she uses SoloSettle to send a debt settlement offer. After reviewing her initial offer, Empire counters with an offer of $2,200. Clara decides to accept the offer. Once she and Empire sign and notarize a settlement agreement, SoloSettle transfers Clara’s settlement payment to Empire. The case against Clara is dropped, and Empire reports the account settled to the credit reporting bureaus.
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:
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:
Several debt settlement companies can assist you through the settlement process. Here are a few of our top recommendations.
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 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 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.
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.
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.
You likely have other questions about debt settlement in New Mexico. Here are a few questions we hear frequently.
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.
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.
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.
SoloSuit has additional guides concerning debt relief and the debt collection process in New Mexico. Check them out below.
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 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.
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