Sarah Edwards | August 24, 2023
Edited by Hannah Locklear
Summary: If you’ve been sued for a debt in New York, you can send a settlement offer to the opposing party at any stage of the lawsuit. Debt settlement can help you save money and get back on track financially. To settle a debt in New York, you must respond to your lawsuit before the deadline, send a settlement offer to start negotiations, and get it in writing once you’ve reached an agreement. SoloSettle helps you with the debt settlement process.
Receiving notice of a debt lawsuit against you is scary. You’re likely wondering what will happen if you lose and how a judgment will impact your wages and bank account. Fortunately, you have a better option: Settle the debt ahead of time to prevent a judgment and its consequences.
So, if you’ve been sued for debt in New York, this article will teach you how to respond to the lawsuit and work out a settlement before your court date.
There are three simple steps to follow to settle your debt in New York:
Below, we’ll break down each of these steps in detail. If you don’t like reading, try watching this video instead:
Whenever a creditor or debt collector decides to file a lawsuit against you in New York, they’ll file a Summons and Complaint in your local court. They must also have these documents delivered to you as outlined by state law.
The Summons notifies you of the case and its basic details. The Complaint lists the specific claims against you, including why they are suing you for debt, the amount of the debt, and any accumulated interest.
Many New Yorkers make their first mistake by failing to respond to the Summons and Complaint with an Answer. If you don’t provide any defense to the claims against you, the creditor or collector can ask the judge to grant a default judgment against you.
Even though you plan to settle your account before your court date, you should still file an Answer. An Answer prevents the opposing party from obtaining a judgment against you without a thorough review of your case. The judge will need to analyze all of the evidence, including your arguments. You can also appear in court to defend yourself.
You have 10, 20, or 30 days to respond to a debt lawsuit in New York, depending on how the court documents were delivered to you. If you don’t respond before the deadline, you will lose automatically by default judgment. This opens the door for the creditor or collector to garnish your wages or even seize your property.
Sometimes, debt collectors use nefarious tactics to try to collect the total amount of an obligation, even after you’ve settled it. They may allow the collection case to proceed and fail to notify the judge of the settlement. The judge won’t have reason to know there is a dispute concerning the debt unless you tell them.
Drafting an Answer prevents these problems. It gives you time to work out a settlement without worrying about a default judgment.
In your Answer, respond to each claim against you and list your defenses. SoloSuit’s Answer form helps you make a customized legal response to your case in minutes online.
Check out this video to learn how to respond to a debt lawsuit in New York:
Your next step in the debt settlement process is determining how much you can afford to pay in a settlement. Assess your savings and any money you can put away over the next few weeks.
If you don’t have much money to offer in a debt settlement, consider selling a few things you don’t need or getting financial help from friends and family.
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 that you offer at least 60% of the total value of the debt to begin. That’s enough to show you’re making an honest attempt to reconcile the payment while also allowing you to save some money.
For instance, if you owe $2,000 on a debt, you can offer $1,200 to settle it. Send your initial offer by saying something along these lines:
“I see you’re suing me for $2,000 for [case number]. I don’t have that kind of money and I don’t agree with the amount. But I do have $1,200 that I can pay within 30 days to settle the debt in full. Let me know if you accept.”
If you can’t afford 60% of the value of your debt, start the negotiations with an offer you feel comfortable with. You can preface your proposal with an explanation of your financial circumstances. Sometimes creditors will grant you more leeway if they understand what you’re going through.
Once you provide an offer, your creditor will likely counter with an offer of their own. Don’t feel you have to accept it if you can’t afford it. Continue to negotiate until you reach a deal you can live with—and realistically repay.
Never transfer any money to a debt collector or creditor before you get a written settlement agreement. A written contract ensures that you and your creditor fully understand the settlement terms, including the amount you’ll pay and the due date for your payment.
Your settlement agreement should also contain wording that releases you from future collection activity concerning the debt. Once you make your payment, your creditor eliminates the remainder of your debt.
Generally, the creditor or debt collector will take care of drafting the settlement agreement, which should eventually be filed into the court case. Here’s a debt settlement agreement example, with a preview attached below:
Make sure to review the agreement carefully before signing. You’ll notice that the agreement includes a place for a notary to sign for both you and your creditor. Notarizing the contract ensures that there’s a witness to the agreement, which provides you with further protection in case the debt collector reneges on the deal.
Now, let’s look at an example of how to settle a debt in New York.
Example: Mario was sued for a credit card debt of $3,000 in New York City. Someone delivered the court papers to him personally, so he had only 10 days to respond to the lawsuit in order to avoid a default judgment. Mario used SoloSuit to draft and file an Answer to the lawsuit before the deadline, giving himself time to work out a plan to settle the debt. After taking a close look at his finances, Mario decided he could pay $2,250 (or 75% of the debt) upfront. He used SoloSettle to send an offer to the debt collectors, starting a little lower at $1,800 (or 60% of the debt). After a few rounds of negotiating, they reached an agreement of $2,100 (70%). Mario paid off the debt as outlined in the settlement agreement and gave himself another chance at restoring his financial health and credit.
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 York, 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:
According to the CCFA, debt collectors have only three years to pursue consumers for outstanding obligations. In addition, they cannot restart the statute of limitations if a debtor makes a payment toward a debt that is in collections.
The CCFA provides additional rules that are favorable toward consumers, including protections from default judgments. Anytime a creditor or debt collector files a claim against a consumer in court, they must provide instructions on how the consumer can respond to the lawsuit and what happens if they don’t.
Under the FDCPA laws, creditors and debt collectors cannot:
Consumers must understand that they have rights concerning debt collection. They don’t have to accept a debt collector’s harassing behavior.
If you’re ready to get started on your debt settlement journey, several companies can help you.
SoloSettle works exclusively with individuals facing debt lawsuits who wish to settle their claims before their court date. We handle the negotiation process for you, so you don’t need to engage with any debt collectors. Once we reach an agreement, we’ll manage the payment process so that you can keep your personal details secure.
Many consumers prefer SoloSettle over traditional debt settlement companies for a few reasons:
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.
SoloSettle really saved me a ton of time and heartburn and kept me from having to be my own lawyer in court.”
Below are some other good debt settlement companies you might consider:
If you’re ready to begin the debt settlement negotiation process, you’ll want to contact your creditor. You can do so via phone, email, or letter.
Consumers who need to resolve their debt swiftly should consider emailing to kick off the negotiation process. An email provides a written record of your settlement attempts and is much faster than snail mail. You may be able to negotiate a settlement with your creditor within a few hours or days by email.
You can also call your creditor to negotiate a settlement. You should record the conversation if you choose to call your debt collector. In New York, it is legal to record a phone conversation with the consent of one party, according to NY Penal Law § 250.00.
Recording your conversation ensures that there is a record you can refer to if the debt collector later tries to renege on the agreement.
Debt settlement is a confusing topic, and we hear lots of questions from borrowers in New York who need help. Here are answers to some of the most common questions.
The statute of limitations for debt in New York is three years. After three years, creditors and debt collectors cannot pursue the collection of unpaid debts through the courts. However, they can continue to report your account adversely, send you letters, and call you until you repay or settle the debt.
Yes, debt collectors can sue you in New York for failing to repay your debts. However, if they do so, they must abide by the state’s statute of limitations on debt, which is three years. If the debt passes the three-year limit, they can no longer file a lawsuit against you.
It’s best to fully repay your debt according to the terms of your agreement. If you do so, you’ll maintain a good credit score, which is helpful when you apply for loans. However, debt settlement is advisable if you can’t afford to repay the debt in full.
SoloSuit has many guides that can help you learn more about getting out of debt in New York. Check out these articles:
Facing debt can be overwhelming, but you don't have to navigate it alone. The Debt Lawyer specializes in offering comprehensive wage garnishment and 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.
If you’re facing a debt lawsuit, debt settlement can help you avoid a judgment and move on with your life. SoloSettle, powered by SoloSuit, is here to help you send a settlement offer, negotiate an agreement, and pay off your debt.
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