Sarah Edwards | March 13, 2023
Summary: Receiving notice of a pending debt lawsuit against you is frustrating. You’ll want to resolve the matter before your court date, which is easier than it sounds. Just respond to the lawsuit in court before North Carolina’s deadline, send a settlement offer to kickstart negotiations, and get the settlement terms in writing. SoloSettle can help with all these steps and more.
If your creditor is chasing you for an overdue bill or missed payment, you’re likely receiving lots of phone calls and letters. If you don’t resume your payments, your creditor might sell off your debt to a collection agency or take legal action against you.
Legal action against a consumer is known as a debt lawsuit. Creditors who file a debt lawsuit seek to obtain a judgment against the consumer, which will allow them to increase their collection activities. A judgment can enable the creditor to garnish a consumer’s wages or freeze their bank account.
You’ll want to avoid a judgment and stop further collection activities by your creditor. You can do so through the debt settlement process.
If you’ve been sued for debt in North Carolina, use these three steps to settle your debt and move on with your life:
Now, let’s break down each step further. Don’t like reading? Check out this video instead:
Your creditor will begin the legal process against you by filing a Summons and Complaint. The Summons notifies you of the lawsuit, and the Complaint lists the reasons for suing, such as lack of payments toward your loan. The Complaint will also indicate your total outstanding balance, including any interest and fees.
You have 30 days to respond to a debt lawsuit in North Carolina before you automatically lose.
You’ll want to respond to your creditor’s Complaint with a formal legal response, which is known as an Answer. An Answer is your defense to the lawsuit. You’ll indicate why you feel the Complaint against you is inappropriate or inaccurate.
For instance, you could claim you don’t have a business relationship with the collection agency or that the amount sought in the lawsuit doesn’t align with your records. If these don’t apply to you, seek out a defense that does.
While you plan to settle the debt with your creditor before your court date, an Answer allows you to defend yourself if the settlement falls through. Without an Answer, your creditor can ask the judge for a default judgment. This type of judgment can lead to wage garnishment and liens on your property.
Next, decide how much you can offer in a settlement. Assess your upcoming income and check your savings. If you have access to cash through other means, such as borrowing money from friends or family, ask for help.
Your creditor will weigh your offer against the alternative (a judgment). Even if they obtain the judgment, they’ll need to go through costly collection activities to recover the money. A settlement is usually more attractive than the collection process.
You may go through several rounds of negotiation with your creditor before reaching a deal. Keep a cool head, and don’t agree to any terms you know you can’t follow through with.
But how much should you offer to settle a debt? The answer can be found by considering two factors:
Ideally, you’ll want to offer your creditor at least 60% of the total value of your debt. That amount is enough to convince them you’re serious about settling while still giving you room to save money.
Once you have a deal with your creditor, you’ll want to get it in writing. A written contract ensures that everyone understands the terms of the agreement.
Your agreement should indicate the amount you’ll repay, the due date, and the payment method. It should also include a statement that releases you from the remaining balance. The creditor won’t be able to take further collection action against you and will have to drop the lawsuit once you make your payment.
You can prepare your contract in advance of the negotiation process. Once you have a deal with your creditor, you’ll insert the relevant details before sending it to sign.
We recommend that you ask your creditor to notarize the agreement. A notarized agreement ensures you have a legal witness to the contract. If your creditor tries to back out of the deal, you’ll have the signed agreement to protect you.
Here’s a debt settlement agreement example to give you an idea of what to include in yours.
Now, let’s take a look at an example of how to settle a debt in North Carolina.
Example: Leah is being sued by Encore Capital Group, a debt collection agency, for an old credit card debt of $8.000.Leah lives in North Carolina, so she only has 30 days to respond to the lawsuit before losing automatically. Leah can’t afford to Encore fully, so she uses SoloSettle to respond and offer a settlement. After drafting an Answer to Ecnore’s Complaint, she contacts the company with a $5,200 offer. Up Top Finance counters with an offer of $6,000, which Leah accepts. Once she has a signed and notarized settlement agreement from Encore Capital Group, SoloSettle transfers Leah’s payment over, keeping her financial information secure and private. Encore drops the lawsuit against Leah and reports the account settled to the credit bureaus.
Under NC Gen Stat § 58-70-95 (2021), debt collectors cannot take specific actions against a consumer, including:
NC Gen Stat § 58-70-100 (2015) prevents harassment of consumers by debt collectors. Creditors cannot do any of the following:
The NC Gen Stat § 58-70-110 prohibits debt collectors from using these deceptive practices:
North Carolina adheres to the federal Fair Debt Collection Practices Act (FDCPA), which has similar protections for consumers in collections.
Like other states, North Carolina has statutes of limitations that cap the time creditors have to pursue a debt lawsuit against a consumer. Under NC Gen Stat § 1-52 (2015), written and oral contracts have a three-year statute of limitations, as do collections on account.
There are several debt settlement organizations you can get help from. Here are a few of our recommendations.
SoloSettle helps individuals facing debt lawsuits resolve the matter with their creditors and debt collectors.
SoloSettle, powered by SoloSuit, is different from traditional debt settlement companies. Here’s how:
Individuals who enroll with National Debt Relief spend two to four years making monthly payments, which go toward debt settlement. The company charges 15% to 25% of the total value of your debt in fees, and you must have a minimum of $10,000 in unsecured debt to qualify.
Freedom Debt Relief is one of the oldest debt settlement companies. Since 2002, it has helped thousands resolve their debts and move forward with a clean financial slate. Programs last between two and four years, and customers pay the company 15% to 25% of their debt in fees.
This company has been in business for over 23 years, making them a trusted name in debt settlement. They have an A+ rating from the Better Business Bureau (BBB).
Century Support Services has over a decade of experience in helping consumers settle debts and maintains an A+ rating from the BBB. The business has consistently high customer satisfaction scores, but the fees can be steep. Make sure you understand the fee structure before making a final decision.
If you’re ready to start the debt settlement process, you can contact your creditor via email, phone, or snail mail.
We recommend email since it’s quick and direct. Once you send your email asking for a settlement, you’ll generally receive a response within the next business day. You’ll have time to consider your creditor’s reply before deciding.
If time is of the essence, you can call your creditor. However, you should record the conversation so that you have a record of any deal you reach. Under NC Gen Stat § 15A-287, you can record a phone conversation you are participating in without telling the other person.
Learn the answers to some of the most common questions about debt settlement in North Carolina.
Establishing a budget and repayment plan is the best way to get out of debt. Some people increase their monthly payments toward a single debt. Once it is fully repaid, they follow the same practice for the remaining obligations. You can consider debt settlement or bankruptcy if it is impossible to make even minimum payments.
It’s best to repay your debts rather than attempt to settle them. Repaying your debts looks better on your credit report and keeps a positive relationship with your creditors. However, settling your accounts can help you avoid potential repercussions, like a judgment or bankruptcy, if you're in too much debt.
We’ve found most creditors will settle for 50% to 60% of the total value of a debt. However, you should only pursue debt settlement if you face extenuating financial circumstances or are trying to avoid bankruptcy. Debt settlement usually reduces your credit score in the short term, making it difficult to obtain loans.
SoloSuit has additional guides you can review concerning debts in North Carolina.
While a debt lawsuit can be scary, settling your obligations before your court date is possible. Review all the information you can find on SoloSuit, and follow our instructions for negotiating your settlement. Make sure to get your agreement in writing before sending your money.
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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