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How to Settle a Debt in Louisiana

Dena Standley | December 22, 2022

Dena Standley
Legal Expert, Paralegal
Dena Standley, BA

Dena Standley is a seasoned paralegal with more than 20 years of experience in legal research and writing, having received a certification as a Legal Assistant/Paralegal from Southern Technical College.

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.

When you reach a debt settlement agreement ^^

Summary: Louisiana consumers can settle their debts using a do-it-yourself approach or by hiring a debt settlement company. Whatever method you choose, settling debt will help you reduce the financial burden you may be experiencing. SoloSuit commits to giving you helpful information to make the debt settlement process manageable.

Debt settlement continues to assist countless consumers in regaining their financial life by allowing them to pay off long-standing debts. In Louisiana, delinquent accounts often lower your credit score affecting your likelihood of getting a loan or a new line of credit.

The creditor or the debtor can initiate a debt settlement offer. When a creditor initiates it, they aim to close the account more than make a reasonable profit. Numerous open debt accounts give the company a bad image to investors.

On the other hand, when a debtor initiates debt settlement, they often want to reduce their debt burden, have a better credit report, and manage their finances better. Today, SoloSuit will help you meet your goal by discussing the steps to settle a debt with a creditor and additional information you need to know about debt settlement in Louisiana.

Three steps to settle a debt in Louisiana

Sometimes you can be pushed to the corner by a creditor, and ignoring their attempts to collect is no longer an option—especially if they have taken you to court. Failure to address a lawsuit may lead to the creditor winning a default judgment, allowing them to access your bank account, garnish your wages, or put a lien on your property. You can avoid such an outcome.

Follow these three steps to settle a debt in Louisiana:

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

Below, we break down each of these steps in detail. Alternatively, you can watch this video to learn more:

1. Respond to the debt lawsuit with an Answer

Filing an Answer to the court is a step you can't afford to put aside and focus on settling the debt. Your settlement efforts will be futile because the court will assume you ignored the matter. Hence, respond to the lawsuit before making a settlement offer.

Begin your response by answering the allegations the creditors made against you in the Complaint document. Louisiana permits three ways to answer this section, admit, deny or deny for lack of knowledge. Even if all the allegations are true, it is a good strategy to deny some to give the creditor more work to prove the case.

The following section in the lawsuit entails listing your affirmative defenses. These reasons can help your defense if the creditor wants to proceed to court. SoloSuit can help you find the affirmative defenses when you use our Answer to respond to debt collectors. Watch this video for more information.

According to LA Code Civ Pro art. 253, you have twenty-one (21) days to file your Answer with the court, or the creditor may receive a favorable judgment.

2. Make an offer to start negotiations

After successfully filing the Answer, choose the most favorable method to negotiate for a settlement. You can use the do-it-yourself approach, employ a debt settlement company to negotiate for you, or use SoloSettle, which combines the two. As you settle on one method, consider the following factors:

  • Determine how much you can offer the creditor: You must first assess how much you can save before making an offer with a creditor. You can safely begin negotiations if you have already saved around 60–80% of the original debt. If you do not have this amount, cut back on your monthly expenses and add any extra income you get for this purpose.

  • Calculate how much your creditor is willing to accept: A debt settlement company can best advise on how much to offer a creditor—if they have already established a working relationship. Generally, an original creditor accepts 60–80% of the original debt, while a debt collection agency that has bought the debt can accept between 10–60%. Always make your initial settlement offer for significantly less than you could pay. This gives you room to continue working toward a settlement if they counteroffer for a higher percentage.

Once you know how much you can afford to pay, and how much the creditor might accept, send your first settlement offer. This will most likely kick start the negotiation process. You might have to go through a few rounds of offers and counteroffers before reaching an agreement.

SoloSettle takes care of the negotiation process for you.

3. Get the debt settlement agreement in writing

Unfortunately, many consumers have been deceived by debt collectors who promise to remove the debt from their credit report or withdraw a lawsuit once they make the settlement payment. These debt collectors then refuse to keep their end of the bargain and ask you to top up the balance for them to fulfill their promise.

To avoid this trap, ask the creditor to agree to have the settlement deal in writing. This way, you can easily proceed to court or raise an evidence-based complaint to the relevant authorities when they refuse to honor their promise. Use this debt settlement agreement template as a guide on what to ensure is included.

SoloSettle manages the debt settlement agreement for you.

SoloSettle is the easiest way to settle your debt

SoloSettle aims to help consumers negotiate with debt collectors and reach a settlement deal while controlling the narrative. The web app provides a structured process to send and receive offers from debt collectors. In addition, it drafts offers for you, preventing the creditor from bullying or deceiving you due to lack of experience.

SoloSettle includes all the legal language needed to protect your rights and ensures you sound professional. Once you agree on a settlement deal, SoloSettle takes care of the documentation and protects your sensitive financial information from getting into the wrong hands.

Let’s take a look at an example.

Example: Candy was desperate to begin negotiations with Premium Credit Corporation because of the lawsuit they sent for a debt of $7,890. Due to her busy schedule, she didn't have time to learn about negotiating, so she chose to use SoloSettle. After submitting her details, SoloSettle guided her through the negotiation process and did most of the work. After several counteroffers, Premium Credit corporation accepted $4440, which was 55% of the original debt.

Louisiana debt settlement laws can protect you

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 Louisiana, 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.

Louisiana protects its citizens from unscrupulous debt settlement practices using the Louisiana Fair Debt Collection Practices Act and Louisiana debt adjusting laws. These guidelines limit the extent debt settlement companies can go in offering their services to consumers. For instance, debt settlement companies should:

  • Clearly state what they can offer the debtor without deceiving them.
  • Operate with an updated and legal license.
  • Not charge upfront fees without first getting a settlement deal with the creditors.
  • Give a debtor a settlement agreement contract and allow them to cancel for a good reason.

If a debt settlement company violates these laws, report them to the Louisiana attorney general's office, where action will be taken against them.

What’s the best debt settlement company?

The best debt settlement company will not ask for upfront fees before getting a good deal from the creditor. Additionally, they will guide you through the entire process and recommend an actionable plan to help you manage your debt. The following are companies to consider:

  • SoloSettle: This web app helps you get a settlement deal for any debt amount, unlike some settlement companies that work with debts of more than $15K. SoloSuit is also a trusted company; you can be sure you are not being scammed.

  • New Era Debt Solution: This company gives you several debt solution options and recommends the most ideal for your situation.

  • United Settlement: The debt experts in this company first discuss the state of your finances and how to approach the settlement process.

  • Century: The certified debt specialist first analyzes your debt situation and does not charge a fee until they have executed the debt settlement plan.

Choose the best method to contact the debt collector

Contacting a debt collector is often unpleasant because they are aggressive in controlling the conversation and coercing you to make payments. The experience may be better this time because you will be offering to pay off the debt. The following are the three main ways of contacting a creditor for debt settlement:

  • Phone: A phone conversation is not always the best to enter a settlement deal because there is no proof of the agreement unless you record it. Fortunately, Louisiana is a one-party consent state (LA Rev Stat § 15:1303), and you can record the conversation without informing the debt collector.

  • Mail: Negotiations by mail take longer due to the days between sending and receiving to and from both parties. It is better than a phone call because you have a paper trail of the agreement process.

  • Email: This method is the best because communication is instantaneous, and you can reach an agreement within the shortest time possible. In addition, you have all the information in writing.

How to get debt relief in Louisiana

Apart from debt settlement, there are other debt management options you can assess to see if they fit your financial situation. These options are debt consolidation, which combines several debts into one loan, and bankruptcy, which excuses most unsecured debt but at the cost of losing most of your assets. For more details on these options, check out this complete guide on how to get debt relief in Louisiana.

SoloSuit can help you settle your debt

At SoloSuit, we are committed to providing exceptional services to help you deal with debt collectors and get out of debt. Our SoloSettle tool has helped hundreds of consumers get a favorable debt settlement deal and become debt free. Start working on your Debt Settlement Letter with us today.

Frequently Asked Questions

What should I do if the debt settlement contract misses an important detail?

If the contract needs to include an important detail, contact the creditor or debt settlement company and ask them to make the necessary changes before signing. You can also refuse to pay until the contract contains all the details required to avoid being deceived.

How do I negotiate with creditors?

First, send a Debt Settlement Letter via mail or email requesting them to take a lowered percentage of the original debt. They may counter the offer, and you can accept the counter offer, or send another offer. It is not unusual for debt settlements to go through several rounds of negotiations. Just remember not to exceed what you can afford to pay. Most creditors will accept a reasonable offer to avoid going to court.

Can I settle a debt on my own?

Yes, you can negotiate directly with creditors if you have good negotiation skills and understand how debt collectors work. However, there is specific legal language and documentation that needs to be present to keep creditors from taking advantage of consumers. Working with a tool like SoloSettle helps ensure you haven’t left any gaps that unwittingly allow creditors to continue to pursue the remainder of the debt.

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.

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