If You Are Using a Debt Relief Agency, Can You Settle Yourself with the Creditor?

Sarah Edwards | December 07, 2022

Sarah Edwards
Legal Expert
Sarah Edwards, BS

Sarah Edwards is a professional researcher and writer specializing in legal content. An Emerson College alumna, she holds a Bachelor of Science in Communication from the prestigious Boston institution.

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.

That feeling when you settle your debts ^^

Summary: You can reach out to settle a debt with your creditor, or a debt collector, at any time. It doesn’t matter if you’ve already been sued, enrolled in a debt settlement program, or in what stage of the collections process you find yourself. That being said, you may still have to pay fees to the debt relief agency for their services, even if you end up settling on your own. Consider settling a debt with SoloSettle to save more time and money.

If you’ve had enough of the constant bills and a lingering debt hanging over your head, you may have decided to work with a debt relief agency to take action on your outstanding obligations. Maybe you felt like you couldn’t keep up with your minimum payments, and debt settlement could get you out of the woods with less damage to your credit than bankruptcy.

But because the process of working with a debt relief agency can seem complicated, people often have questions about their debts and what would happen if an agency were to manage them. Let’s go over a few of the most common.

Should I settle a debt without the help of my settlement agency?

Before you consider going around your agency, consider that you’re paying a debt settlement agency a fee for handling your debts, which can be as high as 25% of the value of the debt. So if you’re considering settling a debt without the help of your agency, you’ll likely still owe them a fee for their services on the debt if you included it in your agreement. You can try to argue with them concerning their expenses, but you probably won’t be successful unless there’s a compelling reason you settled the debt without their assistance.

This means that you’re diverting money toward resolving your debts, money that could otherwise go toward your savings. Don’t forget that there’s also the chance that the debt settlement agency may be able to lower the value of your settlement, potentially saving you additional money.

Also consider that when you sign an agreement with an agency, they typically take over all the communications with your creditors. You may continue receiving letters and occasional stray calls, but your lender's regular collection practices should cease.

A debt collector is suing me — should I let a debt settlement agency handle the lawsuit for me?

If you get sued for a debt while enrolled in a debt settlement program, the debt settlement company will not help you fight the lawsuit. There’s no guarantee that your agency can reach a settlement before your court date, and if no one takes action in the suit, the judge can grant a default judgment against you.

A default judgment is something no one wants; it can grant your creditor or the debt collector rights to garnish your wages, seize your property, or freeze your bank account.

At the end of the day, you are the one who is responsible for your debt, not the debt settlement agency. While they can attempt to manage your financial affairs with debt settlement, don’t rely on them to handle lawsuits that can have severe repercussions for you.

Hiring an attorney to represent you in a debt lawsuit can be expensive and time-consuming. Often, the cost to hire a lawyer outweighs the debt you owe. That’s why you should represent yourself in court with the help of SoloSuit.

Let’s explore an example.

Example: Chris is being sued by LVNV Funding for a $1,200 debt. He’s already enrolled in a debt relief program, but the agency does not help with any legal proceedings. Chris uses SoloSuit to respond to the debt lawsuit and continues to work towards a debt settlement with LVNV Funding. Since he responded to the lawsuit, Chris is protected from losing automatically by a default judgment order. This gives him more time to continue negotiating a debt settlement with the debt collector without having his wages garnished. Eventually, Chris and LVNV reach a settlement of $900 (only 75% of the original debt amount).


What can I do if a debt collector sues me while my account is with a debt settlement agency?

You have three options for dealing with a debt lawsuit:

  1. You can attempt to fight the case in court.
  2. You can pay the entire amount due before your court date.
  3. You can come to a settlement agreement with the creditor.

If you believe you don’t owe the debt or something about the lawsuit is incorrect, you should try to fight it. To do so, you’ll need to submit an Answer to the creditor and the court presiding over your case. You can draft and file an Answer to a debt lawsuit with SoloSuit in a matter of minutes.

Paying the entire amount of the debt is ideal if you have the cash available and don’t believe the creditor is likely to accept a settlement. Creditors suing for small amounts of money of $500 or less may be unwilling to settle, so paying the total amount due eliminates the potential for a default judgment and allows you to move on.

You can also attempt to settle the debt before your court date. To do so, you’ll want to communicate directly with the creditor and try to reach an agreement for a value less than what you owe.

You should start your negotiation process with an offer of at least 60% of the value of the debt. If the creditor accepts your offer, make sure to get the agreement in writing before paying them the agreed amount.

Sometimes, you may go through several rounds of negotiation before reaching an agreement. Keep a cool head and try to get a deal you can live with and afford.

Settle the debt yourself

Working with a debt settlement company can take years to resolve your debt, and it can be costly.

Consider working out a debt settlement yourself. SoloSettle empowers you to settle a debt on your own, while taking care of the settlement negotiation process for you.

That’s right—you can settle a debt yourself and not even have to contact your creditor or debt collector.

Check out our guide on How to Settle a Debt Collection Lawsuit for Less, and watch this video to learn more about the debt settlement process:

Respond to a debt lawsuit

More than 90% of people who get sued for debt lose their case automatically because they do not respond in time.

SoloSuit helps you draft and file an Answer to your debt lawsuit that is customized to your case. All you have to do is respond to a series of questions about your lawsuit, and SoloSuit’s software generates a legal Answer document for you.

You don’t have to hire an attorney to win your debt lawsuit. You can represent yourself and increase your chances of winning by 7x with SoloSuit.

As you draft your Answer document, focus on the following:

  • Respond to each claim listed against you in the case.
  • Assert your affirmative defenses.
  • File the Answer with the court before your deadline, and send a copy to the opposing lawyer.

To learn more about these three steps, watch this video:

Get back to normal

Debt settlement offers several benefits, including saving a significant amount of money on the outstanding value of your debt and less interest expense. Most debt settlement programs last between three and five years, but once you graduate from the program, you’re free of debt and can rebuild your financial life.

What is Solo?

Solo makes it easy to resolve debt with 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.

SoloSettle can help you contact your debt collector or creditor and negotiate the debt to settle for less, all online. It simplifies and streamlines the process to settling your debt.

No matter where you find yourself in the debt collection process, Solo is here to help you resolve your debt.

Respond with SoloSuit

Get Started

>>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 all 50 states

Here's a list of guides on how to respond to a debt collection lawsuit in each state:

The Ultimate 50 State Guide

Debt collector guides

Are you being contacted by a debt collector? We’re making guides on how to resolve debt with each one.

Arbitration

If the thought of going to court stresses you out, you’re not alone. Many Americans who are sued for credit card debt utilize a Motion to Compel Arbitration to push their case out of court and into arbitration.

Below are some resources on how to use an arbitration clause to your advantage and win a debt lawsuit.

Bankruptcy

Bankruptcy is a great way to legally resolve debt, but it's usually best to consider it as a last resort. Here are some bankruptcy guides to help you decide which debt resolution option is best for you.

Check your case status

Don’t have time to go to your local courthouse to check the status of your case? We’ve created state guides on how to check the status of your case throughout the US, complete with online search tools and court directories.

Credit

Debt has a big impact on your credit. Below is a list of guides on how to repair and improve your credit, even while managing major debt, along with other credit-related resources.

Debt collection FAQs

Find answers to some of our the most commonly-asked questions about debt collection below.

Debt collection documents and templates

If you're dealing with debt, these documents and templates will help you respond, protect your rights, negotiate, and resolve your debts.

Debt relief

We’ve created a specialized guide on how to find debt relief in all 50 states, complete with steps to take to find relief, state-specific resources, and more.

Debt settlement

Debt settlement is one of the most effective ways to resolve a debt and save money. We’ve created state guides on debt settlement. Find out how to settle in your state with a simple click and explore other debt settlement resources below.

Eviction

Facing an eviction? The following guides will help you navigate your situation with confidence.

Federal debt collection laws

Knowing your rights makes it easier to stand up for your rights. Below, we’ve compiled all our articles on federal debt collection laws that protect you from unfair practices.

Legal aid

Helping people find access to justice is at the heart of Solo's misison. If you're dealing with a legal debt issue, the following guides will help you through it.

Medical debt

Having a health challenge is stressful, but dealing with medical debt on top of it is overwhelming. Here are some resources on how to manage medical debt.

Personal finance

Learn how to manage your finances and overcome crushing debt. Check out our personal finance guides below.

State debt collection laws

Debt collection laws vary by state, so we have compiled a guide to each state’s debt collection laws to make it easier for you to stand up for your rights—no matter where you live.

Statute of limitations on debt

Like all debt collection laws, the statute of limitations on debt varies by state. So, we wrote guides on each state’s statutes and more.

Stop collection calls

Do you keep getting calls from an unknown number, only to realize that it’s a debt collector on the other line? If you’ve been called by any of the following numbers, chances are you have collectors coming after you, and we’ll tell you how to stop them.

Wage garnishment

Forgot to respond to your debt lawsuit? The judge may have ordered a default judgment against you, and with a default judgment, debt collectors can garnish your wages. Here are our guides on how to stop wage garnishment in your state, plus other wage garnishment resources.

The Debt Hotline

Hosted by Team Solo, The Debt Hotline breaks down debt and personal finance topics with help from attorneys, financial experts, and industry pros. We respond to real questions to help you navigate debt with knowledge and courage.

Other debt resources



It only takes 15 minutes.

And 50% of our customers' cases have been dismissed in the past.


"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



Get Started

Contents

Affordable Legal Help
Trustpilot

Respond to Your Debt Lawsuit

Get your professionally reviewed Answer in minutes. No expensive lawyers needed.

loading...
Get My Answer
Affordable Legal Help
Trustpilot

Respond to Your Debt Lawsuit

Get your professionally reviewed Answer in minutes. No expensive lawyers needed.

loading...
Get My Answer
loading...
Get My Answer