How to Settle a Debt in New York

Edited by Hannah Locklear

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.

Settle your debt in New York with the help of SoloSettle.

There are 3 steps to settling a debt in New York

There are three simple steps to follow to settle your debt in New York:

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

Below, we’ll break down each of these steps in detail. If you don’t like reading, try watching this video instead:

1. Respond to the debt lawsuit with an Answer

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:

2. Make a settlement offer to kick off negotiations

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.

SoloSettle negotiates a debt settlement for you.

3. Get your settlement agreement in writing

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.

SoloSettle manages the debt settlement agreement for you.

Now, let’s look at an example of how to settle a debt in New York.

What are New York’s debt settlement and debt collection laws?

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:

• 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.

Aside from the federally mandated Fair Debt Collection Practices Act (FDCPA), New York has its own set of debt collection rules called the Consumer Credit Fairness Act (CCFA).

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:

• Call a consumer at odd hours of the day, like before 8 a.m. or after 9 p.m.
• Contact a debtor more than seven times over a seven-day period.
• Call a consumer at work if they expressly ask the debt collector not to.
• Tell people whom the debtor knows about the debt.
• Publish information about the debt for other people to view.

Consumers must understand that they have rights concerning debt collection. They don’t have to accept a debt collector’s harassing behavior.

What are the best debt settlement companies?

If you’re ready to get started on your debt settlement journey, several companies can help you.

SoloSettle

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:

• You can settle debts of any size with SoloSettle. Many debt settlement companies require you to have a debt over $15k.
• SoloSettle actively attempts to settle your debt, whereas many debt settlement companies take a more passive role, waiting for settlement offers to come to them.
• SoloSettle is offered by SoloSuit, a trusted brand and a legitimate company. Many traditional debt settlement companies are actual scams.
• SoloSettle has legal defense built in with SoloSuit. While settling, you can use SoloSuit to block lawsuits if you need. Most debt settlement companies don’t provide legal defense; if you’re sued for a debt you are on your own.

Use SoloSettle to settle a debt on your own in New York.

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:

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

Contact your debt collector or creditor to get the debt settlement process started

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.

FAQs on debt settlement in New York

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.

Q. How long before debt becomes uncollectible in New York?

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.

Q. Can debt collectors sue you in New York?

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.

Q. Is debt settlement better than not paying a debt?

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.

Learn more about debt relief in New York

SoloSuit has many guides that can help you learn more about getting out of debt in New York. Check out these articles:

• How to Get Debt Relief in New York | SoloSuit Blog
• Statute of Limitations on Debt in New York | SoloSuit Blog
• New York Case Search—Find Your Lawsuit | SoloSuit Blog
• New York Garnishment Laws – Overview | SoloSuit Blog
• How to Answer a Summons for Debt Collection in New York (2020 Guide) | SoloSuit Blog

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.

Debt settlement can help you get out of a challenging situation

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.

Settle your debt in New York today.

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.

>>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 your state

Here's a list of guides for other states.

All 50 states.

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Guides on how to beat every debt collector

Being sued by a different debt collector? Were making guides on how to beat each one.

• Absolute Resolutions Investments LLC
• Accredited Collection Services
• Alliance One
• Amcol Clmbia
• American Recovery Service
• Asset Acceptance LLC
• Asset Recovery Solutions
• Associated Credit Services
• Autovest LLC
• Cach LLC
• Cavalry SPV I LLC
• Cerastes LLC
• Colinfobur
• Covington Credit
• Crown Asset Management
• CTC Debt Collector
• Cypress Financial Recoveries
• Delanor Kemper & Associates
• Eagle Loan of Ohio
• Educap
• Estate Information Services
• FIA Card Services
• Forster & Garbus
• Freshview Solutions
• Fulton Friedman & Gullace LLP
• Harvest Credit Management
• Howard Lee Schiff
• Hudson & Keyse LLC
• Integras Capital Recovery LLC
• Javitch Block
• Jefferson Capital Systems LLC
• LVNV Funding
• Mannbracken
• Mariner Finance
• Medicredit
• Michael J Adams PC
• Michael J Scott
• Midland Funding LLC
• Mullooly, Jeffrey, Rooney & Flynn
• Mountain Land Collections
• MRS Associates
• National Collegiate Trust
• Nationstar Foreclosure
• Northstar Capital Acquisition
• NCEP LLC
• NRC Collection Agency
• OneMain Financial
• Palisades Collection LLC
• Pallida LLC
• Paragon Revenue Group
• Pinnacle Collections Agency
• PMAB LLC
• Portfolio Recovery Associates
• Provest Law
• PYOD LLC
• Reunion Student Loan Finance Corporation
• Revenue Group
• Regents and Associates
• RSIEH
• Salander Enterprises LLC
• Second Round Sub LLC
• Security Credit Services
• Sherman Financial Group
• Suttell and Hammer
• T-Mobile
• Transworld Systems
• Tulsa Teachers Credit Union
• UCB Collection
• Velo Law Office
• Velocity Investments
• Waypoint Resource Group
• Weinberg and Associates
• Wolpoff & Abramson

Win against credit card companies

Is your credit card company suing you? Learn how you can beat each one.

• Bank of America
• Capital One
• Chase
• Credit One Bank
• PayPal Synchrony Card
• SYNCB/PPEXTR
• Synchrony Bank
• Target National Bank
• Wells Fargo

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Need help managing your finances? Check out these resources.

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