Debt Settlement in NC
Consider a lump sum offer
Have you not made any payments in months? This often results in the debt being sold to a collection agency that may be willing to settle debt on the cheap. How cheap? It varies, but a realistic goal is 30 cents on the dollar.
The key is to know your creditor- some creditors such as Discover generally demand 70 cents on the dollar. Collection agencies who bought your debt in a bulk purchase with little to no documentation are often willing to settle dirt cheap.
Have the account closed
Ask your creditors to close each account and put you on a payment plan of say $100 per month with no penalties and interest. This may help them realize you are desperate to get out of debt. If you are paying 29.99% interest you need to stop the bleeding fast!
Get settlement offers in writing
Do not pay any money until you have the full terms of any settlement in writing. Ideally this writing would be on letterhead from the creditor, collection agency, or law firm suing you. Many old debts are sold to third parties. Without proof you settled an old debt you could end up paying twice!
Don't give up
If your initial settlement proposal offer is rejected try again in a week. You will likely talk to a different person and may get a different answer. Sometimes if you just wait a few weeks a new collection agency or law firm may take over. Another option is to hire an attorney or debt consolidation company to assist your efforts.
Most of the time creditors receive zero in Chapter 7 and pennies on the dollar in Chapter 13. Perhaps even hiring a bankruptcy lawyer will let them know you are serious.
Beware of debt consolidation ads
Do you research before hiring a debt consolidation company over the phone. Remember they can't promise results and they often get paid whether they help you or not! Also realize there is nothing they can do that you can't negotiate on your own.
Have a gameplan
Paying one of your creditors and ignoring others may or may not be a good strategy. Most creditors monitor your credit report so they can see who you are paying and may decide you should be paying them as well. Paying one creditor may lead other creditors (not being paid) to sue you!
Figure out the statute of limitations
The statute of limitations to sue for most debts in North Carolina is three years from the last date of payment. If you make a $20 payment that restarts the statute of limitations and can revive an otherwise old debt.
1099 tax bill from settled debt
If you settle debt for 30 cents on the dollar the creditor generally will write-off the other 70 cents on their taxes and issue you a corresponding 1099. This means you will likely have to report that as income unless you otherwise can claim insolvency. It is important to account for this liability in any settlement discussions.
Talk to an attorney if sued.
Do not ignore a lawsuit. If you fail to file a written Answer with the Court within 30 days you will generally lose by default, meaning there will be no Court date. If you have received any paperwork via Sheriff or certified mail then you have likely been sued. An attorney can help you prepare an extension of time to Answer any Complaint and help you understand your rights and defense.