Legal Question in Credit and Debt Law in Georgia

Your offer is not reasonable but if you are asking for this kind of a reduction, many creditors want to know the type of information requested. They are not going to make a deal like that absent such information. Do you have a home? Is it mortgaged? How much equity is there? Do you have any investments? IRAs and pensions are exempt from creditors. Also, what are your circumstances? Do you work? A creditor is more likely to take the deal if you have no assets and are 93 and in a nursing home than they would be if you are 40 and working.

You have several choices. (1) If you have other debts, file bankruptcy; (2) litigate if you have valid defenses (like the statute of limitations, which is 6 years in GA). or (3) Work out some kind of payment arrangement if you have no defenses and don't want to file bankruptcy, either with settlement or paying the full freight.

You indicate that a lawsuit was filed, but was judgment entered? Do you work and receive w-2 wages? If so, your wages can be garnished. What other assets do you own? Bank accounts can also be levied upon.

ACH is automated clearinghouse. Please tell me that your are not going to be so foolish as to let them automatically draft funds from your bank account.

Most creditors will settle for between 50% and 80% of the balance owed (whatever they are seeking plus court costs and attorneys fees, if owed). You say's its about $13,000 here. If you could come up with a lump sum of $6500 - $7000, would they take it? If not, could you use your down payment of $3500 and pay off the balance in 1-6 pays?

Two years is way too long - things can happen. Get your payments down to no more than 6-12 pays, but 1-6 is better. Creditors, collectors and law firms all go bankrupt and this is a nightmare if you are in a settlement and this happens. I have learned the hard way from experience for clients, so don't do this.

If the firm says no and if you have taken precautions to protect your assets, then let judgment be entered and save up your funds. Know that the judgment will grow but when you have 50% of whatever the judgment has grown to, then try and settle in a lump sum. The more you can put down in a lump sum the lower the creditor is likely to go. Try to get the interest reduced to zero or at least minimized, but the creditor may not go for this. Interest is generally 7% to 12% on the judgment.

If you work out a deal before judgment is entered (most creditors will want you to sign a confession of judgment unless you are paying the full settlement amount before judgment), make sure that you get a written letter memorializing your agreement. The letter should recite the full balance, the settlement or monthly payment amount, that there will be no levy on your assets while you are making monthly payments

If you get W-2 wages or have other vulnerable assets, then consider entering into a repayment plan. Generally, creditors want repayment on the full amount of the debt. Monthly payments are usually 2% to 4% of the judgment. What I would do is pay the minimum you can get away with and save up the balance. Many times, with what you have saved and what you have paid down on the balance, you can reach a settlement at some point. Its not ideal, but better than paying back every penny. This is my least favorite option.

If I knew the creditor, law firm and who owns the debt now, I might be able to give you better advie. I give free email consults. I can also assist with resolving the debt for a reasonable fee. Please contact me at [email protected] if interested.

No, you don't have to give them the information. They may then not feel the need to discuss a settlement with you and go to court instead. If they get a judgment, you will be required at that point to provide the information, or face sanctions including jail for refusing. Settlement is a two way street.

You don't have to give them information, but they don't have to settle.

Frankly a settlement of 7 cents on the dollar over time is so unreasonable I'd be stunned if a creditor would consider it.

Be aware if you have a pending case, and do not win the case, they will get a judgment against you and can go after your paycheck, bank accounts, property, etc. Also, if you do give them information, they may use that information to collect from you.

Bear in mind there are also adverse income tax consequences to you in settling debts, as you usually pay taxes on the forgiven debt.

I would strongly suggest you see counsel, be it me or someone else, ASAP, to determine if settlement is possible, and, if not, to explore other options, including bankruptcy, as well as defenses (if any) you have in the suit. It is vital that you act before the court date.