Legal Question in Credit and Debt Law in North Carolina

It is my opinion that you should not answer the complaint. I say this for several reasons. Generally, you would file an answer if: (1) the debt is not yours (because of identity theft or fraud); (2) you already paid the full balance of the debt; (3) the statute of limitations has expired (its 3 years in NC assuming this is an NC debt and the statute begins to run from your last payment of any kind); (4) you have some other grounds for challenging the debt (the complaint fails to attach proper documentation or does not provide specifics about the debt); or (5) you are stalling for time.

If you file an answer and admit the debt, the creditor gets a judgment against you. If you file an answer but the debt is ultimately shown to be yours (and none of the above defenses apply), the creditor gets a judgment against you. If the complaint just has some errors but the debt is yours and you have no defenses, you can make the creditor jump through the hoops and do it right, but at the end of the day, the creditor will get a judgment against you.

Making the creditor spend money is not wise as most credit card contracts contain clauses that you will be liable for attorney fees. More importantly, you run the risk of pissing off the creditor to the point where the creditor refuses to settle at all and wants 100% of the debt. They don't have to take less and you cannot force them.

There are no forms and you have to either get a lawyer or draft your own answer. If you are going to spend money, I recommend spending it on a bankruptcy attorney instead. If you have a lot of debts, get a consult with a bankruptcy attorney. You can file bankruptcy either now or after the judgment is entered. Many attorneys give free consults. You need a bankruptcy attorney to look at your debts and assets to decide whether a chapter 7 or 13 is right for you. Just because you have a consult does not mean that you have to file.

If bankruptcy is not an option for whatever reason, the good news is that the debt still can be settled. While I understand your problems, start putting money aside if you do not have it today. The creditor cannot do anything until 30 days after a judgment is entered. Once it is entered, the creditor can freeze your bank account or try to execute on the debt. To execute, they must first serve you with a motion to claim exempt property. This is very important - do not ignore this. You only have 20 days to fill it out and if you don't fill it out then you will lose your exemptions and the creditor may be able to take your property (house, car, land, tv and bank account). So if you receive it, get a lawyer to help you fill it out if you don't feel comfortable doing it alone.

Once the judgment is entered, it earns interest at the rate of 8% year, not the credit card rate. Whenever you have about 50% of the balance saved (check with the court in your county to get updated balances) then contact the creditor and see if they will accept what you have in full satisfaction of the judgment. If they say no, see if they will still settle and left you pay what you have and make payments on the balance of the settlement figure. If they say no, then keep saving. When you have 60% to 65%, try again. Most creditors want 50% to 80% of the balance and will be reasonable. Some creditors are better than others. Discover is very difficult once judgment is entered and my settlements have ranged from 60% to 75% of the debt. Unifund is also horrible. Citibank and Bank of America are better.

Do not pay a penny UNTIL you get a letter outlining the settlement terms.

Other ways to pay the debt are: (1) entering into some kind of payment plan with the creditor so they will not execute on the judgment. Again, get the terms in writing. Payments are usually 1% to 2% of the balance. Creditors want the full balance paid Some creditors want more. Some will not let you have an extended plan and want the debt paid in a year. Things can happen so I don't like payment plans longer than a year. (2) You can always pay money into court directly. You have to pay the full balance, but you have the advantage of the clerk marking the judgment as satisified when it is paid off instead of relying on the creditor to do it. Just make sure that if you do this that you pay the amount of accrued interest each month plus something toward the principal so that the balance always goes down. There are free amortization calculators out there - use one to make a schedule and stick to it. Put as much money towards this as you can.

If you want me to settle your debt, I can do so for a reasonable fee. Feel free to contact me [email protected].