settlement letter

[jb4lcm]

What verbage needs to be in a settlement letter from the creditor to be sure the reduced amount is actually the real agreement? How do I make sure there are no follow-on amounts past the "agreed" upon amount?

[LadyInTheRed]

Something to the effect of "Upon payment of $xxxxx, your account will be considered paid in full and you will have no further obligations in connection to the account." Also, if you pay the agreed amount, include a letter saying that your payment is made with the understanding that it will constitute payment in full and that you will have no further obligation for any additional charges or fees in connection with the account.

[jb4lcm]

They have offered a dn pmt and 11 monthly pmts - but it must be auto-pay directly to a checking acct. I opened one specifically for this purpose and will have only the amount I owe when I owe it. So there is no letter ... by the way - this is in response to a summons.

[jb4lcm]

The letter states:

"This letter will confirm that our client, XXXXXXXXX, has agreed to accept $XXXXX (the "agreed settlement amount") as settlement in full of the above referenced account."

Does this cover it? I ask this because it also says:

"After this firm's timely receipt and successful negotiation of all the payments set forth below, (1) we will advise our client that the account is settled in full."



Thank you!

[LadyInTheRed]

That should do it. But, if they already filed the lawsuit, does the letter say how that suit will be dealt with? One possibility is that they want you to stipulate to a judgment for the settlement amount. While that would give you certainty, it would result in a judgment on your credit report. If settling will keep you from filing BK, maybe you don't mind a judgment. Another possibility is that they dismiss the suit without prejudice now. "Without prejudice" means that they can file again if you don't pay. If the court rules allow it, there may also be a way to leave the case open while you make the payments so that they can dismiss the suit with prejudice later. You want to make sure that if you don't file a response with the court, a default judgment will not be entered for the full amount of the debt.

[df04527]

So important LITR.... But also not so sure how to word it but you may need to say about the remaining balance cannot be sold etc... These guys have been known to settle and whatever the remaining balance was they sell it to JDB's and the process starts again. Not sure just how to protect yourself from that as it would be a new creditor coming after you. Just a thought.

[jb4lcm]

Thank you for your input!

It says in the settlement agreement (2) if your account is in litigation and a judgment has not been awarded in our client's favor, we will file with the court a dismissal of that litigation ..

I just received the summons so there has been no judgment made. Does this mean no judgment will be filed on my credit report? I assume that even tho we are in a settlement process that I must still "answer" to the court?

[LadyInTheRed]

Thank you for your input!

It says in the settlement agreement (2) if your account is in litigation and a judgment has not been awarded in our client's favor, we will file with the court a dismissal of that litigation ..

I just received the summons so there has been no judgment made. Does this mean no judgment will be filed on my credit report? I assume that even tho we are in a settlement process that I must still "answer" to the court?

It's hard to tell by reading only snippets of the letter. Do they say they will file the dismissal after the last payment or after you agree to the settlement? Ideally, what you want is for them to dismiss the litigation now or at least agree not to let a judgement get entered. If they dismiss it now, it would be without prejudice so that they can file again later if you don't complete the payments. Since I don't know your state's court procedures, I do not know whether they can prevent a judgment being entered without dismissing the complaint. But, it is likely that you need to file an answer if they don't dismiss the suit before the deadline to answer, because, if you don't answer they can request a default judgement and probably will if a binding settlement hasn't been reached that prevents them from moving for an entry of default.

It may be that they will not dismiss the suit without full payment and will insist on a stipulated judgement. That has the advantage of giving you the assurances that once you make all of the payments, they cannot try to get more from you. It has the disadvantage of having a judgement on your credit report. But, if settling the one debt will keep you from filing BK, that shouldn't be a problem. If settling this one debt is not enough to keep you out of bankruptcy, then it might not be such a great idea unless there is a reason you need to delay filing.

The best way to make sure you get this right is to consult with a local attorney. It may be worth paying some legal fees to make sure you do this right.

[jb4lcm]

Agreed ... I will consult. Thank you very much.