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Negotiating a Settlement

At any time you and the debt collector may agree to settle the judgment. Any settlement that you and the debt collector can agree to is a valid settlement.

Common types of settlements include:

  • A lump sum payment of less than the full amount to settle the entire judgment
  • A partial lump sum payment, plus monthly payments until a set amount is paid
  • Monthly payments with or without any discount to the judgment or even
  • Dismissal of the case/judgment

Benefits of settlement

Settlements allow you to take control of the judgment and set its terms. Settlements are often successful because each party has agreed to it, and is therefore more willing to do what is agreed.

Ideally, a settlement should allow you to leave in a better position than if you did nothing. For you, that may be paying less, or paying on more favorable terms. To the debt collector, this could be collecting sooner rather than later, and with less effort.

Steps of Negotiation

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    Create a settlement strategy

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    Strategy Details
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    Decide how to negotiate

    Decide how you wish to negotiate. Common choices are verbally, usually by phone, or in writing.

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    Reach an agreement

    Always confirm the terms of an agreement in writing. Often a settlement will be put into a written settlement agreement. If the debt collector prepares the settlement agreement, read it very carefully, and be sure that you understand and agree to any terms in the settlement before you sign. You are allowed to consult an attorney before signing any settlement agreement.

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    Decide how to negotiate

    Decide how you wish to negotiate. Common choices are verbally, usually by phone, or in writing.

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    Reach an agreement

    Always confirm the terms of an agreement in writing. Often a settlement will be put into a written settlement agreement. If the debt collector prepares the settlement agreement, read it very carefully, and be sure that you understand and agree to any terms in the settlement before you sign. You are allowed to consult an attorney before signing any settlement agreement.

Next Steps

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