Recent Answers to Debt Settlement Agreement Law Questions

I have recently been struggling to pay off my credit card debt, and I'm trying to find the best way to settle this debt. I am considering a debt settlement agreement, but I'm not sure when it is appropriate to use one. I understand that a debt settlement agreement is a legally binding agreement between a creditor and a debtor, and I want to know if this is a viable option for my situation.

Merry K.

Answered Aug 25, 2023

I only just saw your question - sorry you have been waiting since July 30, 2023! Whether a settlement agreement is your best choice is very fact-specific. In many situations, it's a good option if you can negotiate a far lower pay-off amount, but in some situations bankruptcy and a "clean slate" is the best option. Many legal servies/legal aid offices may offer free debt assistance -if it's not too late, I suggest that you contact such an office.

I am currently in a difficult financial situation and am looking at my options to get out of debt. I am considering both a debt settlement agreement and filing for bankruptcy, but am not sure which option is best for my situation. I am hoping to get advice from a lawyer regarding the pros and cons of each option, so that I can make an informed decision.

Jeffrey Z.

Answered Aug 15, 2023

Bankruptcy is a very large part of my practice. I have had many clients that have attempted to use a debt resolution service without success. Unfortunately, they often pay a substantial amount of money to the service, their debts do not get resolved, they end up in bankruptcy anyway, and they do not get their money back. Aside from the difficulties in successfully completing a debt settlement agreement, there is also a tax issue. Forgiven debt is considered taxable income. You will receive a 1099 from any creditor that accepted a reduced amount to satisfy a debt. The result may be an income tax liability that you were not expecting. Debts that are discharged in bankruptcy are not counted as income.

I recently received an offer from a creditor to settle a debt I owe. However, due to my current financial situation, I am unable to make the payments they are asking for. I am wondering if I can transfer the debt settlement agreement to another party, who would be able to pay the debt in full.

Diane D.

Answered Aug 1, 2023

Probably not. You wil need to talk to the creditor.

I recently entered into a debt settlement agreement with a company and I am concerned about the due diligence that was conducted by the company. I am worried that I may have been taken advantage of and I would like to know if the agreement is legally binding. I would also like to know what options I have if the agreement turns out to be invalid.

Diane D.

Answered Jul 28, 2023

The only way to tell if your agreement is legally binding and what options you have is to have an attorney review it. However, if all the parties have signed the agreement, it is most likely legal.

I recently entered into a debt settlement agreement with my creditor, but I am worried that my rights may be violated during the process. I am concerned that the creditor may not abide by the terms of the agreement, or that they may not provide me with the full protections that I am entitled to under the law. I am hoping to get some clarity on my rights as a debtor in this situation so that I can protect myself.

Diane D.

Answered Jul 14, 2023

Without seeing the settlement agreement, there is no way to tell if your rights, or what you believe to be your rights, are covered. Also, if they don't abide by the contract, you can take them to court.

I am currently in a difficult financial situation and have been struggling to pay off my debt. I have been approached by a debt collection agency to enter into a debt settlement agreement, but I am unsure what this entails and what rights I have. Therefore, I would like to understand the details of a debt settlement agreement before I make any decisions.

Erik W.

Answered Jun 6, 2023

A debt settlement agreement allows you to pay a portion of the debt while the rest of the debt is charged off. Debt Collection Agencies typically want you to pay the amount agreed upon within 3 or 4 payments.