Resolving debt before a lawsuit

Sometimes you can negotiate with the debt collector to resolve or settle your debt before they sue you in court. Settling a debt before a lawsuit is usually the least expensive way to resolve a debt - for you and the debt collector - since they don't have to spend money on court costs or efforts to collect the debt.

A partial one-time payment is often the least expensive way to pay off a debt 

It is common for a creditor or debt buyer to accept a lump-sum or one-time payment of less than the full amount of the debt. The amount accepted varies for each creditor and type of debt, but often is around one-half the full amount. Of course, this only works if you have enough money to pay the company upfront.

Often collectors are anxious to make a deal where they receive the settlement payment within the month to make their numbers for the month.

You may be able to negotiate payments in monthly installments

If you cannot save up a single large payment, you may also be able to negotiate payment in monthly installments.

Because this involves some risk to the creditor and involves more time, the creditor is less likely to accept substantially less than the amount owed. However, they will often agree to give up interest, fees, and other charges that have been added on.

How to negotiate with a debt collector

The Consumer Financial Protection Bureau has resources to help, including sample letters to send to debt collectors. 

If you are being harassed by debt collectors, you can ask them to stop

In California, there are laws that say how and when the collector can contact you. For example, the collector

  • Can only call at a convenient time, generally between 8:00 a.m. and 9:00 p.m., unless you agree to other times 
  • Cannot call you at work if your employer prohibits these types of calls 
  • Must not be harassing or abusive, such as making threats, using profane language, or contact you repeatedly 
  • Cannot make false or misleading statements, such as claiming to be law enforcement or saying you’ll go to jail if you don’t pay the debt

If you want the creditor to stop contacting you, you can send a letter - called a cease-and-desist letter asking the creditor to stop contacting you or to contact you only a specific way.

The creditor must stop contact with you, but they can still file a lawsuit. 

Under California law, you have the right to demand that a creditor or debt collector stop contacting you. To do this, you must notify them in writing that you want them to stop all communication, or stop a particular type of communication, such as telephone calls. 

You must send a separate letter for each debt if a collector is handling more than one account. 

After the collector gets your letter, they must stop contacting you, except to acknowledge that they will comply with your request or tell you that they will be filing a lawsuit. 

Send this letter by certified mail and keep a copy for yourself. 

Click below to download a template for a cease-and-desist letter that you can personalize for your situation (this template requests all telephone contact to stop, but allows contact by mail):


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If the creditor’s attorney or collector have violated the law, you may consult with a consumer protection attorney to inform you of your rights.

When debt expires, you can't be sued for it

A creditor can't file a lawsuit if it's been more than four years since the last activity on the account. This is called a statute of limitations. 

If you have not made a purchase on or made a payment to the credit card account for more than four years, that debt is considered expired. You have a complete defense to any lawsuit on that debt.

Beware of creditors who encourage you to make payments on expired debt. 

In California, if you make a payment after four years of inactivity, the statute of limitations restarts, and the creditor can start a lawsuit. 


If the debt is more than four years old, consider issuing a cease and desist letter, as described above, demanding that the collector cease contacting you. 

If your debts are overwhelming, consider bankruptcy 

If you are unable to pay your debts or reach some settlement on them, you may benefit from bankruptcy. Bankruptcy can either cancel your debts or allow you to create a partial repayment plan and then cancel your debts at the end of the plan.

Bankruptcy is a complicated topic and is handled in the federal courts. Learn more and get resources for bankruptcy.

If you believe you might benefit from bankruptcy, consult with a bankruptcy attorney.


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