How to Settle a Civil Lawsuit From a Debt Collector in California

Settling a credit card lawsuit in California completely resolves the issue and possibly saves the debtor money. Failing to settle can result in a monetary judgment in a California small claims court. A judgment requires the debtor to pay the full amount of the debt. Settling allows the debtor to pay the debt in full for less than the amount due. Settlement amounts vary depending on the negotiation. The defendant's goal is to pay as little as possible -- say around 20 percent, while the debt collector may start at around 90 percent.

Instructions

1

Read court notices sent to you about the lawsuit. The Sacramento County Public Law Library reports that California law requires defendants to respond to a lawsuit within 30 calendar days after receiving the lawsuit. Failure to respond by the deadline results in an automatic default judgment. It is imperative that the defendant respond to the lawsuit -- in writing -- before the deadline, even after starting settlement discussions.

2

Find a nonprofit credit counselor in California offering debt settlement plans. The California Department of Consumer Affairs reports that some credit counseling agencies in California offer debt settlement as a specialty. Find a complete list of government-approved credit counselors in California by visiting the website for the U.S. Department of Housing and Urban Development. The counselors specialize in credit and housing issues. Call agencies in your area to find an agency offering debt settlement services. A skilled counselor can settle the debt even after the lawsuit. The counseling agency will charge a fee for the service.

3

Hire a consumer affairs attorney, as an alternative, for even greater professional help. An attorney licensed to practice in California can offer more services than a credit counselor. The attorney can file a written answer to the lawsuit and if necessary, file legal motions to delay the lawsuit while you save enough money to settle the case. Get a referral for a local attorney through the website for the State Bar of California.

4

Settle the lawsuit yourself if you would rather not hire a nonprofit credit counselor or an attorney. Read the court notices for the name of the attorney filing suit against you. Call the attorney and offer to settle the case. Start at 20 percent and increase your offer until you have a deal. Get details of the settlement in writing, including a stipulation that the attorney for the debt collector file a motion for dismissing the lawsuit before the court date.