One of the most stressful times in your life can occur when you receive a credit summons to appear in court. At some point you spent more than you had, transferring a balance from one credit card to another, unable to pay. Therefore, you stopped paying and are now being sued. You must file an answer to the suit and be prepared to defend yourself. Most plead guilty, as most are. Here are some types of settlements and options for a credit summons and debt.
Bankruptcy
One of the first things people think of when facing debt problems is bankruptcy. While this is a viable option if you can't pay, this doesn't mean your debt is gone. If you qualify for Chapter 7, then your debt is erased. However, Chapter 13 means a court will decide your payment terms. It is usually worked out based on your monthly disposable income, with payments being made for five years before being dismissed.
Settlement Company
One of your options is to use a debt settlement company, which helps you eliminate your debt at a fraction of what you owe, usually within three years. You pay them a fee to negotiate lower debt with your creditors. The downside is that nothing is paid toward your debt until a settlement occurs. So interest and fees continue to climb, even while they are working for you. Your credit is also damaged using a settlement company, which reflects all the late charges, collection accounts and settlements you and the company make.
Settle on your own
If you want to save your credit, try settling your credit summons on your own. You'll need to make an upfront payment of 35 percent to 65 percent of what you owe. Talk to your creditors about this option. However, make sure that everything is in writing. Your contract should state everything about the settlement you reached, from the collector's name and address to the amount agreed upon to be paid. You might even be able to get the creditor to remove any negative information about the debt and settlement from credit bureaus.
Avoid Judgments
Avoid going to court altogether if you can. By doing this, you can avoid damaging your credit rating and if you can settle everything financially before your court date, this will go toward eliminating your legal liability.
Warning
The last thing you want to do is to ignore your court summons. This will only result in what is known as a summary judgment or an automatic loss. This also gives you less advantage when negotiating your debt payments. If you must go to court, be prepared to plead guilty but state to the judge that you need help with payments.
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