When you cannot pay your credit card bills, student loan debt or other kind of debt, your debt will grow with accruing interest, your credit will suffer, and the debt collectors could start contacting family, friends and employers to find you.  The end result will likely be that your creditor will file a lawsuit against you in civil court for the total amount of debt that you owe and possibly attorney’s fees as well.

If you try to fight against your student loan debt lawsuit and lose, then you might consider bankruptcy as a last report – but there is another option.  You can try to settle the case before it goes to trial.

Tips for Settling Your Debt Lawsuit with a Debt Settlement Before It Goes To Trial

  1. What is a student loan debt settlement? A settlement of your lawsuit is basically an agreement that you enter into with the creditor’s attorney (called the “plaintiff’s” attorney). You agree to pay a certain amount under terms that you’ll negotiate with the creditor. In most cases, this amount will be cents on the dollar with respect to the total amount you owe. In exchange for the lump sum payment, or series of installments over a period of time, the creditor will agree to dismiss the lawsuit against you and the case will be over.


  1. Why would my student loan debt collector be open to accepting a student loan debt lawsuit settlement? Usually, the attorney will be open to settlement because ending the case reduces the expenses that the student loan creditor will pay their attorneys to pursue the matter against you.


  1. What is the first step in a student loan debt settlement? You should request that the plaintiff’s attorney make the first offer, which you can then counteroffer. Make sure the payment terms are reasonable and affordable for you, because failing to comply with the settlement agreement could result in further litigation.


  1. Will a settlement impact my credit rating?The settlement may still be reflected upon your credit report unless you negotiate to have your creditor file the settlement with the credit reporting agencies. The court case doesn’t automatically disappear from your credit history unless the creditor takes action. Your credit rating may drop due to the settlement, as not paying your debt in full is considered negative history. However, your score is impacted less than letting the debt remain on your report or filing bankruptcy.  And the good news is that credit experts estimate that your score will rebound in as little as 12 months after completing a debt settlement.

Debt Lawsuit Help 

Stay Tuned for Part 3 of our “How to Win a Private Student Loan Debt Lawsuit” blog when where we will discuss “Can I Really Represent Myself Instead of Hiring a Student Loan Lawyer?”