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The danger of using payment agreements when negotiating debt

If you are one of the many Washington residents who is struggling to pay back large financial debts, you should know that you are not alone. Every day, creditors file lawsuits against consumers who owe unmanageable amounts of money. Consumers who face legal action are sometimes able to create a payment arrangement to keep the matter away from the courts, but this is not always effective. What do you do, then, to halt a creditor lawsuit with regards to your debt?

First, remember that it is not unusual for your debt collector to sue you even while you are still submitting payments. Customers are sometimes duped into future collections actions because they do not understand the terms of their payment agreements. It is important to recognize that simply promising to make your payments may not halt the civil legal action against you.

If you do pursue a payment agreement with your creditor, make sure that you thoroughly document every step of the process. Get a formal agreement in writing, and ensure that your payment plan has been signed by both you and your creditor. This document should ideally be filed in court, and it should include information about the status of the lawsuit while you are paying your debt.

People who are struggling with accounts that are in collection need professional advice before they begin directly negotiating with their creditors. Financial experts say that all too often, consumers accept settlement payment plans that compromise their ability to pay for health insurance or other necessities or to set aside money for emergencies. If the consumer is struggling with that level of debt, bankruptcy may be the only reasonable choice. Bankruptcy can effectively terminate lawsuits filed by your creditors and give you the fresh financial start you deserve.

Source: Credit.com, "Can I Be Sued Even If I’m Trying to Pay Back a Debt?" Gerri Detweiler, Aug. 11, 2014

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