When you’re in the process of settling a debt, it’s crucial to keep complete records and to take careful steps concerning how you pay off your settlement. If you don’t take all the necessary precautions, or fail to make payments, in some cases creditors or collection agencies can continue to come after you for the full amount you owed before you settled. Sometimes a settlement may also fail to get recorded, and creditors or collection agencies might come after you again by accident. In these cases, although you’ve already paid, you’ll be required to prove that you no longer owe anything. In these cases, it’s important to know what your legal recourse after debt settlement can be.
Can Creditors or Collectors Come After or Sue Me After I Have Settled?
Creditors and collection agencies can sometimes come after you or attempt to sue you after you have already settled, so it’s important to keep complete records of every agreement and payment. The circumstances for this happening may vary, and sometimes it might be an accident. Usually the law will be on your side, but you still need to be able to prove the settlement took place and that your payment or payments were accepted. It’s also important to get them to put into writing that you have paid in full. Not only will this statement protect you if they try to collect again later, but you can use it to help rebuild your credit score. The law works is differently from state to state, so make sure to inquire about these issues in your own state if you’re in the process of settling a debt.
What Can I Do to Prevent Further Collections After a Debt Settlement?
If creditors or debt collectors have agreed to a settlement, there are a few things you can do to help prevent them from coming after you again. Most of this involves keeping accurate and complete records and carefully making your final payments. How you make your final payments is also important.
Here are some things that you should and shouldn’t do:
- Do — keep a record of all agreements and payments, including copies of every money order or cashier’s check you use to pay back your settled amount.
- Do — make sure the creditor or collector issues any new terms of payment on official letterhead.
- Do — use registered and certified mail for all correspondence and payments.
- Do — make all your payments on time. Whether it’s one payment or a new installment plan, you must make sure to make these payments or your agreement can fall through, erasing all the hard work that went into the settlement.
- Don’t — reveal your bank or where you work. Even once a settlement has been reached, it’s important to protect your personal and financial information. If you’re asked for any of this information, write or reply “no comment.” You want to make sure that the creditors or debt collectors cannot still try to come after you, and that if they do, you haven’t made it very easy for them.
- Don’t — use a personal check to pay for settlements. Using a personal check reveals information that you should never give to a creditor or collection agency. You want to protect your financial information as much as possible, so always pay with a money order or cashier’s check purchased from another bank, and always make a copy of it.
What Are My Rights After a Debt Settlement?
After a debt settlement, you retain the same rights under The Fair Debt Collection Practices Act.
Can I Declare Bankruptcy After a Debt Settlement?
If you had a successful or a failed debt settlement and are now considering bankruptcy, there are usually certain rules or waiting periods that apply to your situation. Your best bet is to discuss the matter with an attorney.