Don't sign a DSA without reading this
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When you’re behind on debt and collectors are harassing you, times might be so desperate that you'll try anything, but don't ink a debt settlement agreement (DSA) thoughtlessly. With any legal document, it’s drafted to benefit the person paying the lawyer who wrote it. With a DSA, it’s done by the attorney of the creditor or debt collector.
That means the provisions protect them, not you, and you should proceed carefully. As the statute of limitations on a debt gets close to running out (three years in North Carolina), creditors and collectors will themselves get more desperate and may offer a DSA that sounds great but can rob you of options.
Here’s what you must know before you sign.
Did you know?
- That by signing a DSA, you restart the clock on the statute of limitation giving the collector three more years to come after you?
- That if the DSA decreases the amount of the debt you owe, you’ll be responsible for paying income tax on the difference?
- That there may be waivers written into the fine print to protect the creditor or debt collector from recourse for dodgy activities?
- That signing a DSA may not take the negative item off your credit report or improve your credit score?
- That you might sacrifice exemptions that could mean you’ll have less legal protection from the creditor?
When it concerns a Debt Settlement Agreement, here are a few things Greensboro consumers need to know:
1 - Get everything in writing
We can't overstate the necessity of getting everything in writing. Never sign an incomplete agreement or one that refers to schedules or addendums you’ve never seen.
2 – Don’t admit to anything
Try not to make any concessions in the settlement agreement. If possible, stick to terminology like ‘disputed’ or ‘alleged’ rather than specifics so you protect your right to dispute.
3 – Ask for specifics on taxes and credit
Asking for specifics on negative items on your credit report and tax implications is helpful. If you’re going to restart the statute clock ticking, you need to get something for it.
4 - Don't sign a general liability release
Don’t let the creditor and debt collector off the hook for their past actions. If they broke the law by harassing you, don't sign away rights in this regard.
5 - Never sign in panic
Remember, if the statute of limitations is about to run out, it’s the debt collector that’s in a panic even though you may be the one sweating it. Take your time and push back if need be.
6 – Know what you’re signing
Don’t give in to pressure and sign something you’ve not read. It's not like blindly agreeing to the terms and conditions on iTunes – it’s a big deal.
7 – Get an attorney’s advice, if possible
Ideally, you should have an attorney review the agreement to protect your rights. A lawyer with the intent to benefit the creditor (not you!) wrote that agreement, after all.
Consider bankruptcy instead
If your debt circumstance is so dire that you’re considering signing a DSA, you might want to take a step back and consider the alternatives. When you’re in over your head with one debt, chances are you’ve got other financial issues as well.
Greensboro bankruptcy might be a much better alternative than executing a one-sided agreement. If the statute of limitations expires soon, sit back and let it lapse, then the creditor/debt collector has no legal teeth to come after you.
If, however, the statute is still in force, filing bankruptcy shuts down all collections efforts for 90 days and with debts discharged in bankruptcy, stops them forever. Bankruptcy easily discharges unsecured debts like credit cards and medical bills in full.
To find out more about the alternatives to signing a debt settlement agreement, contact the Law Offices of John T. Orcutt. Read reviews from satisfied clients and then call +1-919-646-2654 for a free Greensboro bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.