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Debt Negotiation Lawyer in Alabama

In some cases, it is a better option to contact creditors to negotiate a settlement of your debts. However, please keep in mind that when you settle outside of bankruptcy, the debt is "forgiven." The creditor can file a 1099 which tells the IRS that the forgiven debt is earned income which must be included as gross income on your tax return.

What Happens If Your Debt Was Purchased?

There are some cases where your debt was purchased by an individual or a business engaged in buying "bad debts." When a debt buyer proceeds to collect on the debt, you have several available defenses. The Fair Debt Collection Practices Act provides a federal statutory scheme that third party collectors are required to follow when they attempt to collect a debt. Under the FDCPA, you have the right to demand proof of the debt from the collector. If you have retained an attorney, the collector is legally prohibited from contacting you.

What Happens If a Civil Action Has Been Filed?

In many cases, a debt collector will file a civil action to collect a debt. When this occurs, you may defend against the claim where the collector has not provided sufficient evidence to establish the existence of a contract.

Even if the collector presents old credit card statements and a ledger of payments made by the debtor, this still does not prove features that are usually in existence on a standard credit agreement, such as:

  • Applicable interest rate
  • Establishment of late fees
  • Forgiveness terms
  • Credits

This means that the collector or creditor may not be able to prove the actual balance due on the account, and therefore may not meet its legal burden to prove the debt by a "preponderance of the evidence."

Talk to an Alabama Bankruptcy Lawyer

It is important to discuss the settlement of a debt, and your legal rights, with a qualified attorney. Settlement of a debt can be a tricky process. An attorney can draft a settlement and release agreement that will ensure the claim will not later be sold off or collected upon again. Imagine paying a collector a settlement amount of several hundred or thousand dollars, only to find out one or two years later that the debt was not properly released.

Attorney Kevin Ryan has the knowledge and experience to initiate the negotiation of a debt settlement so you obtain the maximum reduction in the settlement amount. At our firm, Settlement and Release Agreements are drafted specifically for each case. We do not settle cases using "boilerplate" settlement agreements. Settlement and release agreements are drafted and tailored to each client's particular circumstances. We utilize WestlawNext, the most respected legal research software in the industry. You can negotiate a settlement of your debts with our firm knowing that it complies with all applicable current legal standards.

When Bankruptcy Is Your Best Option

The best option in some cases may be a bankruptcy filing. Some creditors or debt buyers are not willing to settle debts on reasonable terms. If you file a Chapter 7 or Chapter 13 bankruptcy case, the creditor is no longer legally able to proceed with their collection of the account without Bankruptcy Court permission. More importantly, debt that is discharged in a bankruptcy case is not subject to being considered taxable income. A discharged debt is not considered a forgiven debt under the United States Tax Code. If you would like to discuss your options with respect to a collection matter, a lawsuit where you were named as a defendant, a wage garnishment, post-judgment collection matter, judgment lien matter, IRS or other tax collection matter, contact our firm today!

See Internal Revenue Service Form 982 here.

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