Ways you can settle a debt and dismiss your case | California Courts (2024)

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Ways you can settle a debt and dismiss your case | California Courts? ›

Option 3: Pay the debt and get the case dismissed

You may be able to take action before getting sued

Negotiating with the creditor to settle a debt before a lawsuit is filed is often the least expensive way to resolve a debt. This is because neither side has invested in court costs or spent much effort trying to collect the debt.

A voluntary dismissal means that if the case is brought to court again, a dismissal in this second case will end the case permanently. With a counterclaim by the defendant, the case can only be dismissed if the counterclaim survives.

Debt settlement involves offering a lump-sum payment to a creditor in exchange for a portion of your debt being forgiven. You can attempt to settle debts on your own or hire a debt settlement company to assist you. Typical debt settlement offers range from 10% to 50% of the amount you owe.

Debts not discharged include debts for alimony and child support, certain taxes, debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit, debts for willful and malicious injury by the debtor to another entity or to the property of another entity, debts for death or personal ...

Often, a case is dismissed when the debtor fails to do something he/she must do: show up for the creditors' meeting, pay the filing fees, answer the trustee's questions honestly, produce books and records the trustee requests, file required documents, or when the dismissal is in the best interest of the creditors.

Negotiate with the creditor or collection agency

You can ask the creditor or collection agency to remove the debt. Writing a goodwill letter to a creditor or collection agency, depending on who now owns the account, may be an option.

How can I settle my debt without paying? ›

For many people, a debt management plan (DMP) is the best way to reduce credit card debt. DMPs involve a structured plan to pay off your eligible debt, with direction and support from a certified credit counselor. Typically, the accounts you include in a DMP will qualify for waived fees and/or reduced interest rates.

Some of these factors include the time since your last payment, the total amount owed, whether your account is with the original creditor or a collections agency, and how much you can afford to pay. Typically, you should offer 60% or less of your debt amount to kick off negotiations.

Canceling runaway interest for millions of borrowers

President Biden will announce plans that, if finalized as proposed, would cancel up to $20,000 of the amount a borrower's balance has grown due to unpaid interest on their loans after entering repayment, regardless of their income.

When you sign a debt settlement agreement, you can cancel it in the first 10 days after you get a written copy. You can cancel it for any reason — even if you simply change your mind.

If you do not pay the judgment, the judgment creditor can "garnish" your wages. An Earnings Withholding Order (WG-02) tells your employer to send a portion of your paycheck to the Sheriff instead of you. The standard portion withheld is 25% of your net (after-tax) pay.

The defendant, however, has the option to file a motion to vacate judgment within 180 days after the date of the original judgment. Based on the defendant's reason for not appearing at the hearing, the judge may allow the motion to vacate the judgment.