According to the Federal Reserve Bank of New York, U.S. household debt reached $18.04 trillion in the fourth quarter of 2024 – while credit card delinquency rates remained “elevated.” At the same time, the Joint Economic Committee stated that the average household in North Carolina must spend $161 more per month to maintain 2023 standards of living. Inflation, economic uncertainty, and other pressures cause families in North Carolina and South Carolina to accumulate increasing levels of debt each month – and this can often lead to legal issues. Those facing legal action from their creditors should consider all their various options. One possibility is a debt settlement, and this might help families avoid lawsuits altogether. To learn more about debt settlements, consider speaking with a civil dispute lawyer in North Carolina or South Carolina. Dial (888) 748-KING to continue this discussion at King Law Offices. Clients in North Carolina can visit our offices in Forsyth County, Mecklenburg County, Haywood County, and Watauga County. Clients in South Carolina can stop by our office in York County.
When Can a Creditor Sue Me in South Carolina or North Carolina?
Before families consider debt settlements, they should determine whether the threat of legal action is legitimate. The first step is to determine whether the amount is even worth the cost of a lawsuit in the eyes of a creditor. For example, a family might owe $20,000 to a creditor. Due to filing fees, court fees, and other legal fees, the cost of going to court might be higher than the amount the creditor stands to recover. In many lawsuits, the “loser” must pay the legal fees of the “winner.” However, this may not be possible in a debt collection lawsuit, since the defendant may only have enough to cover their debt.
On the other hand, the small claims court is a viable option for creditors pursuing smaller debts. According to the North Carolina Judicial Branch, creditors can pursue a maximum of $10,000 via the small claims court. On the other hand, South Carolina does not have a small claims court – instead using the Magistrate Courts to resolve claims over debts worth up to $7,500. These courts are associated with lower legal fees for creditors, and it may be worth the time and effort to pursue debts.
The Statute of Limitations for Debt Collection in South Carolina and North Carolina
Families should also consider the statute of limitations, as this may prevent creditors from pursuing legal action or any other debt recovery efforts. In South Carolina and North Carolina, the statute of limitations for most consumer debt is three years. If three years have passed since a family incurred debt, it may be possible to continue with life and experience relatively few consequences. However, allowing the statute of limitations to expire may affect credit scores – and a creditor may ask for debt repayment even after three years have passed. In addition, the time limit may begin at the date of the last payment.
What Are Debt Settlements?
A debt settlement is an agreement to resolve debt by paying a smaller amount than the outstanding sum. This is usually resolved through a single, lump-sum payment. The classic example is a debtor who receives $10,000 in inheritance after the loss of a loved one. This individual might have $20,000 in debt, and they may offer a single, lump-sum payment of $10,000 to their creditor in order to resolve all outstanding debt. Even though this payment would only represent 50% of the outstanding debt, the agreement may be attractive to the creditor for several reasons.
First, the creditor might never have that much cash in their bank account again. If the creditor rejects the proposed debt settlement, the creditor might gradually drain their inheritance on various living expenses. The creditor would then have to wait years before receiving the full $20,000 via slow, periodic payments. The cost of calling the debtor, keeping track of the debt, and processing these repeated payments may represent considerable losses for the creditor. On the other hand, a single payment of $10,000 allows both parties to move on – with no further costs or time-consuming processes.
What Is the Best Way to Negotiate a Debt Settlement?
Debtors might be able to negotiate debt settlements on their own. If they have cash available for lump-sum payments, debtors can make their offers and see what happens. Most creditors are unwilling to consider debt settlements for less than 50% of the outstanding sum. Some debtors might find it easier to negotiate effectively with help from lawyers from King Law Offices. Another potential strategy is to highlight other debts. If the creditor believes that the debtor only has a certain amount of money to pay multiple debts, they may “compete” with the other creditors to secure whatever lump-sum payment the debtor is capable of paying. Creditors generally have access to the credit reports of debtors, and they can confirm that these other debts are real.
Many debtors threaten bankruptcy, assuming that this will make creditors more desperate to recover the sums before they lose the ability to do so. However, this strategy may not be as effective as some debtors imagine – as major credit card companies and banks already assume a high likelihood of bankruptcy for delinquent accounts. Ultimately, bankruptcy is a separate discussion families should have with appropriate lawyers.
Learn More About Debt Settlements With King Law Offices
While a debt settlement often represents a preferable alternative to legal action, negotiating one of these agreements is not always easy. Families in North Carolina and South Carolina may benefit from the assistance of an experienced negotiator – someone who understands the intricacies of local state law. A lawyer with a background in asset protection, civil disputes, and mediation services could help families achieve a positive debt settlement that serves the best interests of all parties. An initial consultation with a North Carolina or South Carolina civil dispute lawyer may provide an opportunity to discuss specific financial concerns and the details of potential lawsuits. Dial (888) 748-KING for an opportunity to speak about these issues with King Law Offices. We are proud to serve North Carolinians in cities like Winston-Salem, Cornelius, Charlotte, Waynesville, and Boone. Residents of South Carolina may visit our office in Rock Hill.