Sued for Debt – What’s Reasonable to Want out of Settlement

What’s Reasonable to Want and How do you Get it?

If you’re being sued for debt and have at least some money, you may be thinking about settling the case. What’s reasonable to pay? What’s reasonable to want in return for your money? And how do you go about it all?

These are questions that came up in a recent case evaluation. The answers are dynamic, but in a general way they point to some useful ideas.

Settlement Happens When Both Parties Agree they Can’t Do Better

In lawsuits, and perhaps all of life, you take actions you think will give you the best possible outcome. That’s a simple idea, but what it means is that if a company is suing you, they will settle if and only if they think it will give them a better outcome than pursuing the case to trial. In evaluating their case they look at “risk” (of losing) and cost (to pursue the case). When they file the suit, they fully expect to win the case either by default or within a few short weeks without having to spend any significant effort on it. Their only concern is whether you’ll be able to pay, but they do have a serious concern about this issue and will likely either settle for less than they demanded. But not much less.

If you want a better settlement, you’re going to have to take actions to change the way they view the suit.

Look at the Overall Case

Not all lawsuits or claims for money are created equal. If the plaintiff is a debt buyer (and not an original creditor), they will very likely have some or all of the weaknesses we mention in our Three Weaknesses Report. That is, they probably cannot win the case if you fight it intelligently. But they don’t expect many people to fight at all, and of those who do fight, they don’t expect many to know what they’re doing.

That means that when they file suit they completely discount all risk of losing, and they expect costs to be minimal. You need to change those opinions, and if you fight you can change their opinions about both of those things… eventually.

If the plaintiff is an original creditor, there is still a chance they’ll have the three weaknesses. But again they will completely discount any risk of losing. And remember, the lawyers bringing these cases scarcely if at all look at the cases – they have no real idea of what they have. They base their lack of concern over losing on the fact that so few people fight the cases.It’s a waste of money, they figure, to spend even one minute per case looking at the file when almost none of them will actually be disputed.

Again, you can change that by fighting. In discovery you can find out whether they have what they need – and at a minimum you will be adding to their risk (since they’ll have to start spending money to pursue the case, and they’re worried about whether they’ll get it back).

Therefore, it almost always makes sense to start fighting – and to do as good a job at it as possible – whether you have a debt buyer or original creditor, and whether or not you want to settle or try to win.

When it’s Time to Talk Settlement

After a while, you may be able to get the other side to take settlement more seriously.  When you do, what can you reasonable expect from them? Well, in short, that all depends on just how worried they are about their risk of losing and the cost of continuing. If they’re very worried, you could get them to clear whatever credit damage they have done to you, take little or no money to walk away, and give you a dismissal with prejudice.

If they’re not worried, you won’t get much from them. Simple as that.

Factors to Consider in your Favor

Some things that could help your case – you’ve shown them that:

  • They need, but don’t have, a contract with your signature
  • They cannot get records of the debt into evidence
  • They cannot prove they own the debt
  • The case is going to require a significant amount of attorney time to complete
  • The case will not be resolved for a long time
  • They know you know these things

Factors that Could Hurt Your Case

There are some things you can do to make settlement more difficult. And understand, the better your chances of winning are, the more likely they are to settle, so these factors should be considered damaging to your chance of winning at trial.

  • You have admitted to them you owe the debt
  • You have paid the debt collector money
  • You have told the debt collector where you work or bank
  • The trial has been set for a date not far away
  • You have not conducted any discovery

Do you see how all of these things lower their risks or uncertainty regarding getting money from you?

Note that one thing that is NOT a factor is how much they paid for the debt (if they’re debt buyers).  They probably did not pay much, and this might have a small effect on the amount of money they insist on, but their rights are measured by the amount of the original debt. And they will push for the most they can get according to the factors we mentioned above. How much they paid for the debt makes almost no difference. Whether they have “written off” the debt is an accounting matter that also has no impact on your negotiations or the case in general.


If you can do a lot of the things that help you and avoid most of the things that hurt you, you have a very good chance of winning at trial. The better your chance of winning is, the better a settlement you could get if you settle. It all starts with knowing what you’re doing as soon as you can (and of course that’s what our membership is for).

We often say there are no free lunches, and that most definitely extends to settling lawsuits. They will only settle with you and give you what you want because they think that is better than the alternative of continuing to fight. Don’t expect them to settle as a favor to you or from the goodness of their hearts. It just doesn’t work that way.