Settle Your Case in District Court (Maryland State)
Settle Your Case in District Court
If you have been sued in the State District Court of Maryland and you want to settle before trial, you have three options. But let's first discuss the elements of a settlement agreement.
When you negotiate a settlement, you'll want to negotiate several points or elements. First is the principal balance you owe. For example, you owe $5,000, but offer to pay $2500. $2500 is the new principal balance. Second is the interest. Third is whether you will pay court costs. Fourth is whether you will pay attorney's fees. Fifth is whether there will be post-judgment interest of 10% in the event of a judgment.
You will also negotiate your monthly payment and what day that payment is due on each month. Or you can negotiate a one time lump sum payment. The choice comes down to your ability to pay and how much the creditor is willing to work with you.
A creditor is usually authorized to accept an offer anywhere between 25% and 85% of the total balance owed. Low ball the creditor around 50% and they may bite. But use your best judgment. It's best to get them to offer a number first.
The creditor will then offer you one of the following options:
The Dismissal Pursuant to Rule 3-506: This may be the best option. If you, the Defendant, have come to an agreement on the above elements, the creditor may agree to dismiss the case against you without prejudice. This means that the case is dismissed, but the creditor has the right to reopen it against you at any time for failure to abide by the settlement agreement.
The Dismissal Pursuant to Rule 3-506(b): This is the next best option. The creditor and debtor will reduce the above settlement elements into a written contract. The creditor will then present the contract to the court and the case will be dismissed. The catch? If you fail to abide by the settlement agreement, the creditor will notify the court and judgment will be entered against you in the full amount of the original claim.
Consent Agreement Pursuant to Rule 3-612: This is the option least recommended because a judgment will be entered against you in favor of the creditor. You always want to avoid a judgment if possible. A consent agreement creates a consent judgment against you. The catch? The catch is that the creditor usually agrees not to execute on that judgment unless you fail to abide by the contract. As soon as you stop making payment, the creditor can execute on the judgment by placing a lien on any real property, or attaching a wage or property garnishment.
Any settlement agreement should be reduced to writing, signed by each party, and submitted to the court.
While there are other ways to settle and dismiss claims, the three above are the most commonly used. If you have been sued it's always recommended you seek counsel. This article is educational only and not intended to be legal advice. It does not create an attorney client relationship.
Written by Bennett J. Wills, Esq. 2013.