How to Settle a Debt in Hawaii: 3 Steps to Financial Freedom

Debt lawsuits in Hawaii can quickly spiral out of control. When creditors win judgments, they can garnish your wages and freeze your bank accounts.

You won’t have full control of your finances anymore. Your creditor will take the maximum amount allowed from each paycheck.

You can avoid this outcome by settling your debt before the court date. Settlement gives you a chance to resolve the debt for less than you owe.

Here’s everything you need to know about settling a debt in Hawaii.

Follow These 3 Steps to Settle Your Debt

Hawaii debt lawsuits require a strategic approach. You can settle your debt by following these specific steps:

1. Respond to the lawsuit with an Answer
2. Make a settlement offer to start negotiations
3. Get the settlement agreement in writing

Each step protects your rights while moving toward resolution.

Step 1: File an Answer to the Lawsuit

Creditors and debt collectors start lawsuits by filing a Complaint. The document lists their grievances against you, including payment history and total amount owed.

Many people ignore the Complaint. That’s a critical mistake that leads to automatic judgments against you.

File an Answer instead. An Answer is your legal response to each claim in the Complaint.

You can use various defenses in your Answer. Common defenses include insufficient documentation or lack of business relationship with the debt collector.

In Hawaii, you have 20 days to respond to a debt lawsuit. Miss that deadline and you lose by default judgment.

Filing an Answer buys you time to negotiate a settlement. It also protects you if settlement talks fall through.

Our partner Solo can help you draft and file your Answer quickly.

Step 2: Start the Settlement Negotiation Process

Evaluate your finances carefully before making an offer. Review your savings, upcoming paychecks, and available resources.

Consider selling unnecessary items or asking family for help. You need cash in hand to make a credible offer.

Start by offering at least 60% of your total debt. That amount shows you’re serious about settling.

Expect several rounds of negotiation. Your creditor will counter with higher amounts.

Stay calm during negotiations. Never accept terms you can’t actually afford to pay.

Step 3: Get Your Settlement Agreement in Writing

Never transfer money without a signed, written agreement. Written contracts protect both parties and prevent future disputes.

Your agreement must include specific details:

• Total settlement amount
• Payment due date
• Transfer method
• Confirmation that payment settles the debt completely

The agreement should state that the creditor has no rights to remaining balances. You’re settling the debt in full, even though you’re paying less.

Consider having the agreement notarized. Notarization validates that all parties understand and accept the terms.

Settlement Example: Diana’s Case

Diana gets sued by Empire Credit and Collections for $2,000. She responds to the lawsuit with an Answer, buying time to negotiate.

After reviewing her finances, Diana determines she can afford 70% of the debt. She makes an initial offer of 50%, or $1,000.

After several counteroffers, Empire Credit agrees to settle for 60%, or $1,200. They notarize the agreement and Diana makes her payment.

Empire Credit files paperwork to dismiss her case. They report the debt as settled to credit bureaus.

Hawaii’s Debt Collection Laws Protect You

Hawaii law prohibits specific debt collection practices. Understanding these protections helps you identify violations.

Under HI Rev Stat § 443B-16, debt collectors cannot:

• Use profane or obscene language
• Call without disclosing their identity
• Cause expense through long-distance calls or telegrams

HI Rev Stat § 443B-17 prevents collection agencies from:

• Publishing your debt in newspapers or other media
• Notifying your employer or family members about your debt

HI Rev Stat § 443B-18 makes fraudulent or deceptive collection practices illegal.

Federal Protections Also Apply

The Fair Debt Collection Practices Act (FDCPA) provides additional protections. Debt collectors cannot:

• Call before 8 a.m. or after 9 p.m.
• Contact you more than seven times per week
• Threaten you with jail time for unpaid debts

Hawaii’s Statute of Limitations on Debt

Hawaii caps how long creditors can sue you for unpaid debts. Under HI Rev Stat § 657-1, the statute of limitations is six years.

The six-year limit applies to oral contracts, written contracts, and debts on account.

Federal Rules Regulate Debt Settlement Companies

The Federal Trade Commission’s Telemarketing Sales Rule governs all debt settlement companies. These regulations protect consumers from predatory practices.

Debt settlement companies cannot:

• Charge upfront fees: Companies can only collect fees after successfully settling your debt
• Hide important information: They must disclose costs, timelines, and potential consequences before enrollment
• Make false claims: All representations about services must be truthful and substantiated

Best Ways to Contact Debt Collectors

You can initiate settlement discussions through phone, email, or letter. Each method has advantages and disadvantages.

Email is the most efficient option. It creates a written record of all communications and gives you time to consider responses.

Phone calls work if you prefer oral negotiation. Record the conversation to protect yourself.

Under HI Rev Stat § 803-42, Hawaii is a one-party consent state. You can record calls without notifying the other party.

Recommended Debt Settlement Companies

Professional help can simplify the settlement process. Here are companies we recommend for debt settlement assistance.

Solo

Our partner Solo specializes in helping people respond to debt lawsuits. The team negotiates settlements directly with creditors on your behalf.

Solo facilitates secure payments without sharing your bank details with collectors. You maintain privacy throughout the entire process.

Freedom Debt Relief

Freedom Debt Relief has operated since 2002. The company has helped over 750,000 people settle unsecured debts.

Programs last between two and four years. Fees range from 15% to 25% of enrolled debt.

National Debt Relief

National Debt Relief started providing settlement services in 2009. Thousands of people have completed their programs successfully.

Most participants finish within four years. The company focuses on unsecured debt settlement.

Additional Hawaii Debt Relief Resources

Educate yourself before starting the settlement process. These resources provide valuable information about Hawaii debt laws:

• How to Get Debt Relief in Hawaii
• Statute of Limitations on Debt in Hawaii
• How to Answer a Summons for Debt Collection in Hawaii
• Hawaii Court Case Search

Debt Settlement Delivers Real Results

Financial difficulties happen to everyone. Debt settlement offers a path forward when you’re facing a lawsuit.

Understand the process before you begin. Only accept settlement terms you can realistically afford to pay.

Acting quickly protects your wages and bank accounts from garnishment. Take control of your financial future today.