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How to Settle Your Debts in Nevada

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In a Nutshell

If it turns out that a Nevada debt settlement is the right path for you then it’s important to understand how to get through the process. In this article, we will walk you step by step through the process, from the details to collect about both your debts and ability to settle them, to how to make your debt settlement work.

Written by Attorney Eva Bacevice
Updated March 26, 2021

When you’re having trouble keeping up with your debt, the range of debt relief solutions may feel overwhelming. Debt settlement could be a good solution for you under the right circumstances. In a Nevada debt settlement, you would pay less than the total debt you owe to a creditor, who would in turn forgive the outstanding balance. Creditors are under no obligation to agree to a debt settlement but will choose to do so with the right incentive. This is usually getting a lump sum payment upfront to pay off a percentage of the debt. You may wonder why a creditor would agree to accept less than the full amount at all. This comes down to managing their losses. Once an account goes delinquent for over 90 days there is an 80% likelihood that the creditor will never see any money owed on that debt. Because of this, if they can collect a portion of the total amount in a settlement agreement, they’re recovering more than they expected. This creates an opportunity to settle debts for pennies on the dollar. The person best suited to a debt settlement is someone who has a manageable number of debts, that are primarily or solely unsecured debts such as credit card debt. This will not work for someone with mostly payday loans, title loans or online loans with creditors who are out of the country. Most importantly, this person has to have funds available or an ability to set aside money to make the lump sum offers. Generally, banks or credit card companies are only going to consider a Nevada debt settlement for someone who is already behind on their payments by at least 90 days. If you have access to funds for settlement but are not behind on your bills then your creditors have no reason to discuss settlement with you, because they are already collecting money from you. So, if you are current and do want to pursue a debt settlement you would need to stop paying and wait out the three months before approaching your creditors for settlement options. This will have consequences like a negative impact on your credit report and credit score as soon as you go delinquent. Additionally, there is no guarantee that companies will agree to or work with you on a debt settlement, so you are rolling the dice. There are Nevada debt settlement companies that you can work with to help you through this process, who have established relationships with the creditors that can work in your favor, however, the trick here is avoiding the predatory companies who will promise you quick solutions and guarantee resolutions outside of their control simply to make a profit. A reputable Nevada debt settlement company will set up an escrow account for you to make payments into which will then be available for your lump sum payments. 

Learn More Through Free Nonprofit Credit Counseling

One of the best first steps to learn more about your debt relief options is going through credit counseling. With a reputable nonprofit credit counseling agency, you can meet with a certified credit counselor for a free initial session to see what debt repayment options make the most sense for you. You should aim for a nonprofit credit counseling agency because they have to be accredited by the National Foundation for Credit Counseling (“NFCC”) that upholds rigorous standards. Your certified credit counselor will be trained in consumer credit, debt and money management, and budgeting. They will review your total financial situation, including your income, expenses, debts, and will, with your permission, show you how to pull your credit report to see the total picture. After this in-depth review and speaking with you about your financial goals, they will recommend you best next steps with an action plan to set you on the path to achieving those goals. Most often this will be either a debt management plan, which is a form of debt consolidation, debt settlement, or bankruptcy. 

How to Settle Your Debts in Nevada

If it turns out that a Nevada debt settlement is the right path for you then it’s important to understand how to get through the process. In this article, we will walk you step by step through the process, from the details to collect about both your debts and ability to settle them, to how to make your debt settlement work.

Collect Details About Your Debts 

The first step is to collect all the details you can about your debts. This will include the most recent statement for all of your credit cards and other debts. You will need to include information about debts you do not intend to settle (such as secured debts like a car loan, or student loans) so that you can show a complete financial picture to your creditors. You should obtain a free copy of your credit report during this process because it is possible that your debts, especially those in default, have been sold to collection agencies or assigned to other creditors and you need to know who holds the debt to settle it. Once you have a handle on the amount of debts you should categorize them so that you know whether they are secured, unsecured, student loans or medical bills. When you can see the big picture, you are in a better position to determine if you are a good fit for debt settlement as discussed above. Again, a good candidate is dealing mostly with unsecured debts like credit cards, both bank-issued or store cards, gas cards, signature loans, a deficiency balance after a repossession and third party collection accounts. 

Collect Details About Your Ability to Settle Your Debts 

After getting a full picture of your debts you next need to figure out your ability to settle those debts. Here you will need to consider  your income and regular expenses to determine what amount, if any, you will be able to set aside to save enough for lump sum payments. When you are looking at income, this should include any kind of income that comes into your household, although it is important to note that social security income is protected from your creditors. You also want to make sure that you are accurate information to calculate your income. You can look at your last few pay stubs and use those if you were working a regular amount. If you have a lot of overtime that could artificially inflate your income. You also need to keep in mind how often you get paid. If you are paid monthly it is pretty straight forward to see your monthly income. If you are paid bi-weekly or weekly, you need to take into the calculation that very few months are exactly four weeks long. If you are paid bi-weekly, you can multiply a regular paycheck amount by 26 (number of pay periods in the year) and then divide by 12 to get the monthly amount. If you are paid weekly, you can multiply by 52 and divide by 12. Make sure you are using your net pay or take-home amount. Next, you need to figure out your typical monthly expenses and create a budget with those amounts. If there is money left over at the end of the month you can likely move forward on the Nevada debt settlement plan. If there is no money left over at the end of the month before you even get to your debt payments then you may want to consider a Chapter 7 bankruptcy instead of any form of debt repayment. Regardless of that calculation, you should never raid any of your retirement accounts to pay off your debts. If you take money out of any retirement accounts before you are the proper age you will face penalties and/or tax consequences. Additionally, this money is safe from creditors. They cannot garnish or collect the money you have set aside for retirement. Further, if you do end up in bankruptcy, these funds, if they still exist, are protected completely. 

Learn About the Costs to Settle Your Debts in Nevada

There are several costs associated with a Nevada debt settlement. First, don’t forget to consider the costs you incur regardless of using a debt settlement company, including late fees, penalties and other fees on any delinquent accounts. When you enter into a debt settlement agreement part of the benefit will be reducing or eliminating these costs. If you do work with a Nevada debt settlement company you can also expect to pay fees for their services, and potentially bank account fees, if any, associated with a required third party account. There are a couple of different ways the debt settlement company fees can be structured. In general, the Nevada debt settlement company makes its money by taking a percentage of your overall debt. At the highest end, they could charge a percentage of your total debt. A better model, however, is when they charge a percentage of your total savings. This is less expensive for you and gives the company a greater incentive to get you the best possible settlement to increase its contingency fee. The fees should only be paid to the debt settlement company proportionally as each debt settles. 

Decide Whether to Work with a Nevada Debt Settlement Company 

If you decide to go the debt settlement route you can also choose to do the debt negotiation on your own. You are never required to hire a Nevada debt settlement company. If you are organized, computer savvy and not afraid to negotiate you can settle debts directly with your creditors. Benefits of doing it yourself include saving on fees, being able to be in complete control and informed throughout the entire debt settlement process. Additionally, some creditors have a policy of never working with a debt settlement company so working on your own may make reaching an agreement with them easier.  But there are several cons to consider as well. It will take a considerable amount of time and effort, which can be a challenge on top of everything else going on in your life. If you have been current on your bills without defaulting until this point, you need to be prepared to start receiving collection calls which can be very stressful. You will need to keep track of a lot of details that can get overwhelming. The debt settlement process is most effective when you can settle with each creditor, which can take a lot of time. Since this is not something you do typically, chances are you won’t know which creditors might be harder to work with or not worth your time to pursue. It’s also hard when you don’t have insider knowledge, like what percentage a company will typically approve, or how high you need to go to speak with someone who has the authority to enter into a settlement agreement. 

Research Nevada Debt Settlement Companies 

If you decide to work with a Nevada debt settlement company, it’s important to do some research before signing up. Debt settlement can be a stressful process which makes it even more important that you are comfortable that the debt settlement company you are working with truly has your best interests at heart. You can increase your comfort level by knowing what red flags to avoid and steps you can take to avoid scams and predatory companies. First, know that you are entitled to certain information in advance about the debt settlement program, and a company’s refusal to provide any of the following information is a big red flag. This includes the fees and terms. The Nevada debt settlement company should also be able to tell you how long it will take to get results. They also need to share how much money you need to have available before they will make an offer to each creditor on your behalf. If part of their program involves stopping making your payments, they need to be transparent with you about negative consequences that can result, like damage to your credit score and credit report, the possibility of lawsuits against you, increased collection efforts and additional fees and interest accruing that increases your overall total debt. Additional red flags include a Nevada debt settlement company pushing “new government programs” that you have never heard of or offering guarantees. You should walk away immediately if they charge fees before settling any of your debts. Beyond the information provided by the company, you can also research information about the company. Start by checking with the Nevada attorney general’s office to see if there have been any complaints filed against the companies you are considering. In particular, you should focus on their Bureau of Consumer Protection to find out about the state laws protecting you and information about ongoing scams. You can also check with the Better Business Bureau for complaints against companies and check their overall rating.

How to Make Your Debt Settlement Work 

There are some practical steps you can follow to help make your debt settlement work. One of the most important is to make sure that you have a reasonable budget to cover your ongoing monthly expenses while still setting aside money to use for your settlements. You should build into this budget an emergency fund so that you can cover unexpected expenses when they occur. Also make certain to set up a system to cover expected variable costs, by putting aside money a bit at a time so that it does not throw off your budget when those come up. Make sure that the monthly payment you make toward your settlement account is not on the same day as other large payments you need to make. Generally speaking, avoiding the first of the month is a good idea. Finally, be aware that you may not be able to keep any credit card accounts while you are pursuing debt settlements. If you have multiple accounts at the same bank the bank may close all accounts if you are seeking a settlement on one of them. Even if you have accounts with different banks your creditors could become aware of your payment issues from your credit report which could impact the settlement offers you get. Additionally, other creditors may decrease your account limits or close your accounts as a reaction to your current credit rating. 

Alternatives to Debt Settlement 

Keep in mind that debt settlement is only one of many possible debt relief options. As with any debt relief solution your financial circumstances will inform which option works best for you and your family. If debt settlement is not best for your personal finance issues whether that is because of the types of debt you are dealing with or because you can’t set aside any money to fund settlements, then one of the below options might be a better fit.

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Nevada Debt Consolidation

Debt consolidation is when you bring all of your debts together under one new debt to pay off your existing debts and streamline into one monthly payment going forward. A Nevada debt consolidation is cost-saving when the bulk or all of your debts are credit cards with high-interest rates. Presuming you have good or excellent credit to qualify for lower interest rates on a debt consolidation loan, this will save money based on interest rates alone. The biggest hurdle for debt consolidation is usually your credit score.

Nevada Debt Management Plan

Another option is a debt management plan. A Nevada debt management plan (“DMP”) is a form of debt consolidation that is not dependent on your credit score. In a debt management plan, you work with a credit counseling agency that can negotiate on your behalf with your creditors to lower interest rates and reduce or eliminate late fees. With a Nevada DMP, you work with the credit counseling agency to create a budget to afford your ongoing expenses and your monthly payment. You make one payment to the agency who will then send out all the separate payments to each creditor. The payment plan will run for two to five years and in the end, your total debt will be paid in full. 

Nevada Bankruptcy

All the debt repayment options discussed depend on your ability to have some amount of money available to pay off debts. If you have no money left after paying off your regular monthly expenses, then bankruptcy is likely a better option. Bankruptcy is a legal remedy that exists where you can walk away from some or all of your unsecured debts and get a fresh start financially. Keep in mind that you can always go to a free consultation with a bankruptcy attorney, perhaps after your initial meeting with a credit counseling agency, to fully explore all of your options. If you do decide to pursue a Nevada bankruptcy you can check out Upsolve’s screening tool to see if you qualify for free assistance throughout your Chapter 7 bankruptcy.

Written By:

Attorney Eva Bacevice


Eva G. Bacevice graduated from the University of Michigan Law School in 2001. She practiced law for close to a decade in the area of consumer bankruptcy. She now works in higher education as an Academic Advisor for undergraduate students at the Stephen M. Ross School of Business,... read more about Attorney Eva Bacevice

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