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I have been sued by one of my creditors, received summons, and I have retained legal counsel.  The agency who owns the debt currently is willing to settle for $1500 less than what is owed.  Quite frankly, I'm in a position where if I settle the account for what the agency is offering,  I'm not saving much money after all legal fees and expenses, but the issue will be over and done with.  If I litigate the case, is there a chance that the company will settle for a lesser amount, assuming they don't want to go to trial?   If i decide to litigate, I will have to pay my lawyer $1,000 more, but I was also told that if this agency doesn't have there paperwork in order then there is a chance that I might not have to pay anything and it's possible the case could get dismissed.  I guess my main question is that is it better to litigate the matter to potentially save more money, or just settle for slightly less than what is owed? 

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This is a constant struggle in these cases. I have worked for attorneys who do this work, and I plan to do this work in when I pass the bar.

But the dilemma you put forth is a real problem. What I would tell a future client is this, with a settlement you control the outcome and you know what are you getting.  With litigation, you literally have no clue how any one judge is going to rule.  Your attorney can make an educated guess, but he or she will not be able to predict the future.

You reduce risk by settling, but do not receive as great a benefit.  By  proceeding with litigation, your risk increases dramatically but your potential award is owing zero.

I'd like to know your attorneys strategy, the creditor is not allowed to surprise you.  Your attorney should be able to get all their documents or witnesses they plan to use at trial via discovery.  That is really when you should make the decision to litigate.

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What bothers me is that the attorney I retained said to litigate will cost $1,000, and then if the case ever does  go to trial which I hopefully doubt, then I will have to pay the lawyer even more money.  Our plan is to file an answer, and file for discovery, and hopefully the creditor will not want to litigate further and drop the settlement amount even lower.  At this stage of the game with the loan being roughly $6500, the company only wants to settle for $5000.   I have already paid $750 in legal fees for an attempted settlement to which I am not satisfied with.  The prospect of spending another $1,000 for a chance at paying a further reduced settlement or possibly paying nothing seems like a gamble to me.   This is my issue, does one litigate or settle,  other creditors I have dealt with in the past seem to settle at much lower rate which is why I am hesitant to jump on the 5K settlement offer.  I am more leaning towards litigation in the hopes that the creditor doesn't have the proper documentation in order being that the debt passed thru around 3 companies so far. 

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is the creditor a debt buyer or original lender? if the party is a debt buyer, there is no way I'd pay 5k on $6500.  I'd take the gamble and go through with discovery and see what documents they have.

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