I Settled a Debt But Can I Still be Sued Over It?


Dear Steve,

I settled a debt, received a letter from the debt collection agency afterward. There was a legal case opened and that is why I settled out of court. The case states it is closed voluntary dismissal without prejudice by Plaintiff.

What does this mean? Does it mean they can still reopen for the remaining balance? Or is it only worded that way because it was a settlement? Can they still come after me?



Dear Ali,

What you have are two different items. Hopefully, you have a letter from the collection agency stating the debt was settled in full, even though part of the debt was forgiven. Don’t forget, you may owe income tax on the forgiven part if you are not insolvent.

I am not a lawyer but I can offer you some advice from experience. A case that is dismissed without prejudice can always be refiled.

So, can they still come after you? Technically yes. You would need that settlement letter to show the debt was settled in full. I’ve seen situations in the past when a creditor would later say the collector did not have the authority to settle and then go back after the consumer. So the letter is the key proof that you reached a settlement agreement and made the agreed payment.

I’ve seen cases where consumers could not produce the settlement letter as proof the debt was settled and had to repay the rest of the debt. Consumers would say the payment they made was proof the debt was settled but the creditor would say it was only a partial payment. Never lose any settlement letter you might get. Keep it with your most important papers.

The settlement by a collection agency and a legal action initiated by the creditor are two different things and not tied at all.

I hope that helps.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Damon Day - Pro Debt Coach

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