Need legal advice

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marine65

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I was served a summons to appear in court over an old debt.
I am calling the collection agency on Monday to settle out of court.
The original debt was $1500 but has now risen to $3300.
I know I should have taken care of this before but illness, job loss and other factors prevented it.
I want to settle for a one time payment but don't know what would be accepted.
Anybody have any insight on what they might accept?
 
If it is old enough and you respond (admit)/pay it can bring it back from statute of limitations, though it seems if you are being sued it is within statute.

Making a deal on debt will result in taxable income from cancelled debt. They get to write off what they didn't collect and you get to pay taxes on the cancelled portion.

(I work in collections)
 
Originally Posted By: SatinSilver
What was the original debt for? Credit card, etc...


credit card.
 
Originally Posted By: 04SE
If it is old enough and you respond (admit)/pay it can bring it back from statute of limitations, though it seems if you are being sued it is within statute.

Making a deal on debt will result in taxable income from cancelled debt. They get to write off what they didn't collect and you get to pay taxes on the cancelled portion.

(I work in collections)



You work in collections?

So where do I start on my offer?
Or is there a general rule of thumb in the business?
 
Originally Posted By: marine65
Originally Posted By: SatinSilver
What was the original debt for? Credit card, etc...


credit card.


Find out if the agency owns the debt or is collecting on contingency fee basis.

I am assuming this is on your credit? Find out how that will be cleared.

Get the settlement in writing before paying - document, document, document.
 
Originally Posted By: marine65
You work in collections?

So where do I start on my offer?
Or is there a general rule of thumb in the business?


Ok, the original creditor probably charged off the debt and sold the balance to some sleazy collections agency. They bought the debt for pennies on the dollar. So anything they get above the tiny amount they paid for it is gravy. Google the name of the outfit so you know who you are dealing with. Don't give them any bank account info. Many times they will take your payment and still come after you for the balance. Or they will sell the balance to another collection agency and try to collect from you. Get everything in writing if you agree to a settlement. I'd probably offer 10% of the original amount of $1500 and see what they say.
 
How old is this debt? Do you have any major assets?
Show up to court and answer what the judge ask. They only do this in hopes you will not show and the court will put a warrant out for your arrest. The court can't force you to pay in that hearing. The company has to do a lot more work to get to that stage.

You have a lot more power in this than you think.
 
Originally Posted By: marine65
Originally Posted By: 04SE
If it is old enough and you respond (admit)/pay it can bring it back from statute of limitations, though it seems if you are being sued it is within statute.

Making a deal on debt will result in taxable income from cancelled debt. They get to write off what they didn't collect and you get to pay taxes on the cancelled portion.

(I work in collections)



You work in collections?

So where do I start on my offer?
Or is there a general rule of thumb in the business?


Most credit card cases are done in groups on the same day. They will have an ambulance chasing lawyer there hoping you don't show and get a default judgment. Generally, the poor schmuck will make a deal on the spot prior to the court case. Depending on how old/much the debt is (the older it is the less they paid - called buying paper) dictates your bargaining power. I would start at around 10-15 percent.

Remember - what you get cancelled with surely be reported to the IRS on a 1099-C and you will have to pay taxes on it.
 
Originally Posted By: Jimzz
They only do this in hopes you will not show and the court will put a warrant out for your arrest.


Warrants can't be issued for civil court cases. If he doesn't show up then a default judgement maybe issued.

Did the summons arrive in the mail or did you have to sign for it? Proof of service is needed in most states.

If they do get a default judgement then they can put a lien on real estate or even your car. So you may want to talk to an attorney about this. Initial consultations are free. I would think attorney fees would be minimal.
 
Last edited:
If you cannot reach an agreement with them,be sure to appear in court at the appointed time or they will get a judgement against you and come after your paycheck!
 
Also, bare in mind they have access to your credit and can see if you have a credit card that you could use to pay the whole thing. They might be a sleazy collection agency but they already know more about you than you do. Between credit bureaus, westlaw and countless other databases, they know how likely you are to pay and your ability to pay.
 
Originally Posted By: SatinSilver
Originally Posted By: marine65
You work in collections?

So where do I start on my offer?
Or is there a general rule of thumb in the business?


Ok, the original creditor probably charged off the debt and sold the balance to some sleazy collections agency. They bought the debt for pennies on the dollar. So anything they get above the tiny amount they paid for it is gravy. Google the name of the outfit so you know who you are dealing with. Don't give them any bank account info. Many times they will take your payment and still come after you for the balance. Or they will sell the balance to another collection agency and try to collect from you. Get everything in writing if you agree to a settlement. I'd probably offer 10% of the original amount of $1500 and see what they say.


This. I have never been sued but I had a credit card go unpaid. I decided one day to settle all debts and get my stuff together. I offered to pay the original amount I charged off of $500 and nothing more if they would put it in writing. They said yes but wanted me to make a payment over the phone. I told them I would only do it if they sent a letter to me and I would overnight the payment. They refused so they never got paid. I knew from another dealing that I settled over the phone and they didn't mark it as paid. They just deducted the amount I paid to them from what they claim I owed.
 
Originally Posted By: SatinSilver
Originally Posted By: Jimzz
They only do this in hopes you will not show and the court will put a warrant out for your arrest.


Warrants can't be issued for civil court cases. If he doesn't show up then a default judgement maybe issued.

Did the summons arrive in the mail or did you have to sign for it? Proof of service is needed in most states.

If they do get a default judgement then they can put a lien on real estate or even your car. So you may want to talk to an attorney about this. Initial consultations are free. I would think attorney fees would be minimal.




What?!?!?!? Hahahhahaaa yes they can. That is why slimy companies like this do this. They want you to no show and then get a warrant for your arrest. Its a very common tactic in many states. You can be held in civil contempt of court if you do not show up. The court then issues a warrant for your arrest.


The default is also another thing they like to do as they do not serve many people properly but then its on you to not only prove that but then fight the default and maybe even a warrant for your arrest by that time.


EDIT:
Heres a good write up on it...
http://www.nolo.com/legal-encyclopedia/the-new-bill-collector-tactic-jail-time.html
 
How old is this debt? Determine what the SOL is for this specific type of debt in your state.

Collectors can and some will sue on a debt with an expired SOL. In many states SOL is an affirmative defense. This means you must actually raise it, it is not automatic.
 
BITOG cannot provide legal advice, nor should the advice of any user of the forum be considered legal or any other form of counsel.

That said, I would recommend listening to Dave Ramsey radio shows for a while, as he often talks about dealing with collectors.

IIRC:

- Any settlement offer from the owner of the debt must be provided IN WRITING, no exceptions.
- Under NO circumstances do you provide the collection agency or anyone else access to your checking account. I would go so far as to only pay with a money order, but a cashier's check from your bank might also work if and only if it does not provide your account and routing number.
- Obtain documentation from the collector that the check was received and accepted, and once it clears, demand verification in writing of the canceling of all debts, in agreement with the original offer letter.
 
First you need to immediately send or fax a debt validation letter. Make sure the debt is valid and this collection company owns it. They may not have bought this debt or may not currently own it. You can Google debt validation letter to see the wording. I have done it and many collection companies will not have it. And they stop if they do not have the required documents. If they don't have it, no debt. Even if the debt is valid, they may not have the info and so they cannot pursue the debt.

How old is the debt, states have a statue of limitations.

I do not think they are allowed to add interest and fees to the original debt.

Check if this collection company is licensed in your state.

Collection companies are the scum of the earth and will say anything to get money. If you pay never pay over the phone, use a written check.

I would offer them $500 after they produce a debt validation letter.

You may need to show up a court, but if you have not seen the proof debt, ask for it there.

If you pay, get them to sign a letter saying they will totally remove this debt/collection from all 3 credit reports.
 
If they get a default judgement, they typically try and garnish your wages.

No arrest, it's civil court. We have not had debotors prison in a few hundred years.
 
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