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I think she should offer them the $350 and tell them that's the best she can do. I bet you they will take it. They know their chances of getting ANYTHING are pretty slender, and if you don't pay anything, they don't make anything.
They probably can't "Fix" her credit, but she should ask them, followed up in writing (tell her to get an address and name to write to) to make sure that they note "Paid Charge-off" on her credit reports. This debt has already likely been charged off (written off as uncollectable) by the original debtor and the credit report would say "Charged-Off". It is better if "Paid Charge-Off" is on the item, indicating that your friend did eventually make good on the debt. I don't remember seeing the negotiated amount on my credit report when I did this.
It was some years ago, but I paid off debts that were in collection, mostly credit cards, for less than the amount and I asked them to note it on my credit record. It is not an unreasonable request, they hear it all the time, and as I said, they probably expect to get nothing, so tell your friend to offer the $350. She'll have put her mind at ease from having paid an outstanding debt, the collection company will go away, and when the time comes again when her situation improves and someone has to look at her credit, they'll see that she settled her debt.
I appreciate everyone's replies. She's still not sure what to do and the debt collector has given her until the end of the month to accept their offer of a $700 one-time payment.
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Quote:
Originally Posted by plain and simple
Minnesota.
I appreciate everyone's replies. She's still not sure what to do and the debt collector has given her until the end of the month to accept their offer of a $700 one-time payment.
Those that claim she is judgment proof are wrong. Just because she doesn't have much right now doesn't mean that she won't have anything 10 years from now, a judgment in that state is good for 10 years.
Minnesota is definitely not a debtor friendly state. The collector (CA) can pocket serve a debtor, without first filing an action in court, and if the debtor fails to respond then the CA will file an action with court showing that the debtor failed to respond and the judge can then issue a default judgment against the debtor, without the debtor even knowing about the court action until after the fact. The CA can also freeze bank accounts and begin garnishment procedures before filing the case with the court.
The majority of debt cases in that state end up as default judgments because people mistakenly think that since the service papers are coming from the CA and there is nothing showing up from the court then they aren't real .. but they are very real.
With that being said, there are a few things that are in the debtors favor ...
The CA must be licensed and bonded. Check up on them to see if they are.
If the debtor requests validation then the CA must be able to prove that the debt (including the amount they claim is owed) is valid and prove a valid chain of assignment from the original creditor.
She might consider sending them a debt validation request, and, you/she should go to the Credit Forum on creditboards and post the same/similar question on there. She might also consider removing her funds from her bank account and deal in a cash only basis for awhile, using money orders to pay her bills with.
Those that claim she is judgment proof are wrong. Just because she doesn't have much right now doesn't mean that she won't have anything 10 years from now, a judgment in that state is good for 10 years.
If she has the means to clean this up in the future she should try to do so whether the creditor gets a judgement or not.
The issue is that at this point in time she has nothing that can be taken via judgement and very little to live on, so using her meager savings to try to settle the debt will likely do her more harm than good.
1. Make a deal with the collector, If she is willing to pay the debt. The deal I would offer is to pay the $350 that you say she can pay. Then to make arrangements to pay $50 a month at a new interest rate. I am thinking that she will get something back in her taxes with the low amount that she is making. offer to pay the balance off with her tax return.
2. Since she is emotionally involved with the process, have her call Consumer Credit Counseling and have them be her advocate and work it out.
3. File Bankrupsi. With this small amount of money though it doesn't seem worth it.
4. Get a second and maybe a 3rd job. If I was single I would be working 2 full time jobs. When I was younger I did work 1 full time and 2 part time jobs.
5. Do any kind of side work, sell what ever she can sell, collect cans and turn them in, do yard work, do anything that can make her some money to satisfy the bill. Most of us seem to spend our time thinking about debt when we should be thinking about making money. Have her forget about the debt and take it off her mind. She really does not have to think about it now, as the collection people are willing to keep her debt on their minds. I would even tell them that when they call. Here is what I would say: "Thank you for calling. It is so nice that you are so concerned with my debt. This is a big help and allows me to concentrate on making money. I am going to spend my time worring about how to make more money to pay off my debt, while you spend time worring about my debt. Thank you for doing that, it is a big worry off my chest."
Again, I really do appreciate everyone's advice and opinions. I still haven't given her any specific advice yet, which I'll need to do pretty soon. You can see by this thread how many different opinions there are and I don't want to steer her wrong.
I'm mostly being moral support for her to have someone to talk to about this. But, I don't want to take the chance of having what I tell her be the deciding factor in how she decides to handle this. It's not cut and dry enough for me to bear that responsibility. I'm trying to find someone that she can consult for a free consultation. Paying even a small fee right now is money out of her food budget. That's already pretty low.
Disconnect the home phone number and purchase a no-contract cell phone plan that doesn't require a credit check.
While she may WANT to pay - right now ANY amount will cause more of a hardship than she can afford.
Also - tell her NOT to sign for ANY registered letters - it will prove they "found" her.
Sometimes life happens - and even honest people need a break to get their business straight. To make this "plan" work - she will have to become CASH ONLY until it is eventually paid or forgiven.
Also - she will not be able to sign a new lease in her name - make sure the rent is ALWAYS on time.
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