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I recently responded to a summons from a Debt Collector which was my first step in dealing with a potential law suit over an old debt. In response the debt collector has provided credit card statements as proof of the balance. The debt is within the statute of limitiations and I would like to try and negotiate a suitable amount to pay. The collector is attempting to collect the entire amount of $6,500, but I am going to offer much less in hopes of settling on a lower amount. The debt went into collections when I lost my job and the amount reflects a ton of incurred interest. My questions are as follows:
1.) How should I begin negotiating with the collector?
2.) If the collector agrees to an amount how can I make sure that the debt officially gets satisfied?
3.) Is it in my best interest to try and continue to fight this in court?
How much correspondence have you had with the debt collector? Usually the collector makes two attempts or so to collect the full amount, and then the owner of the debt authorizes them to offer a 'settled' amount, or reduced amount.
When they do this, ask for the settlement offer in writing. That is your guarantee that when you pay it, the debt is satisfied.
If the collector isn't offering any settlement, contact the debt owner directly. Pay them directly--they have to accept direct payment--to ensure that the debt is settled in full.
Thank you for the response!
The only correspondence I recieved was a summons because the original debt holder sold it to a junk collector. They are the ones who filed the lawsuit. I responded to the summons, and now the debt collector sent me copies of the credit card statements. So I want to start negotiating but I just don't know what process I should follow. It is our first communication since the summons so I wanted to know if it was wise for me to begin negotiating, and how to go about starting that negotiation. Apologies for leaving out a few of the details.
Thank you for the response!
The only correspondence I recieved was a summons because the original debt holder sold it to a junk collector. They are the ones who filed the lawsuit. I responded to the summons, and now the debt collector sent me copies of the credit card statements. So I want to start negotiating but I just don't know what process I should follow. It is our first communication since the summons so I wanted to know if it was wise for me to begin negotiating, and how to go about starting that negotiation. Apologies for leaving out a few of the details.
Thanks,
Honestdebtor
If you are going to attempt to negotiate with the collector you should be ready to offer them a sum to get them to withdraw the lawsuit.
You do not want these people to get a judgment against you. The judgment AND the debt will both report on your reports and tank your scores.
Any of your negotiations need to be in writing and you must require that they withdraw the suit.
A great resource for info is creditboards dot com (look under the "Help I've been sued forum threads)
Sounds like the debt has been charged off, so......
1. Look closely at your credit card statements. A good starting point is to pay off what you actually charged on your account, i.e., eliminate the late charges and stupid high interest fees.
2. When y'all come to an agreement, demand a written statement that the debt has been satisfied. You'll prob'ly have to pay it with a cashier's check and don't hand it over until you receive a statement that sez the debt has been paid. "With prejudice" will be in there someplace. Don't accept anything less.
3. If you owe the money, pay the bill. Some folks fight and win, but c'mon.
It's not your fault that you went into arrears, but if you charged the stuff then you should pay.
Ifya lose in court, then they can do all kinds of stuff....
Garnish your paycheck
Take money out of your bank account
If you negotiate a settlement that involves debt forgiveness, then prepare to pay taxes on that "forgiven debt". The IRS considers that income and you'll have to pay taxes on it.
E.g., they say you owe $6500, but you fork over $4000 and the debt is settled, with $2500 forgiven.
As for how to start...just jump in. Call them up and tell them you can't afford to pay all of the debt but can pay part of it, name a dollar amount, and see what they say.
Be prepared, though, for the fact that they might not agree to any reduced payment. Credit card companies rarely do so. Hospitals do, but credit card companies rarely do.
NEVER talk to a collection agency on the phone, unless you have to.
Get your terms in writing before you even open your checkbook. Never expect a collector to meet an agreement that was made verbally. Everything must be in writing.
Keep good records. This can be the difference between a good and bad settlement. Don't expect them to remember you or what you agreed upon.
Send all correspondence via registered mail, receipt requested.
Keep a copy of every letter you send.
If you call, keep a log of when you spoke to the agencies, and who you spoke with. Ask for the name of the supervisor of the person you spoke to, as the turnover rate at collections agencies is high.
Follow up all phone correspondence with a letter (registered, of course).
Penalties and extra interest are typically fictitious amounts of money added on by the collection agency to pad their profits. They may charge up to as much as 50% of the debt or more claimed to be owed by a collection agency consisting of interest and fees. This is illegal; every state has usery laws (which dictate the maximum interests allowed to be charged.) If you consider the junk debt buyer paid 7 cents on the dollar or less, there is no way there is this much interest. Most companies would be thrilled to get you to pay the original debt even without the extra penalties they add on and will usually be more than agreeable in waiving these fees.
Time is on your side. As time passes, the creditors will likely stop calling and the debt will be filed away for future attention. The longer the debt remains uncollected, the better your chances will be of getting a good settlement. Eventually, the creditor will consider the bad debt a loss in order to receive a corporate tax write-off. This does not necessarily mean that they won't pursue you for the debt. The corporation may then collect on the debt themselves, sell or assign the debt to a collection agency, press for a judgment and garnishment, or temporarily ignore the debt. The course of action chosen by the creditor will vary widely between corporations and debts.
Never look too eager to settle. Take plenty of time to reach an agreement. Never let it slip that you need to settle the debt because you're buying a home, car or anything else. If, for example, you tell a creditor that you really need to get this debt settled to get into your dream home, you can forget any kind of settlement. The creditor will insist on the full balance. Don't accept the first, or even second, settlement offer. Make sure that they are the ones calling you to push the deal forward. You cannot expect to reach an affordable settlement if the creditor thinks he has the upper hand.
Agreed that the debt is charged off. Have the junk-debt collector establish that you and they entered into an agreement with each other. Have them provide the documents that establish that they extended you credit or that you have entered into an agreement with them for payment.
When they can not prove you owe THEM money, they can not pursue you for repayment.
Agreed with the above also that do not talk w/ them w/out a plan. Also you will need to send a debt settlement letter as mentioned above through registered mail. You really need to read the FDCPA.
How long ago did this debt take place? Can you just get these letters out of the blue when you haven't heard from them in ages?
I have in the past gotten a couple of emails from a company about a debt and they said that if I didn't pay it they would go to a collections agency but I never heard from them again. The thing was that it wasn't really a debt, but a membership that I had paid the first year for and I wasn't planning on continuing, but I didn't realize that it was reoccuring. Can they just contact me in a few years from now with a pile of interest?
Right now I am just trying to deal with some real debts, and I think I'm doing well, but the idea of having more things pop up in the future that I thought were finished is a little overwhelming.
Yes some of these things creep up from time to time. Make sure the statue of limitations has ran out, if not try validating the debt, this always a good idea. Unfortunately sometimes forgotten debt comes back to bite you, you know where!
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