Posts Tagged ‘debt settlement’

What difference is there with an attorney or DIY?

Sunday, February 22nd, 2015

There are plenty of sound reasons to hire a seasoned professional, who has the knowledge, tools, and experience to do the job correctly through to completion. Clearly, others agree with me by their referrals of folks in need of debt collection lawsuit defense or debt settlement. Superior Court dockets around California are flush with money judgments against people who had no legal representation, though the debtor filed documents in the case that he or she believed would prevent a money judgment.

A few people assume that lawyers simply type their new client’s name and case number on a standardized legal form, then pay the court’s fee to file it. Trial could be many months off, so what happens now? Next is the discovery phase, in which both sides get to ask the other for their documents and evidence of the case, to prepare for trial. Lawyers who do these cases are ready, so expect to receive those requests from the debt collection lawyers soon after your response is filed. They can also ask to have you appear in their law office to answer questions under oath at a deposition. Is this something you can handle without an attorney present? You may also expect the debt collection lawyers to file a “motion” stating that you did something incorrectly, which can result in your papers being stricken or you may be ordered to pay more money, known as “monetary sanctions,” to the collection lawyers. If you are fortunate to get to trial, what do you say when the debt collection attorney asks you if this was your debt and if you disputed any of the credit card statements that the judge is reviewing? The knowledge of how to deal with each of these experiences is not learned in school, it is learned by handling these types of cases every day.

Some people believe that they have the same tools as a debt collection defense lawyer uses for taking on a debt collection law firm: a computer, a printer, and the internet. As anyone with a new computer can remind those people, a computer is useless without certain programs and the information those apps require. Even MS Word is a blank slate that needs legal forms in document files, before a lawyer can file it in court. There is also the challenge of representing yourself, when it comes time to serve a document. Serving a legal document must be done by someone who is not party to the lawsuit, which is why a process server, a lawyer and anyone in the law firm can serve legal documents.  Anyone but a party, who is at least age 18.

I cannot imagine someone believing that they have the experience of an attorney who every day represents consumers against debt collection attorneys. Lawyers who rarely handle debt collection cases don’t have the experience to know how much these cases often settle for and which debt collection agencies and creditors settle for less and which demand more. That is why many lawyers who do not handle these cases quote astronomical fees to prospective clients, because they don’t have any idea how much time the case requires and they’d rather not deal in unfamiliar territory. Also, because those lawyers don’t routinely handle debt collect cases, they will take much longer getting papers together and making sure, from start to finish, that key areas have been covered.

When you hire an attorney with the experience handling debt collection cases, you benefit from his or her knowledge, tools and experience, which ends up saving money and reducing the risk of bad outcomes posed by such lawsuits.

Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler
Facebook: www.facebook.com/SoCalConsumerLawyer

Living Below Radar, Best Time for Hardship Settlement Offer

Wednesday, September 18th, 2013

Question: I am living below the radar, not paying off any debts. I believe that several debt collection lawsuits have been filed against me, which I have ignored. I am not sure if they have gotten judgments against me or not, but there is nothing in my name and all my transactions are in cash, even my income is entirely cash-based. Is there a good time to come out of the shadows and deal with this and, if there is a good time, when and how? Thanks.

My response:
You appear to be following a mish-mash of (a) my “Don’t Pay a Dime Strategy” in which the debtor does not pay the debts in the hope that the creditor or debt buyer will miss the statute of limitations and (b) some other advice you found somewhere commonly referred to as “Judgment Proof.” I am not a fan of your current strategy, because anyone with a house, bank account, or a job that pays more than the minimum wage in California, would not be judgment proof or would be subjected to massive judgments once they get a job, bank account, or real property.

The result is the debtor ends up overpaying to resolve old debts, because the judgment creditor (the person or entity who has a judgment for money) gets a judgment for the full balance, plus accrued interest, court costs, and sometimes attorney’s fees. Defending my clients from debt collection lawsuits has saved my clients so much in most cases. If you’ve ever experienced a small bulb growing into a large flower, you can relate to how these debts blossom and bloom from a simple credit card balance to a default judgment. For the judgment creditor, it’s a sweet smelling, colorful flower. To the judgment debtor, it’s a Venus fly trap!

I have posted several blogs about timely responding when served with a debt collection lawsuit. I have also explained how default judgments are obtained without the debtor knowing about it and what can be done to resolve those old default judgments. I have blogs and legal guides on Avvo.com that explain how to settle and what documentation is essential. Please review my postings, which are organized by several categories.

Great question on when is a good time to settle old debts, including old default judgments. Of course, right now is a great time to settle old debts, especially if the debtor has no assets and very low or no income. When the judgment creditor is unable to collect most or all of the judgment and the debtor could be a candidate for Bankruptcy Chapter 7, that’s when the debtor can propose a “hardship settlement offer,” because they have an actual financial hardship. The offer works best if the debtor has access to additional funds to make an offer that is greater than what their assets and income can provide. For example, since retirement funds are beyond reach of civil judgments, borrowing from a 401-k, a family member, or on an open line of credit, are ways to get the funds for a hardship settlement offer.

How you come out is up to you, but this can be done between the debtor and the debt collection agency directly or the debtor may want to use outside resources. Perhaps there is a family member who is comfortable doing this or hire a debt collection DEFENSE attorney to negotiate. The key is not paying too much for the settlement process, to leave enough to propose an attractive settlement amount. Too little and the debt collector will reject the offer and wait.
Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler
Facebook: www.facebook.com/SoCalConsumerLawyer

I was just served with a credit card collection lawsuit. Now what?

Monday, March 4th, 2013

Question: I stopped paying on my credit card a while back, because I was tired of paying a high interest rate and I did not have enough money to pay it all off. I sort of suspected that this debt would be sold to a debt collection agency for pennies on the dollar, but the papers are asking for me to pay the full balance, plus the high interest rate that I thought I was going to avoid. I contacted the company and they are holding firm on that number. I don’t have the money for this and my income is too high to qualify for a Chapter 7 bankruptcy.

My response:
First, please check out the short videos on my home page. The first video is a quick overview of all options that are possible to the situation of being served with a debt collection lawsuit. That will help you narrow down your options to the one or two that suit your situation and your own preferences. Your posting did not specify what bank had the original credit card or when you last paid it, which will help determine if they filed the lawsuit after the statute of limitations period had expired. That is very important in these cases and makes a big difference.

I’d then suggest reading my blog posting on the defendant’s Next Steps when the consumer has been sued in a debt collection lawsuit on a defaulted credit card. That blog explains how much time is appropriate to avoid a default judgment, as some people confuse a hearing date with the due date for a proper, written response. If you want to defend this lawsuit and have a good chance to settle for much less or possibly get the case dismissed, do not miss the deadline for filing a response or having a lawyer do this for you. It is usually 30 days from the date of being personally served, but please don’t wait for the last minute.

I don’t suggest that consumers or non-litigation attorneys try to handle the lawsuit defense for themselves, as I have seen too many people either pay way more than they should to settle with the debt collection law firm or they file papers with the court, which get stricken as being defective or improperly admit most or all of the debt collection lawsuit. Almost as bad, is when the debt collection lawyers press the case very hard against the defendant, using court procedures and formal discovery requests to overcome the defendant’s attempt to get the case to trial. I have some of these as PDFs on my website, in the Case Examples tab.

To avoid the risk of losing a money judgment for the full balance in the lawsuit plus accrued interest, I urge you to contact an experienced consumer attorney, who regularly handles debt collection lawsuit defense. An experienced attorney should be able to help negotiate a satisfactory settlement or get the case dismissed, depending on the admissible evidence that the debt collection law firm can obtain or not obtain.

Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler

Facebook: www.facebook.com/SoCalConsumerLawyer

How do I know that I have received a legitimate offer to settle my debt?

Tuesday, August 28th, 2012

Question:
I received a debt collection letter from a company that is out of state.  The web contains many complaints against this company that it commits fraud.  I know that I did not pay this credit card a couple of years ago, so I would like to settle this, so that I would never be sued.  How do I know that if I accept their settlement offer, that they will stop bothering me and that I will not hear from any other company about this debt in the future? No debt collection lawsuit has been filed, as far as I know, but I am worried about all that I read on the web.

My response:
Unfortunately, whether you have a formal, written settlement agreement or simply a letter offering to settle and proof that you accepted the settlement and paid the amount demanded, there exists a few debt collection agencies which do nothing, but defraud money from unsuspecting victims without any finality on the debt.

A false debt collection agency, such as the one from Tracy, CA described by the Contra Costa Times on 8/27/2012, which called consumers threatening to arrest them, might have learned of an unpaid debt of the consumer in an illegal way, such as electronic dumpster diving or special websites maintained by credit thieves.  Then they place harassing collection calls from a boiler room to squeeze funds from many consumers, before the local authorities crack down.  A letter from such thieves is really no more assurance of getting the real debt settled than the collection calls, though a paper trail by mail may feel more reassuring.  However, this type of operation does not even rise to the level of a debt collection agency, if it is collecting debts that it does not have the right to control and settle.

It may also be that these very low life collection agencies are simply proposing a settlement offer as a bait and switch to try to get more, even after the full agreed settlement has been received.  These sorts of agencies prey on their victims by not putting anything in writing, then claiming that the settlement was not satisfied, and demand more. Another ruse used is that they make an offer, accept the settlement money, then sell the debt to another company, not mentioning the settlement to the buyer, which tries to collect the full balance.

Unfortunately, researching the web about the company contacting you, will only make you believe that every debt collection agency is low life and/or unscrupulous.  There are so many consumer complaints against most if not all debt collection agencies, that it is a daunting task to try to decide the category of the agency contacting you, so you know how to proceed.

One source of guidance is to see if this company is regulated in the state where they say they are located, although California does not license debt collection agencies anymore.  States such as Oregon, Texas, and Connecticut require every debt collection agency to register, to be allowed to collect debts from consumers within that state or face stiff penalties. A licensed debt collector in one or all three of these data bases is meaningful, though still no guarantee that that the agency will always behave honestly and with integrity.

Robert Stempler
www.StopCollectionHarassment.com
Twitter
@RStempler

Three Common Mistakes to Avoid when Negotiating a Settlement of a Collection Lawsuit

Friday, August 17th, 2012

Consumers routinely try to settle a debt collection lawsuit, which is something that I believe should be explored, before deciding which option is best (see the first video on my web site’s home page, “Understanding Your Options”)).  Below are the three most common mistakes that consumers make in the settlement process.  There are plenty of others, but from the horror stories that I have reviewed after the fact, these are the most common regarding settlement.   Often, these pitfall prevent a settlement and risk a money judgment for the full balance and other charges by the debt collection law firm, which then shows up on consumer credit reports.

Mistake 1.  Whatever settlement you negotiate and accept, be sure that you can comply with the payment terms, or you may probably end up with a judgment for the full amount (less credit for payments), if you miss a payment or are late.  I often caution people to look carefully at their finances before entering into a settlement discussion.  I also warn against very long term payments, even if the seem affordable. This is not a car that you can at least drive around for several years.  If anything happens financially, such as unemployment or illness in the family, and you are unable to make the monthly payments, the collection attorney can enter a judgment on the full unpaid balance, which is almost back to square one for this lawsuit, but now there will be a money judgment on your credit reports.

Mistake 2.  Be aware of the little things that can add up to an enormous settlement, if agreeing to make payments over time.  In particular, the rate of interest on the unpaid balance.  The current legal rate in California on a money judgment is 10%, which is what money judgments earn, even if the debt was originally at a higher rate.  Not only that, but many creditors and debt collectors will not charge any interest (0%) on a long-term payment settlement agreement, provided that the agreed payments are timely received and don’t bounce.  Consider the rate of interest and try to get interest waived (0%), before agreeing to make long-term payments, as an interest rate  adds many payments to the settlement.

Mistake 3. A few people believe that they can negotiate a lower settlement of a debt collection lawsuit by misstating their income or other financial information, or not providing it at all.  Debtors must be accurate and avoid misleading statements when negotiating. Debt collection agencies and their lawyers often have a copy of the debtor’s credit report and other available information to help root out inaccurate statements.  For instance, if the debtor claims to be swimming under a load of debt, but their credit report shows only two low balance credit cards, then that will be viewed as a bad faith settlement tactic, and probably be rejected.  Another example is to claim that the house has no equity, which is easy to verify using free online databases of housing values.

Please also be aware that credit reports contain inaccurate information or are missing key data, which the debtor may need to clarify or explain, if aware of that.  For instance, some credit reports show the debtor at a different address in a good area, but if you have moved or it is only a private mail box, perhaps the debtor should clarify, so they understand your circumstances are more dire than once assumed.  Some credit reports also show employment information, which can also make a big difference in negotiating a settlement.

Hiring an attorney to negotiate and defend against a debt collection can make a difference, but I try to encourage consumers to try this for themselves, to see if they can save the legal fees and courts costs.

Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler

How much should I offer to settle a debt collection lawsuit?

Friday, August 10th, 2012

Question: I’ve never been sued before, this is all new. I read your Settlement Guide #1 on Avvo.com, which explained many of my questions. I’m sure that I will read your other two Settlement Guides, once I know how much to offer to settle. Should I offer 10% of the amount stated in the lawsuit?  Bankruptcy is something I want to avoid.  I have a home with some equity in it, but not much. The lawsuit is not by the bank, but filed by a debt collection agency, so shouldn’t they be willing to settle for much less?

My response:
How much to offer is probably the top question on everyone’s mind.  First, understand the debt collection agent’s perspective.  The goal of the collection attorney and their agents is to maximize the recovery from each case and turn a profit for a particular portfolio of debts.

Time is money, so the sooner the funds are received, the less costly a settlement proposal can be.  If you can pay the settlement funds soon (such as within 30 to 90 days), that will usually make the settlement a lower dollar amount.  Settlements can often be approved with payments for 12 to 36 months, sometimes longer. Some companies will agree to waive interest, so long as the payments are received timely and don’t bounce.  Some debt collection agencies insist on full payment of the principal amount, if the settlement payments are made over a year or more.

Then, there are those debt collection agencies who like to squeeze everyone, because they believe they have the upper hand over unrepresented consumers.  They squeeze the debtor consumer into paying every cent, even obnoxious rates of interest and attorney’s fees.  Why bother settling if there is almost no difference between what would be the result if you go to trial and lose and making settlement payments of the full amount plus interest, etc?

The risk of heavy-handed debt collection practices is that when push comes to shove, people will learn their options (see the first video on my website’s home page).  Once they know their options, if the debtor cannot get a reasonable, affordable settlement, they may reject settlement and see if the judgment will be enforced, file bankruptcy, or hire an attorney to defend them in the collection lawsuit and likely negotiate fairer settlement terms.

Ten percent up to half of the amount in the lawsuit might be accepted by the collection company, if the debtor can show at least one good reason why the company risks get nothing and wasting its time and money in the case, if they don’t settle.  For instance, perhaps the lawsuit was filed too late, well past the statute of limitations, which should result in immediate dismissal if proven.  Perhaps the debtor has many debts and their income is such that they qualify for a Chapter 7 Bankruptcy, in which case if the debtor is faced with an unreasonable settlement posture, the bankruptcy option may be explored and the debt collection agency may get nothing.

Even if the debt collection agency purchased the debt for less than ten percent of the amount of the unpaid principal, unless the lawsuit was not filed timely or the debtor is a good candidate for bankruptcy, I would not expect the company to accept 10%. That is because they speak with debtors every day who are unable to pay.  In their view, they must turn enough accounts into a profit over the purchase price, or they will no longer have enough income to pay employees and other business expenses.

There really is no magic number to offer or that all debt collection agencies will find acceptable, each case can be negotiated, if a difficult situation is properly and accurately presented.

Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler

Financial Columnist’s Advice on Old Credit Card Debt May Mislead Money Talk Readers

Monday, July 16th, 2012

Q & A Posted on LA Times Money Talk Section on July 15, 2012: Link to Money Talk

My response:
This question concerns a credit card debt that was charged off in 2007. That means that it has not been paid since 2006 or 2007, because banks usually charge off accounts 180 days or earlier, after not receiving any payment.

I agree with the columnist, Liz Weston, that contacting the bank that issued the credit card would not be productive.  Within one year of default and lack of payment, banks almost universally sell the credit card account to a debt buyer or sue in their own name.

However, this debt has not been paid for more than four years, making it almost certain that the debt is well beyond the statute of limitations, thus discharged under California law.  See my blog on the Don’t Pay a Dime Strategy, using California law at this DPAD Link.

Ms. Weston’s response should have explained that the debt is most likely discharged, because the statute of limitations had long since expired, so that the consumer has the upper hand on this and should not offer to pay much at all and should be clear in his or her communications that this debt is discharged by the already-expired limitations period.

My concern is that the consumer may contact the debt collector and offer in writing to pay the debt. Some debt collectors may potentially try to use this written offer or actual payment to claim that the consumer has revived the statute of limitations period on the unpaid balance, giving them another four years to file a debt collection lawsuit. I disagree with that possible position.

Some debt collectors incorrectly believe that they can report any payment received as “last activity” on the consumer’s credit, thus renewing the 7.5 year period for credit reporting.  I disagree with that possible position.

Thus, I hope that the LA Times removes this posting, so its readers would not be mislead.

Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler

Am I better off filing bankruptcy now, than dealing with a credit card lawsuit?

Saturday, May 19th, 2012

Question:
I was served with a debt collection lawsuit from a credit card that I was not able to pay off.  I had been paying the minimum payments with interest for many years, which no longer made sense to me and was never going anywhere.  A debt collection agency, not the credit card bank, is named in the lawsuit and they have a lawyer here in California.  Does it make sense to file bankruptcy now?

My response:
No. Filing bankruptcy is a substantial decision that can be delayed and decided later, if you are unsuccessful in fighting off or settling this debt collection lawsuit and any other lawsuits that happen to be filed against you for other unpaid debts, if any.  The first video on the home page of  www.StopCollectionLawsuits.com discusses an individual’s six options, each of which deserves consideration and understanding of the pros and cons, before narrowing it down to a couple of worthwhile options, then going with one.  Thus, that video and my other videos are a good starting point, along with my blog posting on making your next steps count.

In deciding whether to file bankruptcy or one of the other six options, much depends on your and your family’s financial status and current income.  Perhaps you do not qualify for a Chapter 7 Bankruptcy, and thus this is not an option for you now, but you may qualify in the future.  Also, perhaps you are in a career or regulated industry that prohibits employees from having a recent bankruptcy filing or any bankruptcy.  Perhaps being able to discharge this and all other debts would make bankruptcy worthwhile, though sometimes if you are patient, you can discharge other substantial debts, such as income taxes.  Perhaps your finances are mixed up with other family members, such as you have property or accounts held in joint names, which can make filing bankruptcy a problem for that asset and the other persons.

If you have further questions, be sure to consult with an experienced debt collection defense attorney to help you understand each of the six options.  If you consult with an attorney who’s practice is mostly bankruptcy cases, he or she may be more inclined advise bankruptcy, rather than offer you alternatives to bankruptcy, such as defending the lawsuit or settling.  My web site’s free eCase review asks whether the consumer has received any settlement demands to settle the debt, because then the consumer knows earlier if settling is realistic.  The key to making the best decision here is to understand your options and having experienced legal counsel.

Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler

Mandatory Settlement Conferences for Debt Collection Lawsuits in Riverside

Monday, April 2nd, 2012

Riverside County Superior Court now has a special settlement program for debt collection lawsuits, under $25,000. The program is activated by the court, once the court receives the defendant’s answer. At that point, the court sets a date for the Mandatory Settlement Conference (MSC). Here’s a link to the MSC program information.

Bonus: unrepresented consumers (pro per) are invited to attend a free workshop to prepare for the MSC. No need to RSVP for the workshop, but they suggest attending at least a week before, so that you know what materials they suggest you bring on the day of the MSC.

Before you file anything in court, I suggest you review the short videos on my home page, because knowing your options is crucial, before you “just do something,” because it sounds good.

Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler

Credit Card Lawsuit: A Money Judgment Is Not Inevitable

Thursday, March 15th, 2012

Question:
I know that I owe this credit card debt. I don’t dispute it, though I don’t have money to pay it. Is there any point to fighting the credit card lawsuit? Shouldn’t I just declare bankruptcy, so that my wages will not be garnished for many years?

My response:
It may seem bleak, right now. You’ve just been sued by a professional debt collection attorney.  You are not sure what your options are or how to best proceed. My web site’s homepage has several short videos which you should watch, starting with #1 on understanding your six options.

Bankruptcy is one of the options, but please give each of the six options your careful consideration, both with respect to the lawsuit itself and your overall financial situation. I suggest that you submit a detailed account to an experienced attorney to help you get a handle on your rights and options, so that whatever you decide to do, you will understand and possibly be happy with the decision and outcome.

The one thing about bankruptcy is that it often can be done later. Other options need to be considered right away and a certain process and timetable followed, but bankruptcy often can be done later, if necessary. Sometimes, bankruptcy is appropriate, and sometimes it is better to try an alternative and if that fails, then review bankruptcy later. Sometimes, in fact, bankruptcy must be delayed, such as when there are income taxes to be discharged or other issues to be handled before the bankruptcy can be filed.

Simply because the credit card lawsuit is for a debt that you stopped paying a while back, does not make a judgment against you in court inevitable.  One of the options discussed in the video is settlement. You can settle and not have any judgment or risk, if both sides agree to a settlement that you can afford to comply with. I have a legal guide on Avvo on documenting settlement agreements.

Also, if you defend this lawsuit, it is entirely possible that the plaintiff will not ready to take the case to a judgment and may dismiss their claims. I have defended many cases in which this was the result. Maybe it is me or the way that I take care defending my clients.  Or, perhaps the debt was not that easy to present in court or there was something in the paperwork that may have been challenging.  Plaintiff collection agencies and creditors have the right to dismiss before trial, even on the day of trial.  Sometimes they dismiss at trial when they see an experienced debt collection defense attorney show up to defend the case, with papers for the judge to read.

Or, perhaps after the trial presentation. the court determined that the plaintiff’s evidence was inadequate or improperly presented. Perhaps the plaintiff fails to satisfy the rules of evidence for key evidence.  Perhaps the debt collection lawsuit was filed after the statute of limitations had expired or some other defense to the lawsuit was available, such as a prior settlement or illegible or lost documents.

There are so many reasons and possibilities that can occur in any debt collection lawsuit, which can take several months to more than a year to get from filing to trial.  With an experienced attorney defending his or her client against a debt collection lawsuit, a positive outcome is more likely, making bankruptcy or a money judgment not inevitable.

Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler