How to Settle Credit Card Debt with a Judgment
One of my credit cards I fell behind with sued me and has a judgment.
Can you settle credit card judgements like other debts
—Stressed
Short answer
Yes, a judgment can still be settled. Settlements can be negotiated at every stage of the collection cycle, but settling before a lawsuit is filed is easier and usually saves more.
Key points on this page
- Settlement is possible at any stage, including after a judgment has been entered.
- The largest savings usually come from settling with the original bank after a few missed payments.
- A judgment is enforced through bank levies, wage garnishment and liens on real property.
- Judgment balances keep growing at the interest rate set by the court, and most states allow a judgment to be renewed, often ten years plus another ten.
- Wage garnishment removes most of a creditor’s reason to negotiate, so act before it starts.
- If you cannot fund a settlement, bankruptcy can stop a levy, a garnishment or a lien.
The short answer to your question is – YES! CRN does assist in settling debts like credit cards where there was a lawsuit and then a judgment entered against you. Settlements can be negotiated at all stages of the collection cycle.
There are challenges to settling credit card debts that have reached the lawsuit and judgment stage. Before I address the challenges, I want to point out that the best time to settle credit card debts is before a lawsuit is filed, and even before the account is placed with a debt collection attorney.
Watch my brief video about some of the differences between settling credit card debts with your bank and debt collectors compared to negotiating with collection attorneys whether they have a judgment or not.
While this may not be instructive to your judgment debt, you may have additional credit card debts that have gone unpaid and I want you to be aware of the following:
- Settling a debt with your original creditor (the bank you had the credit card with) after having missed a few payments is not only possible, but in your best interest. In fact, reaching settlement early will often achieve the best savings result when negotiating is done correctly.
- You may end up with credit cards that are charged off and placed with outside collection companies. This is the next best (sometimes the best) opportunity to settle a credit card account you could no longer afford to keep payments current.
- If your overdue credit card account lands in a collection attorney’s office, you can still settle the debt before any court action is filed, or at a minimum, negotiate favorable payment terms.
There is a science to navigating the collection stages I briefly outlined above. Timing, balances, who your credit card debts are owed to, and your ability to come up with the money needed to settle the debts – all will affect the strategic design of which account to settle with first, second, third etc…. It is important to have a plan to follow if you want to systematically and successfully settle debts and save the most money in the process. CRN is excellent in assisting people in this regard.
If you want to learn about how to settle your debts no matter what stage of collection you are in, we have a ton of resource pages to help you. I recommend starting at the beginning of my debt settlement section.
If you are floating out there with several unpaid credit card accounts with no real financial resources to handle the situation, or a plan for doing so, you owe it to yourself to learn if you would be better off filing for chapter 7 or chapter 13 bankruptcy before a lawsuit is filed, or now that a judgment exists. You can consult with a bankruptcy attorney for free. I recommend talking with more than one.
Collecting on credit card judgments can be challenging too.
The primary ingredient found in any debt settlement recipe, whether there is a judgment or not is… money. If you have enough of this ingredient you need to be aware of a few things.
A judgment is just a piece of paper. It’s the court sponsored enforcement of that piece of paper that is the problem. You could end up with liens placed against your real property, your bank account levied and wages garnished directly from your employer. There are even instances where a sheriff can show up to take a look around at your “stuff” and inventory personal items that can be taken to satisfy a judgment (this happens, but relatively rarely).
Judgment debt, whether past due credit card bills, personal loans, medical bills and other debts, are easier to negotiate and settle while maximizing your percentage of savings results if:
- A bank account to levy cannot be found because one in your name does not exist, or does exist but is maintained with little money in it;
- If a W-2 wage source cannot be located to garnish and;
- Where there is no real property lien, or where the lien is filed, but has been in place for some time and remains unpaid.
The one thing you can control is whether you have a bank account with your name attached. If you do keep a bank account open, realize most bank levies are attempted at the beginning, middle and end of the month – when you are most likely to have deposited a pay check, or other money to cover bills.
If you have sources of funds electronically deposited, you may want to elect to have paper checks issued to you until the credit card judgment debt is resolved.
The lien on property will generally not involve forcing the sale of the property in order to satisfy the judgment. You should look to resolve the judgment prior to selling the home (negotiate a settlement before listing if possible), or refinancing (settling before a lender does a hard credit pull is often best).
Wage garnishment is a major concern. Once your wages are attached the creditor has little reason to work with you at resolving the debt for less because they will continue to get paid unless:
- You prove you meet garnishment exemptions in your state
- You leave that job
- You satisfy the judgment
Warning: Your credit card judgment debt grows from interest and can often be renewed!
Interest is accumulated at the rate set by the court, or the maximum allowed by law in your state for judgment debt. While you may be able to be creative in how you avoid paying the judgment you must realize that the balance of the judgment is likely increasing.
If you are struggling with overdue bills and other expenses and are unable to come up with a plan to get rid of the judgment or lawsuit through a negotiated settlement or payment terms you can afford, the fact that the debt is increasing should concern you. Stop and consider what your options to resolve the credit card judgment will look like next year. The year after that.
Judgments do have a “best collected by” date, but can be renewed. Judgments have a shelf life with a time frame specific to your state. Most states allow for a judgment to be renewed prior to expiration. For many, this is a ten year time line and renewal allows for an additional 10 years. That’s a 20 year shelf life!
Identify all resources you can tap to fund a settlement offer or payment plan successfully. If you cannot reasonably come up with the money to settle the debt, or make payments after reaching agreeable terms, look to bankruptcy to stop a bank levy, wage garnishment or lien on property.
Those are the unfortunate realities.
I highly recommend anyone with a judgment, that needs to be resolved in order to buy or refinance your home, to watch this video interview I had with a former debt collector: https://youtube/QpdDks73QUw
It is always best to put a plan together to address delinquent debts before a judgment becomes the concern and you are forced into crisis mode. If you have other debts, you can still put a plan together that includes resolving the judgment too, but it is important to not waste any time in doing so.
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About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
I had a lawsuit against me back in 2011. I believe the original debt was around $8000, and I’ve been making $50 monthly for the last two years. Because of several missing payments, I got a judgement of $11,000 debt against me. They just blocked my bank account. I’m trying to borrow some money from my friends. I can’t get that much money, but probably close to $7000. I called the collection company, and they said the lowest they can offer is $9000. Can I try to settle below than that? or can it never go down? If I can, what would be the best way to deal with them? Thank you!
Peter – With a judgment in place, debt collectors have a lot less motivation to settle for the best savings. Can you get lower than the 9k they said they would accept? Probably, but maybe not right now. If they just came away with some money from a bank levy, your motivations to resolve the judgment are high, and they know that. If they get nothing for the next 3 to 6 months (or longer), they may be open to negotiating a lower pay off.
Who has the judgment? What type of debt was this originally?
Thank you, Michael,
To answer your questions, this was a Discover credit card debt. Now the collection company called “SCHLEE & STILLMAN, LLC” is handling my case.
They just took about $1,500 from my bank. Now I’m afraid that they are going after my wage.
Michael,
One more question for you! Is it risky to tell them, “If you cannot accept the lump sum payment of $7000, the only option I have to using that money to hire a lawyer to file a bankruptcy.”. Is this a good strategy? I’m just afraid that if I tell them this, they might hurry up and garnish my wages, that’s something I don’t want to see happening.
Thanks,
Peter
Well, if you are at risk of a wage garnishment, and have the resources, it may be better to call them and say something like “I have no shot at paying this off.I barely get by with my bills as it is. I had to borrow money to keep the lights on due to that bank levy. I talked to some family, all of them want to help, but they are limited with what they can do to. You said you would take 9k, and I spent the last several days trying to raise it, but the best I can do is 7k (or some other number if you have it, and think upping it to say 7500 is in line with the situation). If you give me a letter saying this is done for that amount, and file a document with the court after you get payment, I can get the money and have it to you by such and such a date”.
Chapter 7 bankruptcy cost is about 1800.00 (national average), so bringing that into the discussion as relates to them not accepting 7k to settle this is just not all that meaningful. But you certainly can consider that to protect your wages and your bank account if they will not agree to a deal you can afford, and they continue with the aggressive collection path they are on.
Hi Michael,
For the $1,500 that they took through the bank levy, I filed a motion on jointly account with my wife. Now the trial is set in a month.
yesterday I called the collection law firm, and we agreed to settle all Discover debt ($11,000) at $5,000 lump sum payment plus the $1,500 from the bank levy. They only gave to 7 days to send the payment to them. I did receive the settlement agreement letter through email, and it looks pretty general. It says that the settlement agreement is reached, and it will resolve my account with $5,000 money order payment. It does not say anything about the $1,500 bank levy. I called them, and they told that it will be enough and no need to change the agreement letter.
Do you have any concern regarding this agreement? Will the trial for my motion cancel after the creditor report that the case is settled? or should I still attend? Also how should I re-establish my bank account after it’s settled?
Thank you for your help!
I would need to look at the agreement to offer the feedback you need Peter. You can email that to me and we can correspond via email or phone. You should have not problem with your bank once you resolve this and you have proof it is paid.
Hi Michael
I’m in Minnesota. I had a judgment placed against me from midland funding successor to interest to Orchard bank. The judgment is for over 2000 which I only had a credit card with a limit of $500.00. I have been in communication with them but I was exempt due to being on state resources. Now I have received a post judgment deposition requesting an account of my assets for the last three years. I have been unemployed for 2 1/2 years but I just landed a job three months ago. However, I am still receiving state services for food. I am not sure what to do as I do not make but 12.01 an hour and I am single parent of three. I believe since I just got financed for a used car they figured I have adequate resources to pay but I needed transportation to get to and from work and to transport my kids to school. Please advise me on this!
donna – You are probably right about the car financing raising a red flag and making you appear more collectable. Though you are back to work, with your income supporting a family of 4, you would probably still qualify for exemption from garnishment. You still want to participate in the court process and should respond to any depos and court filings.
You may still have to be concerned with a bank account levy. If you do find yourself in a position to settle the judgment with Midland Funding in the future, they are pretty reasonable to deal with when your personal finances are what you described.
Hi Michael. I have a situation that I would appreciate some advice on. I received a default judgement that was entered on 6-22-05 from Discover card who was represented by attorney Burt Harriman. I was properly served but didn’t show up for court. The judgement amount was for $6500. The court documents show that I am to pay attorney fees of near $1000. I don’t know if those are included in the$6500 or not. The original amount I defaulted on was about $4000. I’m sure the total today is much higher with interest, but I have no idea what that amount is today. Also I live in Missouri and the judgement was filed in Missouri. I have never had wages garnished because I’ve always been self employed and still am. Several bank account garnishments happened after the judgement. The last one happened in 2008. In all of the bank account attempts, I think they got $40 or so. There has been no collection activity for over 5 years now. I’m wondering if I should make any attempt to settle this debt or if there is a good chance it will not be renewed. In about a year and a half, the original ten year term will have ended. I hate to call the attorney and re-open a can of worms when everything has been quiet for so long. My questions are:
1) Should I make contact with the attorney for Discover or would it be smarter to bide my time and see if this judgement is not renewed. I don’t know if this makes any difference, but the website for attorney Burt Harriman says he is a personal injury and criminal defense lawyer. I’m wondering if he may have used to do more debt collections but has gone a different direction now and may not pursue me anymore.
2) I have 2 cars that are paid off but are pretty old, one is 17 yrs and one 15 years. They both still hold some value though, $3000 and $8000 respectively. Is it possible that they could go after my vehicles?
3) I bought a non livable fixer upper house for $6000 cash about 2 years ago. It does not show up on my credit report and it is not my current address. When I bought it, the title company didn’t even ask me for ID or my social security number so I don’t think my social security number can be attached to it. Is there a chance that Discover or their attorney could find this piece of property and put a lien on it? If so, how likely is that since it doesn’t show up on my credit report and I don’t live there?
4) I have gotten lax and have a bank account that I sometimes have a little money in. I’m sure that’s probably not a good idea but they have sort of lulled me into a sense of security after not trying to collect for so long. I live in Missouri, but on the border of Kansas. Would it be smart for me to open an account with a bank that only has Kansas locations and none in Missouri? My thinking is that they may have to go through a court process in Kansas to take an account from a Kansas based bank, where my account in Missouri can be taken at any time with no warning. Is this a smart thing to do and I viable strategy to protect my money and account?
5) Can a judgement like this be sold to another debt collector at any time?
6)How will I know if Discover tries to renew the judgement?
7) The judgement no longer shows up on my credit report. If they renew, will it show up for another 7 years, or is it gone for good now?
Thanks so much for any and all help and advice that you can provide.
1. I would check with an experienced debt defense attorney in Missouri, who has been practicing consumer law for at least as long as your judgment has been in place, for some history on Burt Harriman, and whether the firm is still active in debt collection lawsuits. That said, contacting the attorney about settling the judgment could mean being referred to another collector or debt owner, as judgments for debt can be sold similar to how other collection accounts are. And while Discover is not all that active in selling unpaid credit card debts today, they were back when your debt went delinquent.
2. Missouri protects your automobile from a judgment creditor up to 3k in value, with some wild card amounts beyond that. But it would appear that is only for the one car in your name. For a better detailed answer to this you should bring this up with a consumer law attorney in Missouri.
3. Debt collectors use different levels of skip tracing tools to discover assets. If the property can be found in your name in public records, a debt collector could locate that. But not all collectors take their efforts that far.
4. Perhaps, but I am not certain how much of an additional layer of protection you would get by using a branch bank in Kansas. This is another item to discuss with a debt defense attorney in Missouri.
5. Yes. See number 1 above.
6. They will follow local court rules for judgment revival. You can contact the court clerk for details.
7. If the judgment is revived, or if you settle it, generally would not result in it reappearing on your credit reports.
Hi Michael,
I’m in Indiana and just received a summons letter about an old hospital bill. The summons say i have 20 days to respond today is the 18th & it was left on my front door and mail box 4 days ago but the sheriff received it on the 2nd. The hospital bill is from 11-09 & they’re looking to get $15,500 + fees. I’m currently working, have a mortgage and just purchased a new car. I can NOT afford to be wager signed. I have no problem paying my bills somehow this one was forgotten. I would like some help getting this amount reduced so i can pay this off without the judgement. I’m trying to clean my credit up and don’t need this hit. Any referrals will be appreciated. thanks
Send an email reply to the this comment notification you get. Those all come to me. Include the name of a nearby larger city. I will respond with contact info for consumer law attorneys nearest you who have a practice that focuses on debt collection defense.
Also, if the name of the plaintiff is different than the hospital, post a response and provide the name of who issuing you.
I’m desperate for information, please help! I live in California and I have a default judgement against me for $20,000 by an attorney. I was in a horrible situation in 2003. I was an injured worker and unable to work for 2 years, then retrained for a new career and reentered the workforce in 2005. After 5 months on the job, the company I worked for went out of business and once again, I was unemployed. I was in major debt by this time and I refinanced my home to help pay off some of my credit cards. To make a long story shorter, I was too overwhelmed at the time to deal with creditors and unfortunately set myself up for this judgement which was made in 2008. Now, it has grown to over $20,000 and the attorney suddenly levied a bank account jointly owned with my 92 year old sister in law and wiped out $3000. How can they do that when she is not party to the debt? In fact, the money in that account was actually only 1/3 mine.
I also own a rental property as tenants in common with this sister in law and my ex husband. Can the attorney put a lien on that property that I am only 25% owner of, with 2 others on title with me? Should I quit deed my share of the property to SIL or Ex to protect it? I myself have nothing. In 2006 I had to let my ex have our family home because I couldn’t pay for it alone and I live with a friend/partner who supports me now. I have no job, no other bank accounts, debt, or anything else they can take except an 8 year old car that is paid for. I guess that’s next. I’m just hopeful that they won’t be able to attach a lien to the property jointly owned. Can I file bankruptcy while owning 25% of a rental property? Please advise!!!!!
DB – You should contact a consumer law attorney that specializes in debt defense in California as soon as possible to get the bulk of your questions answered. If you would like me to send you an email with contact info to the type of attorney you want, you can reply to the comment notification emails you get from this site, and I will reply with that.
Yes, you can file for bankruptcy while owning property. That may mean filing a chapter 13 instead of chapter 7 though. But here again you should be running your scenario by an experienced attorney, or bankruptcy specialist. You can reach one at 877-278-8117.
Bank accounts with your name and social security number tied to them are all at risk. There are options worth pursuing to get your former sister in laws funds returned to her.
Quit claim of property to avoid judgment creditors is not generally a good idea. That transaction can actually be unwound by the courts.
What was the judgment related to? Who is the judgment creditor?
Hi Michael,
Was hoping you could help me out before I make a phone call to speak to a specialist…
I have an unpaid debt with Asset Acceptance for $6,500 that I regretfully ignored. Although the court judgment has not shown up on my credit report I did receive an earnings withholding/wage garnishment order from a levying officer (L.A. County Sheriff’s Department) early in 2013 (signed by the levying officer in December ’12). The employer listed on the court order however is a company that I never worked for so wages were never garnished. I’ve been working with a company for the past three years and I find it strange they never got in touch with my actual employer. A few weeks ago I received another court order from the LA Sheriff’s Department for a notice of levy (signed by levying officer in August ’13) to Bank of America as the “garnishee.” Once again, I find it strange that the bank I’ve had for the past three years (not Bank of America) was NOT included as the garnishee. I additionally opened another account early in 2013 (leaving me with 2 banks I use that are not B of A). I did have a checking account with Bank of America account over 4 years ago which has been closed– I believe the savings account is still open but with a zero balance.
I called Asset Acceptance to get details on making payments now that I have recently graduated from college and have a competitive salary (35k/year). They directed me to Fulton Friedman & Gullace as they are acting on behalf of Asset Acceptance. Fulton Friendman & Gullace have been on all court documents as the attorney for Asset Acceptance. I contacted FF&G earlier this week to discuss payment options and the gentleman over the phone informed me they cannot enter in a formal agreement now that the wage garnishments have been ordered. All I can do is pay the amount in full (which I cannot). I would like to pay a large sum and work out payment plans per month as to have this cleared out by the end of 2014. The man over the phone said I could make payments to FF&G’s main office in Rochester NY and put my account number as reference so it can be deducted for the balance.
I also noticed on the court order that it said to make checks payable to LA County Sheriffs Dept with the “levying officer file number” included.
I am confused who I need to pay (Asset, LA County Sheriff, or FF&G) and what corresponding verification I will have that it’s actually being deducted. Although it looks like they are not levying banks where I am having my money deposited in, I would like to somehow know that these accounts will be safe once I have start to pay off a large amount of the debt.
I’d like to add that I have never resided in the County of L.A. and I will be starting a new salaried job in mid January at 55k/year. I really want to work on getting this paid off so I can move from the past and continue on with a mature adult decision making future!
Best regards,
Brad
Brad – You mentioned being able to come up with a large down payment. How much would that be? It may be possible to settle this upfront and move forward.
If you do agree to some form of payment arrangement, you would want to get that documented beforehand. The written agreement, as long as payments are made on time, would alleviate much of the concerns regarding levy and garnishment.
Hello, I have a question.
My elderly uncle got a judgment for credit card. He is getting only Social Security payments and small IRA monthly Distributions. The entire amount is less them $1000. If his bank account will get a levy, can any of those money be taken? And for how long the levy is working? Can he continue use his bank account?
Thanks a lot.
Katya – Social security payments are exempt from garnishment resulting from a credit card judgment. And if his bank account only has social security deposits, those would be exempt from a bank levy too. I am not certain about the IRA disbursements, as those can vary. But there are state specific exemptions from bank levy that may apply too.
What state is he in?
Hello,
I Just recently received notice from a advertisement letter from a local attorney discussing bankruptcy and my upcoming lawsuit. As I looked up the case # on Missouri casenet I see that I am being sued by Pech, Hughes, and Mcdonald, PC. The amount owed is $5797.23 and its from Capital One. I do owe the debt and I do have some funds available to possibly do a settlement with them. What is the best way of going about this with the law firm? Should I email them or call and talk personally? What kind of % should I look for in a settlement offer with this firm. Just seeing what kind of tips you could give me in this case. Thanks
Justin – I typically target settlements with Capital One at roughly 50%, but that is without having been sued. Negotiating a settlement with Cap Ones attorney can range between 50% and 100%. The lower range is a more realistic target when you have hardship scenarios like medical concerns, long term unemployment, fixed income etc. The high end of that range is often the result of the debt collectors data and information about you showing you are more collectable (credit report shows you are paying other unsecured debts on time, car payments, mortgage), and have a steady income.
In many instances you can negotiate a more affordable settlement, once sued, by filing an answer with the court and defending the lawsuit in the early stages. I encourage consulting with an experienced debt defense attorney – at a minimum – at this point. Most attorneys of this type offer an initial consult at no cost.
What created your inability to pay and do those conditions persist?
What other debts have gone unpaid?
Are there debts showing current on your credit report?
Do you own a home with equity?
Do you have a steady income?
What amount of money can you pool together in order to offer a lump sum settlement either now, or in the next couple months?
I lost my Job as a manager at a retail store and have since just now started to get back on my feet. I have 70-80k worth of credit card debt, all those debts are showing on my credit report. I do own a home with about 10-20k in equity, I also own another loft that is currently rented out. The loft has negative equity so I make no $ on it, just had a bit of bad luck. I own a couple different businesses that I have a 50% partner in. I do have some cash on hand so bankruptcy is not an option, I have been saving up to try and settle some of these one by one. Its a daunting task I am facing but I’m hoping to settle each of them for a lesser amount I’m hoping. I can have the money quickly. Just fyi I haven’t been served yet. What are my chances of a successful settlement or what would you suggest with knowing this information. Thanks!
Justin – I would suggest you call in and talk to a specialist before deciding your next move. You have a lot going on. Call is free, and you may later decide you want help navigating all of this – 800-939-8357.
Settling with Capital One is going to be the first priority. You can do that now, prior to them affecting service, or afterward. I would realistically target 60% as the low end, but be prepared for a higher settlement.
What you need to know is that this account, once settled, may create a situation where other debt collectors take notice of the fact that Capital One updated any credit reporting to show a zero balance now owed to them. This can make you appear more collectable. That is not a bad thing, but it is something to plan for/around in order to optimize your available dollars to settle other accounts that are the next higher risk of suing you.
How long has it been since these debts were last paid?
All of this debt is approx. 1 year old past due, about a year ago I was forced to pay only the essential bills. I will be calling in to talk about my situation as well. I did go ahead and contact the lawyer, I offered $2200 on a $5700 debt. They are asking for a personal financial statement in order to send this to capital one to see if they would approve. Is this normal or should I go see a lawyer before I give them this info? Also, is there anything else I should request with the settlement offer?( like to take it off my credit report, I want to build my credit back and want to know what would be the best thing for them to do to my credit report) I’m also going to see a local free no obligation attorney to see what he suggests as well. Any insights you have would be greatly appreciated. Thanks!
Justin – A collector asking for documentation in order to support the settlement offer you are making, when lower than what they can act on without their clients approval, can often lead to the request. I do not think you have a shot at the reduction with this creditor and the fact that a suit is filed, but not served yet. But there are some interesting things happening with creditors and debt collectors being subject to higher regulatory scrutiny, and pending rule changes. If your offer were to get approved, it would surprise me, but I did recently see an uncharacteristically low Capital One settlement (not with an attorney collector).
You will not be able to bargain to get this removed from your credit report.
1. The attorney does no credit reporting and cannot impact how Capital One reports in any way.
2. Capital One is flat out not going to remove it. But you will need to keep an eye on them for accurate reporting that your account show zero due after it is settled. See this article for more on why: https://consumerrecoverynetwork.com/why-does-capital-one-hate-america/
Best thing for your credit report is to get all of these collection accounts resolved and update to show no balance is owed, take smart and simple steps to rebuild, and let a good 12 to 14 months of time elapse after settlements are completed.
I have sent in the personal financial statement they have requested. If and when I can get these accounts settled what would you recommend in doing to rebuild my credit? What is the quickest most positive ways to rebuild my credit back to where it was. I really want to get this financial burden off my back and get back to the road to recovery, hopefully I hear something positive back from them soon. Thanks again for all your help!
Justin – Until you get the bulk of the collection accounts resolved, there is not a great deal to be done to start rebuilding your credit. Just be sure any accounts that you are current on (home, car, etc), are paid on time while you negotiate and settle others. With an eye on a more rapid credit report and credit score recovery, you will want to avoid any court judgment entries if possible.
Negotiating your settlements can be done rapidly on accounts that have not been paid in a year. It is the money needed to pay the deals you get that is often what takes the bulk of time. The quicker you can settle with original creditors though, the more you can avoid duplicate key derogatory collection accounts from freshly appearing on your reports that result from your creditors selling off unpaid debts.
Just an update, We came to agree the $5700 cc debt for $3,000 with payment due at end of the year. What documents should I request from them before paying so that I make sure I am covered and wont be sued again for the same debt? I think I’m going to pay with a money order or cashiers check that way they don’t have any of my personal bank info. What do you think?
Justin – Thanks for posting the update. Read through this outline about settlement documentation.
The risks of being sued again for a debt resolved in the past, and even the extra caution and need for using a cashier check to pay, have diminished over the years. More so when resolving accounts with legitimate collectors working with original creditors. I still do encourage any ACH or check by phone payments be processed through a separate bank account you set up for the express purpose of paying settlements you negotiate. More on that here.
There is far too much scrutiny of the collection industry at every level these days, especially now that you have the ability to resolve complaints and disputes through the CFPB consumer portal. I completely understand and appreciate your wanting to proceed with extra caution. Just know that, these days anyway, I see more potential hiccups using cashier checks and money orders, than electronic payments (as long as you have a written agreement).
I have a capitol one card that I am in default of around 1800$. I have received a letter and write up of a court filing and that I would be receiving a summons and compliant from the court in the near future. In the letter they are asking for $2589.70 plus fees.
This morning a woman knocked on my door and upon answering, I saw the papers in her hand. I refused to answer her questions and asked her for ID. The only ID she could produce to me was a business card saying process server. I declined any more responses and closed the door, all being polite.
I then called the law office of Weltman, Weinberg & Reis Co., L.P.A. of Troy Michigan, the ones who sent the letter, and told them I am in dispute with the charges of Capitol One.
I am unemployed, and when my UI ran out I called Capitol One to start my protection Services that I had on the card and been paying for, for the last ten years I may add. Capitol One then said that it no longer applied to me and no such service was available for me, yet right there on the monthly bill is the charge they were charging me for this service. I was no longer able to make monthly payments after that (Jan 2013) though I did notice on the monthly bill that they were still charging me this fee for protective service, which covers loss of income and makes your monthly payments for up to a year.
The law office then gave me the phone number for capitol one to call them. So I did and the lady said she would get all the monthly statements for at least the last two years to me and that the dispute department would be calling me back. She also said it would take two weeks to get the statements to me. So far no call back from Capitol One.
So I called back the law firm and updated them as to what took place during the call with Capitol One.
So, now what. I’m financially strapped. Not sure what to expect. Should I accept papers if brought again? How should I negotiate? Can I argue about the services they did not provide? Should I take it before a judge? Can’t afford a layer right now. Should I agree to $1000., $50 a month, at 0% interest and wait to see it in writing?
DS – If it were me in your shoes, I would wait to hear back from the Capital One dispute department. If they do not get back to you in the allotted time, call back to them. Post an update here with what you learn.
In the mean time, I would encourage you to put together a comprehensive chronology of what happened and when (refusal to honor payment protection, still charging for it and for how long, lawsuit, speaking with the Weltman firm, who you spoke to/time of day/number called – at Capital One). All of this would be in preparation for the next steps I would take depending on what Capital One does next.
First off, thank you for your help.
I recieved a letter today from capital one saying they look at the dispute and “found that your capital one balance is correct”. So I called them, after being shuffled around from call to call I got to talk straight to the dispute department. I never got an answer as to what that balance is. She did say that my protection service was denied because I did not write a letter to them stating I was unemployed within a twelve month period from being unemployed. Now during this time I was up to date with my payments. She also said that this protection was canceled in Dec 12 after I called to get it activated, yet in my statement from Jan 13 they are still charing me for it. I also found out during this call that the protection service is not provided service by capital one but from an outside company. Now I was asked to get this protection when I got the card back in 03, I paid capital one for this service for 10 years. Then when I really needed it they said sorry. In my eyes this is fraud. Should I let a judge look at this or am I just screwed. Again I am still not working, but I am in the army reserve. I get about 500 per month when we drill and there is no Gov shut down.
DS – Actually no, I would not wait to talk to a judge about it. I would encourage you to file a complaint about your entire experience with the credit protection including all relevant dates, conversations, collections efforts etc., with the CFPB. You can file that here: https://www.consumerfinance.gov/complaint/.
The CFPB has taken some banks to task for related products. Please post an update as you make progress.
I filed with the CGPB the next day just as you suggested. They submitted this complaint to Capitol One for thier response, they had 15 days to make one. This morning CFPB issued me this note via e-mail; The company has provided a partial response to your complaint number xxxxxx-000xxx describing the steps taken so far to address your issue. They stated they are still working on your issue, and you should hear from them again within 60 days.
Is this now just a waiting game or is there any more I should prepare for?
You should also be preparing to respond to the lawsuit. Look up the court record (if available on line), and see what is showing as having been/not been served.
Thank You Micheal!!!
I just got back the info from GCPB with the response from Capitol One. They are refunding all monies paid for the credit protection services for the last ten years. They are removing all bad credit reports for this account. They have stop all actions to sue me. For me this is great news, and I would have never been able to get this far on my own with out your help and support!!!
They also said that my balance will show up on my next quarterly billing statement. This should be around $1500. Should I wait for this statement or call them and make payment arraingments?
Again, a great BIG THANK YOU!!!
DS – I am very happy to hear how this worked out for you!
If it were me, I would get a head start by calling Capital One, and not wait for anything from them in the mail.
i forgot to mention the hsbc discover was from 2009 that is what it said on the papers and like i said i never had a hsbc discover card at all only capital one witch i payed off last year
I payed off my capital one a year ago and a police came to my door saying a i was being sued by hsbc discover witch i never had and i have to reply within 30 days and i called on a Saturday the kramer linkie & taylor llc witch was suing me cause of my unpaid dept and when i called on Saturday the lawyer answered and said that i had to pay 1796.16 by Wednesday by 2pm and i told him i didn’t have that kind of money and he said i had to go to my family members or to my bank to get it and if i didn’t have the money by then i will have to go to court and i said sir i don’t have that kind of money and on the papers i was given did not even have a court date and it says i have 30 days to reply and it was filed on Oct 30th 2013 and i just received it Dec 7th 2013 i thought that was subspecies and when i called the number it says capital one and i payed off capital one last year and when i called to talk to the supervisor there i told them i payed off capital one last year he looked up the account number told me he had the account in front of him and i said how much does it say the man got quit and said that he could not see the account in front of him after he just told me he had it in front of him and just to let you know i have been getting scam calls on my phone so i had to put a block on my phone to keep the scam people from calling me i just want your advice on what to do and how to handle this i have went to a police officer who is now a detective and he said the papers i was given looked really fishy so i need your help on what i should do if you could email me asap that would be grand i am from ga
PH – You should take this to a consumer law attorney with FDCPA experience and discuss your options. If you send me an email (same address you get this comment notice from), with the name of a nearby larger city, I can email you contact details to an attorney closest to you.
I have had a lady calling my house and my uncle-in-law (who is my neighbor) for about four days now. She said I need to contact the firm for a case filed against me that is moving forward. She said they need to take my statement. She also said disregard this message if I have received the paperwork. Which I haven’t. I am assuming this is a debt from Texas back in 2006 or 2007. I am currently unemployed. What do I do? I definitely do not want a judgment filed against me.
Rebecca – Try to get as much information from them as possible on the next call and post a comment update with what you learn. Texas SOL to sue for collection would have expired in 2010 or 2011. Are you still in Texas?
Also, legitimate debt collectors do not talk the way you described, but scam collectors do.
Hi Michael,
First of all, thank you so much for your quick response. Secondly, They finely called me back today and it was a different person, and ‘Private caller’ showed up on my caller I.D. She said “I am with Paralegal Documented Services @ 626-656-3360 and due to your negligence and failure to respond to written and verbal inquires left on your voice mailbox from my colleagues the firm has decided to move forward, and you now have a pending request to appear against you. You need to contact the firm in order to avoid further constitutional consequences against you. The gravity of the case has increased so your case number is different…” I called back and talked to another guy. I asked the name of the company, he said it was TCA or TC Associates. He confirmed my street address and birthdate and said that if I didn’t settle the debt then a lawsuit would be filed against me and a summons would be served to my address. He said I have to Thursday, Dec. 19 to let him know if I would like to settle for 50% with no interest. He said I could also qualify for a hardship plan if I worked less than 30 hours a week or was unemployed.
I was correct about the debt, it is a loan from CitiFinancial opened in 2005. It went into collection in Dec. 2007 in Texas. Currently, I live in South Carolina.
Also, I googled the number they called from and it said that most numbers with a 626 area code are scams?!?!
Thanks again in advance,
Rebecca
These are the type of comments I found online when I googled the phone number…
“Received a call from Michael Bronson of Legal Support Services asking that I call Michael Stafford the case manager at TCA due to lack of appearance and or legal proceedings would be initiated. However in order to be charged with lack of appearance a person has to be served first and legal proceedings started. Very pushy, and no information of relevance was shared, the way The so called Michael Bronson of legal support services conducted himself i knew something was not right.”
“Had the same guy call me looking for my sister and said he was Michael Evan and left numbers for my sister to call Michael Stafford. He said he was a private investigator and insinuated that my sisters wages were going to be garnished. It is Trans Continental Affiliates (TCA), a California debt-collection agency who currently has charges against them by the Federal Trade Commission for using deceptive practices when attempting to collect debts which is in violation of the Fair Debt Collection Practices Act.”
Caller: TCA
Call Type: Debt Collector
“they called my work telling the person that answered that i had 24 hours to respond or i would be served. and when i called them back, they would not give me any information and wanted my birthdate and social security number and when i refused, they hung up on me. they only threatened court action but would give me no more information unless i gave them information. i asked the name of the company and they said it was t c and associates. they said they were a litigation company.”
“got basically the same message left, caller id says PRIVATE . Have no idea of who or what they want. Haven’t been or received anything in writing to support this.”
and so on…
Rebecca – Thanks for all of the follow up details you posted. You are being harassed by what appears to be an illegal debt collection scam. I would encourage you to gather up every detail you have and file a complaint with both your attorney general and the CFPB. You can file the CFPB debt collection complaint here.
Michael,
I need to find a consult with Consumer Attorney, Can you please send me some contacts via email?
Thanks
Forgot to include, I am in Dallas, TX
Thanks
Shawn – I sent you an email with contact information for several experienced consumer law attorneys in the Dallas area.
I had a credit card go into default about 6 1/2 years ago. From my understanding this goes off my record after 7 to 7 1/2 years but the crazy thing is that the same credit card company issued me a new card about 4 years after the other one had went into default. I’ve kept it in good standing and still have it. My question is, does this affect the 7 1/2 years that it takes for the defaulted card to come off of my record? Surely there time to legally collect on the defaulted card doesn’t start over once I get another card from them does it?
David – The new credit card you have from that same bank will not have an impact on how, or how long, the older charged off credit card appears on your credit report.
As far as how long a charged off credit card debt can be collected through the courts, it depends on state law. What state are you in?
I’m in Missouri, and thank you for your helpful information.
David – If your last payment on the charged off credit card was more than 5 years ago, and no legal action was filed in that time, any legal collection action filed from this point forward could be defended as being time barred.
Be sure that no collection agency is reporting that charged off debt as a separate entry using a different delinquency date. That can and does happen, and it results in a negative item staying on your credit report longer than it should. Negative entries related to this account (other than a court judgment) should fall off at the same time as the original creditors negative reporting.
I am also curious if the judgement was settled, if they would send me a 1099-c. I can easily proof insolvency, but it would be preferable to not involve a 1099-c, since I am on SSI and while they supposedly don’t count it as income, for their purposes of calculation, I’d rather not rock the boat.
JJ – It would be unusual to settle a judgment debt for that low, but not unheard of. Because your income is not at risk of levy or garnishment, you may want to save up closer to 20% of the balance before starting down the negotiation path. And I would consider not referencing the fact that you have money saved. You could reference that “you can possibly manage to pool together xxxx dollars if this would resolve the debt, but that is about all there is”. It is often a good idea to lay your cards on the table about fixed income, the source cannot be touched, and you are not returning to work, etc.
There is nothing you can do about whether Barclay reports the amount they forgave as income, and should expect that they will. The form 982 submitted with your tax forms is fairly simple given your circumstances.
Michael, thank you for the advice.
So a minimum of 20% would be smart. Would 30% increase the chances of success greatly?
I’m wanting to make a solid offer the lowest amount that has a good chance of success. Not low enough that they don’t reply to negotiate. And not higher than what I’m able to gather. The higher the %, the harder to gather the funds, and the longer it would take.
I’m assuming it’s best to start with a strong offer, rather than start at the minimum and be followed by slowly increasing offers?
JJ – It is far better in my experience to be prepared with an offer that has higher odds of being approved. That experience suggests judgments settle for between 50 and 100 percent of the balance. But hardship situations, such as fixed income from social security and disability, and where other collection means like garnishment and property liens, are off the table – have led to better than average settlements.
I want to also suggest you speak with the collection firm, rather than write to them. They already have a judgment, and they have already tried bank account levies. So while judgment creditors feel they have all the leverage when collecting, in this case they do not.
Offering 30% to settle the judgment in this situation is realistic. But play your hand with patience. They may turn down the offer, and may counter with something far higher, but that should be expected. You can re-approach them next month, or later than that. If you can be patient with resolving this, at least with the info you have provided, you will increase your ability to settle for less than what I mentioned is normal.
I am on SSI disability, and Barclays won a default judgement on me for $5100 in 2012.
I have no income or assets other than my garnish-proof SSI payments. No property or vehicle of any type.
They have already paid 300 to garnish 2 bank accounts which were already closed – their later interrogatories on the account will reveal that I had only a few hundred dollars in them when they were open.
I am thinking of writing to try to settle the judgement, and am wondering what to say and how little an offer they might accept (12%?) because that is all I have. I can be up front about being on SSI, having no income or funds other than SSI, and having no property. And that my offer is for all the money that I have saved. That way they aren’t left wondering if they might be better off hoping to find some hidden assets rather than settling.
Hello,
I have a judgement from LVNV Funding, who is represented by Rosen and Loeb Attorneys At Law (Rosen and Loeb), that was entered into again me in 2008, by default. In the first year after the default judegement, I was not working full-time, had jsut graduated from college and was not in a good place financially, so I was only able to pay up to $100 a month on a $4000+ judgement. Rosen and Loeb refused that payment and said that it was not enough money. They were terribly rude to me, each time I tried talking with them, so eventually, I stopped. Moving forward to 2012, I was in a much better place financially, had done some research on how to resolve the judgement and requested Rosen and Loeb to send me my account information, i.e proof that they’re able to collect debt on behalf of the original creditor, that they’re able to collect in CA, account history, balance, etc. Their reply to my request was just a copy of the judgement. In 2013, I called to ask for this same information, and expressed wanting to resolve judegement (now $8000+), but they refuse to give me any of the requested information, but now has sent me an offer letter to settlet debt. I need help with:
1. understanding my rights
2. what actions would be best to take
3. how i can be sure that this firm is legally collecting on the behalf of the original creditor
4. if i settle, how can i be sure the creditor will not try to collect again, will update the judgement as paid and will report to the credit reporting agencies.
Thank you in advance for any advice you might be able to offer.
Jennifer – Once sued, and a judgment entered, asking for debt validation is not going to serve much purpose.
LVNV Funding is not the original creditor, they are a debt buyer. They would have bought the legal right to your debt from your original creditor. Who was the original creditor?
Your next action depends on your goals. If you want to take them up on the offer to settle the judgment debt with them, that is a good option. It stands to reason that Rosen and Loeb are who you would need to resolve the debt with, as they are who sued you on behalf of LVNV. But you can always call LVNV to verify that Rosen and Loeb are still involved with your file.
If you do settle, that offer letter and your proof of payment will usually be enough to clear up any later issue if any further collection efforts mistakenly occur. Post an update if that happens and I can offer more feedback about how to resolve something like that quickly. Rosen and Loeb should update the court record to show the judgment they got has now been satisfied. That process can take several weeks. Is the satisfaction of judgment, or any wording to the effect of them updating the court, referenced in the offer letter? If not, call them and talk to them about that aspect.
I tried to buy a house and the people doing my loan told me i have a judgement lien against me from capital one in 2009. I filed bankruptcy in 2009 after i was dumb in credit cards and i had to start clean. My loan people told me i need to get this taken care of before i can close on my new house. I called the people who bought out the capital one loan and they said they gave it back to capital one. I called capital one and they told me the only way to get a “judgment satisfied” letter is to pay off the balance which apparently is now double what it was back in 2009. Is this the truth or what can i get to get this taken care of quickly i cant afford 4000.00.
David – Can you confirm whether the Capital One debt was included in your bankruptcy? I have some actionable feedback to offer, but the direction of the my response will vary based on your answer.
Yes it was very much apart of it
Thanks. Couple things:
Continuing to collect on a debt included in your bankruptcy is likely a violation of consumer protection laws. Talk to your original bankruptcy attorney about this, or better yet, send me an email with the name of a large city near you, and I will email back contact info for an attorney whose practice focuses on this area of consumer law (not many lawyers, and few bankruptcy lawyers, focus in this area).
File a debt collection complaint with the CFPB naming Capital One and the collection attorney who sued you here. Capital One has someone assigned to the CFPB complaint portal. They may decide to take this more seriously at this point. Do not know about the collection attorney, but I doubt it.
You may want to speak with an experienced debt defense attorney first, before filing the complaint, but I would definitely do both.
Hi, I have a judgement from capital one from 2009. The credit limit was 300. They are now asking $1040.19. I received a garnishment letter from a NY marshal. I have never received a summons to go to court. What should I do?
Tanisha – Are you within NY city?
I am looking for any info how should I proceed.
About a month ago I lost my job. And week later served with possible judgment.
I replied to courts with within time. (Plead guilty and asked for summary.)
During this time I’ve tried to settle with debt collector. ( They purchased another 4k loan that was out on me.)
I’m scared to contact them again for I might hurt my case if it goes to court.
Who was the original credit card debt owed to?
15k principle & 15k interest – Bank of America
When did you last make a payment on the account?
5 years ago
Who is it that is suing (the name of the plaintiff)?
Cavalry SPV, LLC (Gurstel Chargo P.A.)
What is the name of the collection attorney or firm suing you?
Gurstel Chargo PA
What state do you live in?
AZ
Currently waiting for court date.
Tony – Given all that you have going on, have you looked into your options with bankruptcy? If a chapter 7 BK is a good fit, it would be the least costly solution to wipe most, if not all the debt away. Are there reasons you are looking to keep from filing?
If you have not talked with someone about the bankruptcy option, the number to the right of the screen, 877-278-8117 will connect you with someone live to talk about your options.
If you are bent on avoiding bankruptcy, what financial resources do you have now, or can you obtain, in order to either settle with Cavalry, or make payment arrangements?
I was hoping to avoid bankruptcy. I can obtain 4/5k to settle with Cavalry.
Tony – I do not like your chances for negotiating a settlement for that amount. But let me be sure I understood your initial comment correctly.
You are being sued Gurstel Chargo who represents Cavalry SPV for roughly 30 grand. You filed your response with the court in time to avoid default judgment. In your response you admitted to and/or agreed that you owe this debt. Have I got this correct?
If I am on point, here are some issues:
You admitted to the court you owe the debt.
Gurstel may understand you have a limited ability to pay right now due to being unemployed, but they reasonably can assume you will not remain so, and may like their chances they will get you to pay more once a judgment is entered with the court.
Negotiating a settlement when sued, or even after a judgment is granted, is fairly common, but typically not this low.
Assume you could pull together 10k in order to settle. Where does that money come from? Would you have to pay it back? Now compare the national average cost of bankruptcy at 1800 to the 10k in this example… Bankruptcy is more affordable.
Thoughts?