Credit Card Debt Buyer and Debt Collector Going After Cosigner. Should I Settle or Fight?
I am currently filing for chapter 7. For one of my debts my mother cosigned and a credit card has been issued to a law firm. They called me andI told them my situation. They tell me they are going to file against my mother. They call her and tell her they got her social security number etc. - the basics - and that they are coming for her. They say she is going to be sued, and they told her she can settle for 4,000. to avoid the court fees, which will add up to 8,000. What shall we do in this situation? Can she fight it or can i? Can i settle for way less than the 4,000? If the debt has been bought several time, does that change anything?
Should you settle with a debt buyer, or fight them off in court?
—Carlos
Credit card debts that charge off can get bought and sold several times. Each time the debt gets sold it is further removed from the ability to substantiate the debt as legitimate if you were to raise a meaningful challenge in court, or out of court. You may be able to settle with the debt buyer for less than 4k. You may also be able to fight the debt collector off.
Debt buyers and the debt collectors they work with.
When dealing with a debt buyer you know a couple of things for certain. You know that:
- The credit card debt has been charged off by your original bank.
- The debt buyers only skin in the game is what they paid for the account – The amount paid varies based on several things, like how old the debt is.
- The debt is still collectible if it is not passed the statue of limitations in your state.
- Debt buyers will try to collect using their own internal debt collectors, or assign out to a collection agency.
The debt buyer and the debt collectors they hire are chasing a return on their investment. They loaned you nothing. The debt buyer invested their own capital in order to chase a profit from collecting off of debts that have already proven to have low to no value.
Debt buyers and the debt collectors and collection agencies they hire to hound you, can be aggressive and relentless in the frequency they contact you and the collection methods they use. There are instances when a debt collector working for a debt buyer, or the debt buyer themselves, step over the legal line while collecting.
When a debt buyer and debt collection agencies working for them are all bark and no bite
With a debt like yours, which you believe has been bought and sold several times, consider the following:
Check the statute of limitations (SOL) in your state. The SOL is a time limit on how long you can legitimately be sued for unpaid debt. The time limit may be different for written contracts compared to open ended revolving consumer debts, like credit cards. If the SOL is expired, the threat of being sued is an empty one. Well… they could still file a suit, but your answer to a debt buyer lawsuit would be that the debt is time barred from accessing the courts. Done correctly that would end the suit.
If the debt is still within the SOL, is the debt collector going to take the debt to court? There are many more threats, veiled or otherwise, of suing for a debt, than there are actual suits file by debt buyers and debt collectors. Don’t take that to mean one won’t get filed against the cosigner, just that debt buyers and debt collectors are known more for their barking than their biting.
If a suit were filed by a debt buyer inside of your state statute, you have the option to defend it
As a result of the robo signing issues that came to light during the housing crisis, a good amount of awareness has been raised on the topic of collection lawsuits suffering from a host of similar deficiencies. Defending debt collection lawsuits has fast become a more cost effective and reasonable approach to take in dealing with old unpaid debts.
Check out this article for more information about debt collection and debt buyer lawsuits.
There is some math involved with deciding to settle with a debt buyer, or defend any suit that may get filed down the line. For the amount you are talking about, an 8k balance if brought to the courts, and where settling for 4k is a workable option for you, consider the fees an experienced collection defense attorney may charge could equal 2500 or more. There is no guarantee the attorney you hire will win, but there are some really good attorneys out there that have not lost a debt buyer lawsuit.
I am working on two files right now with debt buyers where there is nothing they can do to collect, in or out of court. I know it and the debt collectors the debt buyer hired know this too. But the buyer won’t settle for an amount the individual can afford. They will end up with nothing. Debt buyers buy up bad debts at a steep discount. That does not necessarily make them smart about every account they seek to collect.
In the end, what you decide to do with settling, defending, or even ignoring a debt buyer, or the collection agencies they use, will be determined by your personal set of circumstances. For you, the fact that a cosigner for your account is the debt buyer/debt collector’s target, you may want to settle the account to get your family member off the hook.
If you want to talk this out, you are welcome to call in and discuss it with me, or another CRN specialist.
Anyone with questions or concerns about dealing with a debt buyer is welcome to post in the comments below for feedback.
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.
Michael my situation is exactly the same as the one above that I’m going through right now. I’m a 76 year old widow and living on my social security and my Florida teacher retirement pension from Florida. My husband and I purchased our home $200.000 in 2006 in Atlanta.. My husband became very ill in 2007 and later died in 2010. The last 3 years of his life was spent in a nursing home for which we lost all of his income too. Because of the lost of his income all of my income had to cover our mortgage, utilities, life insurance, credit cards, 2000 Van, (that I still have) upkeep etc. I fell so far behind in many of my credit card payments to the point I had to stop paying them. My Citibank, Amer Express. Chase and Bank of America credit cards has been charged off. Now comes one Credit one Bank claims I owe them 920.00 plus interest. This account was sold and has passed through two other sources and is now owed by LVNV Funding and I’m being sued by them. When I moved to Atlanta in 2006 I continue to stay with my Florida Credit union that I have been with now for 42 years. If I lose this suit can LVNV Funding take any money from the bank in the state of Florida. I was given a summons on Dec. 20. 2015 acknowledge to the court in 30 days. I don’t know how to defend myself, I’m ill, don’t have money for a lawyer and don’t know how to defend myself in a court of law. Please Help!
What do all of your unsecured debts add up too? When did you stop paying on all of them? How much equity would you estimate you have in your home?
Unsecured debts add up to about 5400.00 stop paying on them in 2010 when my husband died. I was able to refi my house into my name along in 2013. I don’t know what equity would have at this point.
Thank you Michael that was really fast. Thank you so much.
It is often not worth filing chapter 7 bankruptcy over the small amount you owe. Not if you consider it is possible to settle all those debts for half or less, which would mean you would file over $2,700. The average cost of bankruptcy is more than half that.
I have a post up dedicated to SSI and other exemptions from judgment creditors per state.
It is better to pull money together and settle small balance debts like this whenever possible, But I understand when it is not.
I am being sued by Capital One. I haven’t been served but my friend said she checked the county’s court and they had filed a law suit on me. I have been waiting to be served and the 30 days to respond is getting close. What can I do so they don’t file default judgment on me? Thank you so much for our help.
The 30 days to file an answer to a lawsuit against you typically begins on the day you were served, not the day they file their case in the court.
You would file an answer or general denial to avoid default judgment, or you could negotiate some form of settlement and get the case dropped.
I encourage you to talk with your own attorney about your options.
Sorry it was actually wright lerch & litow attorneys at law.
Thanks Sarah. Can you also tell me who the collection attorneys are working for, whether your original creditor, or the name of the debt buyer involved?
You may need to add more to your offer in order to accomplish your settlement goal. Read more about why smaller balances may not settle for the best savings.
It was originally capital one. I’m not sure if it was repurchased by someone else prior though.
Thanks. Your target for negotiations is going to be 50% of the balance owed today, and that is being optimistic when dealing with an attorney collecting for Capital One.
I have seen so few settlements on Capital One below 50% that they may as well be figments of my imagination.
Hi Michael,
I have a credit card that has been bought by a buyer. I signed up for the card on 2007 when I was 18. It was charged off August of 2009. The original credit limit was $500 after all the past due fees and over limit fees the buyer is trying to now collect over $1200 which is more than double the credit limit. The statue of limitation in my state is 6 years which would expire in August of this year. I have tried to tell them I don’t understand the high amount and they are not willing to go for any less. I’m unsure of what I should do.
Who is the debt buyer?
What was the amount of your offer to settle?
Wright leech & Luton attorneys at law. I told them I wanted to pay the credit limit amount which was $500.