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?
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.