Help Someone Settle Debt – What Do I Need?
My step-son has a lot of debt; one credit card has gone to a collection agency, which has been awarded a judgement (more than $10,000, I believe). They have also been allowed to access his bank account (took all the money in the account, and $100 more, causing him a bank fee in excess of the amount removed).
My stepson cannot afford the judgement, and the threat of additional action necessitates my involvement at this time.
What kind of paper work do I need from my stepson in order to begin negotiating with the collection agency? What percentage of the judgement is typically required following judgements (attorney fees, etc.)?
—Tim
You will need to get written authorization from your step son in order to give and receive information on his behalf. You can probably find a limited power of attorney example on line that you can edit to suit what you will need. You can also have your step son on the phone line to give verbal authorization in many instances. Once authorization is in place you can then begin to negotiate and help settle the debt.
Once you have authorization, what is it you are looking to accomplish? Are you focused on the judgment credit card debt only? That would make sense, as it is the one that is levying bank accounts and could potentially garnish wages depending on the state you live in.
If you are looking to help settle the judgment debt, you will start by negotiating over the phone.
Reaching out to the attorney office that handled the lawsuit over the phone is a good place to start. You will have to get their fax number to send written authorization signed by your son in law. You can start the negotiations to settle on that same day, or follow up shortly after. If there is no money in the bank account to hit, and no wage garnishment to chase after, you will be in a good spot to negotiate and settle for the best rate.
What amount to target for the settlement will be different from one account to the next depending on who the creditor or debt buyer is, who the law firm is, the state of residency (i.e. better state consumer protection laws can mean a 10% better savings).
If you answer the following questions with a comment reply at the bottom of this page and I can provide additional feedback.
Who is the original creditor on the debt?
Who sued, the creditor or a debt buyer? If a debt buyer, the name of the debt buyer?
When was the judgment entered in the court?
Who was the attorney hired to sue?
What was the amount of the judgment when it was entered?
What state is your step son in?
Any reader who has concerns or questions about helping someone else settle their debt can post 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.
I am a Representative Payee and am wanting to negotiate and resolve my client’s debt that has gone to a collection agency. Do you have any advice or ideas on how I could handle something like this?
thank you
If you have a POA from your client you can negotiate with the collection agency in most cases. There are some creditors that make this more difficult (even though you would be handling this with the third party agency). Who is the creditor or lender at issue? Hoe long ago did payments stop?
I have the ability to settle immediately. My step-son had his bank account emptied in November 2012. He is working free-lance (part-time), and wage garnishment would seem to not be an option. He no longer has a bank account. I would think the lawyers would be realizing they have little recourse in this matter, and should be willing to listen to offers.
Tim – Debt collectors with a judgment to back them up will typically have two trains of thought.
1. A long term view of the value of the debt. Many people who hit a rough financial patch are only there temporarily. As finances improve, the ability to collect improves. While they are waiting to get paid, the balance on the debt is growing at the rate set by the court, which is often at the state cap for judgment interest (10 to 12%).
2. The real time value of money. Their client wants to get paid and do something with the money. Suttell and Hammer want to get paid too. The value of getting paid something less today could exceed the value of getting paid even more sometime in the future (then there is the risk of not getting paid anything when the debtor files bankruptcy).
Here is how I would approach it; get the written authorization make the first call and get the authorization faxed over. Follow that call up with another a day or two later. Let them know the limited income situation and that your step son only recently confided with you about his finances. You are offering to help, but that you are limited in your capacity to do that. 50% would be a realistic lower end target to hit, but I have seen files get under that in these situations (not with Suttell and Hammer though). A high target would be 70%. If there is no urgency for your step son to knock this down, do not worry if you cannot strike a deal in the first volley. Come back 5 to 7 days before the end of the month and try again.
Post an update comment here after the first attempt to settle with what occurred and lets go from there.
The original creditor was FIA Card Services, through Bank of America. FIA received a judgement dated January 26, 2011 for $12000. The counsel hired to sue was Suttell and Hammer, Bellevue WA. The amount remains $12K, and the state is Washington.
Thanks Tim. I would estimate the low end target for settlement at roughly 60%. Suttell and Hammer will be chasing their fees in this effort to get paid, so they have an interest in getting the settlement done. Bit they also want to maximize those fees and know that holding out to garnish your step sons wages, or hit his bank account with a levy again, could lead to a better pay day.
What is your cash flow ability to fund the settlement? Is that amount available right away?
When was his bank account hit with the levy? If it was very recent, you may want to be more strategic in your initial effort of settling with Suttell and Hammer. Is your step son working full time? If he is, the judgment could lead to wage garnishment. If not, that can play in your favor when negotiating and settling.
Post your answers in a comment reply and lets go from there.