Hired a debt settlement company and got sued – what now?
I received a summons for 2 of my Wells Fargo accounts. I started with a debt settlement company in February. I am told they are going to try to settle these accounts so we don't have to go to court. I have asked this debt settlement company if i should contact a lawyer and now they will not give me any advice only say to call back in 5 days and they will send me a packet in 10 days.
I was told I have to answer this summons/complaint but they don't have a form. I was told to contact county court and they don't have forms. I don't qualify for legal aid advice since both accounts are 12, 000.00. I do not know where to turn to since I do not have any money for a lawyer and I don't want my wages garnished. I believed this debt settlement company was a better choice than bankruptcy but I still couldn't afford it. I appreciate any response.
What do I do next?
—Michelle
Short answer
Being sued does not end your ability to settle. Filing an answer with general denials preserves your options and buys time, and a consultation with a debt collection defense attorney is generally free and leaves you far better prepared.
Key points on this page
- You still have options to settle after being sued, even where the original intention was to settle earlier
- Which direction you take depends on who owns the debt, who is suing, your cash flow, and how the accounts already in court are best handled
- Wells Fargo does sell debt to debt buyers, and those debt buyers do use the courts to collect
- Filing an answer with general denials at this point preserves your options and buys time to regroup and make informed decisions
- A consultation with an experienced debt collection defense attorney is generally free, and you will be far better prepared afterward
- Avoiding bankruptcy may still be possible, but it will not be as simple as hiring a settlement company and leaving it to them
I have some questions about the debt settlement company you hired and the timing of all that has transpired. You can answer those questions in the comment box below.
Debt Settlement Company Questions
My immediate answers are going to be more of a benefit to later readers of this page who may be considering hiring the typical debt negotiation firm, but will also help me offer you more foundational feedback about what you do next, and how to navigate the lawsuits with Wells Fargo.
- When you hired the settlement company, were you still current with your credit card payments?
- If you were not current, how many months late were you?
- Debt settlement companies generally have you deposit a set amount of money in escrow each month to save up and pay the deals they get. What amount have you been putting in escrow each month? What is the total amount you have in your account now?
- Do you have other debts than these 2 accounts you are being sued on? If so, who with and what are the balances?
- What were your settlements originally estimated to be by the debt settlement rep you spoke with?
- What amount of fees are you supposed to pay for the service? Are any of those fees already paid?
- What is the name of the debt settlement company you hired?
Answering the above questions will help me to give you much more than general feedback. I will also be able to make some comparisons of your remaining options to handle the situation, and the affordability of each path.
Debt Negotiations When You Have Been Sued
You do have options to manage your way through being sued for a debt. I know your intention was to settle earlier, but you still can after being sued. Which direction you go from here will be affected by who owns the debt, who is suing, your cash flow, and the best way to handle the accounts that are in the court.
Wells Fargo does sell debt to debt buyers. Those debt buyers do use the courts to collect. Each debt buyer will handle the deals they are willing to accept when settling accounts before and after suing. Are your Wells Fargo accounts sold? What is the name of the plaintiff on the lawsuit? What is the name of the attorney suing?
Filing an answer with general denials at this point will preserve your options and buy you some time to regroup and make some informed decisions. You mentioned you do not have money to hire an attorney. But you should at least consult with an experienced debt collection defense attorney. The consult is generally free, and you will be far better prepared to make some informed decisions afterward. You may still be able to avoid filing bankruptcy. But it is not going to be as simple as hiring a debt settlement company and leaving it to them at this point.
I can help you locate the type of attorney you will want to speak with in your area. Post the name of a larger city near you along with your answers to my questions. I will email contact information to you.
What you do next is going to be based on comparing your remaining options, the costs, your income, and personal financial goals right now and looking forward 2 years.
Post in the comments below and lets go from there. Anyone dealing with a similar situation is welcome to participate in the comments 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.
Hello, my name is carla, from Baltimore, Maryland. I owed $4275.00 to Capital one credit. I stopped making payments since January 2015, because I enrolled to debt consolidation program.
First week of this month, I searched my name under Maryland case search. There, I have an active lawsuit filed LYONS DOUGHTY and VEldhius law firm. The trial set for March 18, 2016.
I called the law firm, and informed them that I can arrange a monthly payment plan.
I agreed to pay $1k on 2/25/16, which I just paid this morning (thru their website). I got a transaction confirmation.
I also agreed to pay starting on March 10 of the amount of $300. I also agreed to pay another $300 biweekly.
I haven’t received a summon letter yet. And, also I’m still waiting for the law firm to send me a copy of stipulation agreement.
With stipulation agreement and started paying $1k today, do you think they will still continue the court hearing on 3/18/2016 ?
Do I need to show up? Is stipulation agreement a good option, since I cannot afford the lump sum that they asked of $3250.00?
Please help me…
Thank you
How long is the stipulation set to run for?
You should consult with your own experienced debt collection defense attorney, but in a situation like this I would usually shoot for filing a defense to the lawsuit in order to buy time to raise the lump sum to settle all at once. This way you avoid any consent or stipulation to judgment. You cannot do that in the way I would shoot for now that you have paid.
If it were me, and I did not have the signed stipulation before the hearing date, I would show up to court. I would keep bugging them to send it, and if they did not have it to me (given the current lead time of a couple weeks) I would file a debt collection complaint against the Lyons Doughty collection law firm with the CFPB, and outline the false and misleading nature of coaxing you to pay under a stipulated agreement, but never sending the agreement.
Consenting or stipulating to a judgment with payments you are certain you can afford is not a bad thing. If you can avoid that with other alternatives… great, but not everyone can. And most of us want to avoid any lien, bank account levy, or wage garnishment. This can help you do that.
Hello, Sorry for this being so long but……. I entered into an agreement with a Debt Settlement Co back in January with 11 Creditors I owe money to. The lowest being $750 and the highest being $3000. All total $16,000. I have been putting money in the “savings” plus paying them their “fees” since Jan 2015 of enrollment. Well, now I have had 4 lawsuits filed against me. (expecting 2 more all with same attorney) 5 with Synchrony Bank and 1 with Capital One. One of the Synchrony accounts we were able to settle as I had enough money in my “savings”. All money as of this month will now be going in to my “savings” as my “fees” to the Settlement company are paid. So now a total of $287 will be going monthly in my savings. I am answering 2 of the law suits this week admitting the debt and stating I had a hardship and have enrolled in a Debt Settlement Company. I am fearful of my outcome with all these lawsuits coming at once and not enough money to settle them and the advice from my Debt Settlement Co was to answer the suits to buy us time. I have not other means of money to settle any of these debts now. The settlement company told me we would deal with each on individually. What usually happens after I file my “answer”? Thank you for your time.
Who is the settlement company you hired?
You often can buy yourself time to settle a debt (once sued), by filing an answer and starting with a convincing defense. But with this many, and the fact that settlements on lawsuits are sometimes done at a higher rate, You may end up with judgments. This can derail a settlement plan all together.
I am not so sure settling was a good option for you. Have you looked into your options with a chapter 7 bankruptcy? Before you settle the first debt I would at least consult with an experienced local bankruptcy attorney. It will help you learn more about the process if you have not gotten informed about it already.Even if you do not file, it can help you to know that you qualify and can file if settlements are not as successful as you had hoped.
Hi Michael!
This January I started a debt relief program with CuraDebt, due to the high amount of money I owe, yet only being able to afford minimum payments (I’d have been paying off well into my 50’s, and I just couldn’t do that). I’d spoken to people who had done it, researched, and this seemed like a good option. Up until January every payment I’ve ever made has been on time- I was not late or delinquent. Into this debt relief program I entered 5 of my 7 credit card accounts. My lowest account has settled as of 1 month ago for around 40-50% of the debt.
The 2 I did not enter into this program were: my oldest credit card with around a $1700 limit, and a PayPal Credit account that has less than $500 owed. I chose not to enter these as I figured I could probably pay them on my own, and they would help my credit not plummet quite as far. I now think this was a mistake because keeping current on the 1 credit card has made me a more desirable collections target. Sad realization for me.) In this program (CuraDebt – who then works with legal firms local to your state – mine is Peak Legal in Utah), I pay a set amount each month into an account, and then that money is used to settle debts.
This weekend my friend received a note from the Constable’s Office requesting I contact them. (I used to live with this friend but have since moved.) I can only assume this is a summons for 1 or more of the 4 credit card accounts I still have that are delinquent. Of these 4 accounts I think I owe around $28-30,000.
Earlier this year I was in a very cheap living situation so paying down my debt slowly both for the 2 current accounts, and the 5 delinquent accounts was doable. I ended up needing to move, and now my living situation is over double the cost before- my rent & utils are around $1100 a month now. I make about $2000 a month that I actually get to keep (after taxes, health insurance, etc). Basically, now I live with only about $200 a month for gas and food after all my bills (rent, utils, cell phone, insurance, cc payments on the 2 open current accounts, and the ~$500 I pay towards the CuraDebt program) are paid.
I only have about $2000 saved that I could give immediately to a settlement, but the 4 accounts are all at least $5k, with the highest being around $11k. So, nowhere near the 50% amount that seems to be accepted for settlements. I own a car that’s around $6000 in value, but that’s it. I have no other assets aside from 401K and some stock. I work full time at a good company, though. So I am scared the debt collector may try for some wage garnishment.
Would you recommend I reach out to this Deputy right away to accept the summons? Once I do this, I will provide a copy to Peak Legal who says they will try to negotiate out of court, but, you really seem to know your business well, so I am looking for some advice as far as what to try and make sure Peak Legal tries, what my options may be, what to expect…
Any help is appreciated!
You can probably look on your county courts website and search your name in the court records to see who is suing you. Post an update with who that is, and the name of the law firm handling the suit. I will be able to offer better feedback with that information.
Thanks Michael,
I searched Utah Courts and could not find my case referenced anywhere. So, it looks like the only way to get that info would be to reach out to the Deputy and accept the summons?
You can do that. The issue is not going to improve until you resolve it, so taking the initiative is not a bad idea.
I called the Constable and left a voicemail. They have not responded. We’ll see what transpires. I’ll keep you posted as soon as I have more info. Thanks again.
Michael, I had contracted with another debt settlement company, sadly, and the negotiating they have done on my behalf has, in my opinion, been pitiful. I am considering pulling my last account (Discover) from them and attempting to negotiate it on my own, or find a local attorney. Since I placed the account with them 1 1/2 years ago, my balance has gone from around $5,000 to $7,000. Wow. The settlement they are proposing to me is basically for the initial $5,000 PLUS their fee (25%), and they are telling me this is the best they can do as Discover has filed suit against me now. I am unable to do this-and unwilling to pay them for such a poor result. I actually will be unemployed at the end of this week. I can come up with around $3500 to settle immediately. How should I (or should I at all) go about negotiating on my own after I pull this account from their ‘services’, should I call the attorney directly? Is this even a viable option for me? Thanks for your input….
Hi Pam – I believe we talked on the phone last week. I would recommend settling with the attorney for Discover on your own. I have a could of pages up dedicated to the topic. One is focused on negotiating Discover debts, and the other is regarding settling when sued.
Calling the attorney for Discover is the first step. Getting them to agree to the $3,500.00 you can afford is possible. That is often the floor for realistic targets in your situation.
Read through either of the pages I linked to above and post questions that come up on each respective page as you the occur.
Hi. I entered into a a program to help with debt with Freedom. I pay $550 a month into an escrow account to pay my creditors. I was making my monthly payments on time until I joined this program. GE Money Bank is now Synchrony. 5 of my creditors are GE Money. I had to sign for a letter today for one of my creditors paypal. Late fees and interest has put my balance at $2,700.00 paypal has charged off the account and an attorney in Wisconsin has it now. The paperwork I got today I have 21 days to respond in writing to the court to this. I entered into the debt program because I owe the IRS $50,000.00 and could no longer pay my credit cards. I needed help in paying them. I just didn’t want to do nothing. I pay a monthly payment to the IRS of $800.00 and a lien put on my house by them. Needless to say payments to creditors were only min and was going deeper. My credit used to be over 700 then when the IRS hit..it went to 542. I live in Michigan and the attorney is in Wisconsin. It’s for $2700. Do you think it’s a good idea to write a response to the court explaining my situation and that I do have this creditor in this Program I’m in and in Active Negotiations in the program. I don’t have any extra to give. I am working…but my checks are all spoken for for at least another year. Between the irs and the debt program I am paying $1342.00 a month. I really have nothing extra…thanks in advance for any advice.
You should contact Freedom Debt Relief and see what they suggest you do. You may have enough saved up on escrow to settle this Synchrony account quickly, or maybe you are close, and just need a couple of months more to use the funds you add monthly, and then settle. You will want to file an answer with the court if you need a few months to pull together the money to settle. This way you can avoid a judgment.
Post an update once you have talked to Freedom Debt, and lets go from there.
Thank you for your advice!
Hi Michael,
I had a question regarding a civil court summons I received in addition to another card that recently contacted me regarding a past debt. I am going to try to make this as brief as possible but give enough info regarding my situation. I am disabled and applied for disability benefits in January 2010 and did not begin receiving benefits until March 2012. Due to the fact I had to stop working in January 2010, I had a great deal of credit card debt to pay off without any income. My parents used a debt settlement company successfully so I decided to use them as well. I stopped paying the cards in late 2009 and paid them money over a about a year in order to settle my credit card debt. They negotiated 2 of the 10 cards. I found out in early 2013 that they basically disappeared most likely due to not having the money to keep up. So thousands of dollars went out the window and I was left with 8 cards I could not afford. I work part-time and receive SSDI. According to my research as I live in NJ, none of my wages can be garnished as my income is just about at the maximum amount NJ allows a person to keep that’s exempt from wage garnishment and I know SSDI benefits cannot be garnished. I have my work and SSDI benefits in separate accounts which I believe you recommended I do. So due to the fact my wages cannot be garnished, how do I respond to the Civil Court Summons or what is the best way to go about this current situation? Can I respond to the summons showing them my income is exempt? As I said I have one other card that verified the debt as well so that could potentially become another issue in addition to the other 4 cards. The statute of limitations is up in Oct of this year so I imagine that is why they are scrambling. Any advice you can give is greatly appreciated. I am looking to handle this in the best way possible. Thanks again.
There is little point to answer the complaint indicating you are as uncollectable as you appear to be. The collection attorney is looking to get the judgment with an expectation that they can enforce it at some point.
How much is the lawsuit for? Who is the plaintiff?
What is the approximate balance of the other account?
Who was the debt settlement company you hired that is no longer in business?
It’s from a law firm in NJ hired by Macy’s to collect the debt. It’s for 2,500. The other letter I got was from a place called Credit Control for Kohls and that one is for 1,350.
I am not able to disclose the debt settlement company’s name as it is a legal matter at this time being pursued by the FTC.
Regarding wage garnishment, I figured I would have to answer the summons in some way otherwise they will enter a default judgement against me. Wouldn’t I have to make them aware I’m exempt?
Read more about dealing with a collection lawsuit, and how to deal with a judgment. You can go on the record as uncollectable if you want, it just typically does not slow the process down.
Good luck with the FTC investigation of the settlement company. I hope they are able to get some money back for you.
I have received a lerrer from a attorney that i haved been sued but have not received a summons
is it to late to get help from dedt relief program
It is rarely ever too late to get help with debt relief. But you do want to select the right type of debt help, and a debt settlement company may not be what you need right now. I would encourage you to contact an experienced debt collection defense attorney.
Who is suing you (you can search your name in the court record to find out if you do not know)?
For how much money?
What is the name of a nearby larger city?
Hello Micheal,
I have a situation, i live in a private house with 3 other tennants. we all use one mailbox. I just came in, opened the box and 3 sheets of paper stapled together says ” consumer credit transaction” and that i am being sued. I live in kings county , new York. It is asking me to report to the county civil court within 30 days. it is dated 6/23/14 today is 7/31/14 they set me up. the original debt was with citicards. the current amount is 2,946.69 plus court fee. How should i proceeded. i cannot afford an attorney.
Look for a local legal aid office for some assistance. You probably were not set up. The clock for responding to this type of thing generally starts from the date they served you. The 6/23/14 date stamp is probably just the date they filed with the court. Then they had to hire a process server, find you, and schedule the work to serve you. But run your concern through the legal aid office you speak to.
In my case, I hired a debt relief agency – Capital Debt Relief – I paid them over 6500 from 2009 to approx mid 2011 to settle on credit card debts for me. One of the credit cards I was led to believe was settled was Citibank back in 2010. I was told that Citi offered 40% of the approx $9000 balance as settlement/discharge which worked out to be approx $3900. As proof, I got a Dismissal without prejudice judgment back in Nov 2010 for this debt. At the time of the settlement i did have enough payments made to the Debt Relief agency to settle with Citi. Now, last week I got a summons that I am being sued for this same amount approx $9000 after I thought that was handled years ago. I have learned that Capital Debt Relief is under investigations and no longer in business. What can I do?
Marty – Do you have any documents, settlement agreements, dates and amounts of negotiations work they provided? Did Capital Debt Relief pay the entire 3900.00, or was your escrow balance short, and payments were not completed?
Hello Michael
Thanks for responding! I have copies of my money order and a copy of the dissmal without prejudice notice from Citi. I did have enough at the time i was led to believe that the debt was settled and even after that made at least $2000 more in payments to Capital Debt, If they didnt pay it then where is ALL my money. I have been trying to contact Capital Debt to get copies of the agreements etc but it seems they are out of business. I do have an application/agreement where it shows 9.95 monthly fee plus program fees (which i was told is for each debt settled and that would be around 10% of each settled debt when the debt is settled). I need full copies of the agreements and I cant get any help from Capital Debt.
Thanks for the details Marty. I have some additional questions that, once answered, will help me get a good bead on what next steps make the most sense for your situation (or at least that I would do if I were you).
What is the name of the plaintiff now suing, and who is their attorney suing?
What was the name of the plaintiff that sued on the Citi Card account back in 2010, and the name of the collection law firm they used?
Did you receive a collection notice, or call, from the current collectors prior to being sued? If so, how did you respond, if at all?
What state do you live in?
Who is investigating the debt settlement company you hired, and for what?
Hello Michael
here are the answers to your questions:
(1) Capital Alliance LLC is the Plaintiff being represented by Stenger & Stenger P.C. (attorney) based in Michigan. (2) Back in 2010 Citibank was the Plaintiff represented by Zwicker & Associates P.C. (attorney). (3) I did not receive a call or notice from the current collectors prior to being sued. (4) I live in GA. (5) I have been told that the attorney general is investigating Capital Debt Relief for fraud.
Michael I have 3 questions for you if you don’t mind; I am in the process of crafting an answer to the suit by Capital Alliance. I believe I have a very strong case. My questions are as follows: (1) Can I demand that the Plaintiff provide proof of purchase of the debt, legal chain of custody, proper standing to sue, and other burdens of proof in my Answer filing? (2) if for whatever slim to null chance the ruling might be in favor of the Plaintiff Can I go ahead and address in my Answer filing the issue and proof of hardship that I will not be able to pay the debt even if the Plaintiff wins? For example, should I provide evidence of what I earn and evidence of what my immediate and necessary living expenses are every month such as mortgage, utilities, child care, etc etc? and (3) at what point can I say, ok Judge please dismiss this case with prejudice as the Plaintiff has no proof, no legal standings, I have proof of payments to Capital Debt Relief, and I believe with good faith that all this was settled years ago as stated before?
Thanks for all your help Michael.
Thanks for the additional information Marty. Zwicker and Associates should have the information about what they did with the debt settlement company you hired. Contact their offices in writing, and via phone. Let them know that you are being sued by another debt collector for a debt they sued you for in 2010, where a settlement was reached by the company you worked through, and where Zwicker and Assoc dismissed the lawsuit when paid. That debt negotiation service closed up, and you need what Zwicker has on file to show the other debt collector.
Mention that you intend to file complaints against Zwicker with the CFPB, as they are responsible for this debt being resold. And file that complaint if you do not get answers.
You are ahead of yourself on the demands for proof and standing in your answer. Those things get hammered out in discovery. And you should not be looking to expose all your financial hardships in a court filing.
Based on what you shared so far, taking any other position than this debt was paid, and is no longer owed, if you are certain it was, would be a mistake in my opinion. You are being sued, and Capital Alliance as well as Strenger and Strenger are going to quickly grind through this process regardless of what you say. You do have to answer the complaint to get the time you need to bang heads about this being paid in 2010. So if it were me I would deny anything about owing a debt, and keep it that simple.
You should talk to your own attorney about all of this, and one with debt defense experience. Check around for a legal aid office near you. See if you qualify for help.
Thanks for all you help Michael. You’ve shed a lot of light on how things work with cases like mine. I did see that the court mentioned in the served papers that if I expect any to show any hardships in paying the debt I should say so at once or something to that effect in the wording.
I will take heed and keep it simple though and just deny the allegations. I intended to mention some of the details regarding the debt being settled thru Capital Debt Relief after negotiations with Zwicker. Are you saying dont even mention that fact in the answer as well?
I think I am somewhat more confident to file this answer after consulting with you. Thanks again for all your help. May you be blessed abundantly.
I would mention the debt is paid to be sure.
I certainly will. Thanks again!
Sooo, looks like I’m going to court now. That being said, Persels has kind of dropped off the planet now that I need them. I’ve tried emailing/calling/etc, but am not getting anywhere. Any advice?
Gary – How long has it been that Persels and Associates have not been returning your calls and emails?
It’s been about 2 weeks now. I have a little bit of money that I can throw at Johnson Mark, LLC (debt collection company that summoned me), but if they don’t bite, I won’t be able to pay them back AND almost seems like it would be in my best interest to look into bankruptcy. I thought about calling/emailing Persels to that regard, but wasn’t sure if that would keep them away even more as well.
gary – I would encourage you to get a grip on the direction you want to go as quickly as possible. A good resource for an experienced bankruptcy attorney in your area would be http://www.nacba.org
Most bankruptcy attorneys will offer a no cost initial consult, so if one wants to charge you for that, move on to the next one who does not. But know what you want to do, like yesterday, and if bankruptcy is it, your attorney will handle Johnson Mark once retained. If bankruptcy is not the direction you take, you need to get on the stick with Persels, or a consumer law attorney with debt defense experience, or seek alternative resolutions. Please do post an update with your progress.
Thank you for the link. I’m trying to get a grip on what is the best plan of action for me, and am doing my damndest to get ahold of Persels. Because, as of this minute, my decision is contingent on what they say. I’ll certainly keep you in the loop. Thank you again.
Awhile back I said that my First National Bank debt lawsuit had been dismissed without prejudice, but I was served again today. Any advice? Seems like I do what I did last time but was wondering if I should do something different since it’s the second go round.
Gary – Generally speaking, your defenses would not have changed. But you should consult with an attorney experienced with debt collection defense about any additional strategies.
Hi, I’m currently attempting to fight a lawsuit filed by CACH against me for an old charged off BOA card. I’ve hired a lawyer to assist, however, I have a question regarding recent correspondence I received from CACH. They sent 3 packets, essentially asking that I provided original documents proving that I don’t owe the debts, and never received the card, etc. They are asking me to admit or deny various claims. My lawyer wants to review the packet, and answer the questions, and she’ll review them. My question is, who has the burden of proof here…CACH or me? They are the ones coming after me, claiming to be owed for the debt, however, they are requiring me to admit or deny various claims. Most of the questions I cannot answer, nor do I have documentation for, since it was so long ago. In addition, it was my daughter that was the one that used the card, and accumulated the debts. The card was charged off in 2012, but since I never really used it personally, I don’t have any of the information that they are requesting me to provide. In addition, my daughter doesn’t have anything either. I’m not meeting my lawyer until later in the week, but I honestly have no idea how to answer these questions. And I don’t know if admitting or denying anything will help or hurt me. And am I really required to provide the information, although they’ve yet to provide any original documentation with my signature that shows that I owe them in lieu of BOA? Any assistance or advice you can provide would be greatly appreciated. I’m just really confused right now. Thanks.
You will want to rely on the assistance of your attorney in order to get the advise and answers you are seeking, but generally:
You are engaged in discovery. This can include interrogatories, which can often mean questions requiring an admit or deny, or additional substantiation. You could also see the same question asked 5 different ways.
Your attorney will assist in the responses. Sometimes your answers are going to come in the form of a question, and sort of throw the issue back at them as relates to proof they have.
So, I went over those statements last night (which were all scrambled up), and found something interesting. I had said that the card hadn’t been used since April/May (which still hold true), but all of these charges started in August, so I guess that’s when my card/card number started being used. When I had called Citi and told them what happened, they told me those charges were too old to do anything about, but now it appears that they were only 3 and a half months old (starting from the beginning) at the time instead of 6-7 months old. I’ve gone back through and highlighted all of the fraudulent charges, should I send them back? Also, if I do that, is there a cover letter/form I should attach to it? Or should I be waiting for the CFPB to do something? Again, Citi just sent me the statements, no response forms.
Gary – If it were me, my next step would be to contact the sheriffs office and file a police report – regardless of how you were advised prior. And yes, I would want to prepare an affidavit outlining the facts and the fraud charges in order to provide same to Citibank.
Citi responded via the CFPB and pretty much said that because I did pay for something with said card (I realized I had done so when I went over my statements) that the rest of them were valid, and unless I got back to them within 30 days showing something different, I am being held responsible for all the debt accrued.
Gary – This is why I would file the police report and craft an affidavit about the identity theft. Those 2 items would accompany my response if it were me in your shoes.
Ok, I’ll file the police report today. What’s the best way to do the affidavit? Is there somewhere online I can go to find out how to do that?
Here is an FTC form for identity theft: https://www.consumer.ftc.gov/articles/pdf-0094-identity-theft-affidavit.pdf
So, I filed my police report and filled out the FTC form like you said, but before I did that, I emailed my representation from Persels and Assoc. He told me that I just needed to file the report (which I did) and I didn’t need to do anything else. I told him that the letter from Citi stated that I had 30 days to reply, but haven’t heard anything back from him yet. Do you think I should just mail the form in with the police report in it?
If it were me I would send the report and form in with a cover letter clearly referencing the chronology of events to date. I know that may sound redundant, but I would have a summary ready to copy and paste at will.
So, after I did all of that, the lady from Citi called me and told me she didn’t know how someone could have used my cards around town without my knowledge. I told her the same thing I had told her before (the truth), that I don’t know how someone could have gotten my info, much less used it. She told me that I needed to send her my statements again, and that their security department was going to take a look at it. That was about 2 and a half weeks ago, but I haven’t heard anything more. I’m assuming their security department is going to check and see if they can get videos to see who was using my card? If they get that, will they forward to the police to investigate? What do you think my next step(s) is? Just hurry up and wait? From what I’ve read, this seems to always be a long drawn out process, but it’s just so frustrating.
gary – It depends on how good you are at waiting. I am pretty good at that, but on something like this, and after all that you have been through, I would call her about once a week to see if there are any updates. But that is just me.
So, I’ve tried calling that woman from Citi twice and left voicemails both times, but haven’t heard anything back yet. Do you think it’s a good sign? I’m pretty good at waiting myself, but am anxious to get this over with.
I would not read anything (positive or negative) into her not returning the call.
On the First National Bank of Omaha account (the one that is hopefully being dismissed), they say I owe $4490. I’m almost 100% positive that card should be completely paid off minus the outrageous fraud and late payment charges, but am unable to get my statements at this time. On the Citi Bank card, they say I owed them $4608, but of the legitimate purchases, I’m in the $400-$500 range at best. In my naivety, I had sent both creditors statements with the fraudulent charges circled, but can no longer access my account online. Even the balances that I’m taking credit for may not be entirely mine; I just know that all purchases made between April and November were not mine, but there were some small purchases made shortly before that, that I cannot recall if they were made by myself or not.
Gary – I was afraid the difference would be that stark.
I like Care One as a company in this industry. But I would not have taken your file. I would have preferred you file complaints with any and all bodies that care about this type of thing instead, and resolve these issues with assistance from regulators.
How much of all that transpired with Citibank and Bank of Omaha, after you found out what happened, can you document with accuracy? Do you have notes of dates, numbers called, who you spoke with etc?
I would be able to document pretty accurately if I was able to get my statements. Like I said, I know for a fact that all transactions that appeared between April and November of 2012 are not mine. There could be some before April that weren’t as well, but I have already told both companies I would take responsibility for those, because I can’t remember if they were mine or not. I have the dates that I had sent my letters in (along with copies of said letters) and the phone numbers that I called, but I couldn’t say for certain what days that I called them. I would honestly say, though, the calls wouldn’t have been more than one day before the letters were written. What bodies that care about these things are you speaking of in? Who are these regulators that could assist me? Are they anyone that can still help?
gary – I would encourage you to gather up your notes, outline a clear chronology of events first, and then file a complaint with the CFPB. The banks will have personnel assigned to the CFPB complaint portal. I expect you would get some form of correspondence back within 2 to 3 weeks.
Go here to start the complaint process: https://www.consumerfinance.gov/complaint/.
Post an update with anything that results from that effort.
So, I submitted a claim to the CFPB, and they apparently sent something off to Cit. The CFPB emailed me back last Friday saying that I should hear something back from them in the next 15 days or so. Today, I received a packet via UPS from Citi with statements from 2012, but no cover letter or anything. Should I just wait to see if the CFPB sends me something? I have no idea what I’m supposed to do with the packet I got from Citi. In my complaint I told them that I could no longer get access to my statements, but like I said, this packet didn’t have any cover letter or anything in it. Any advice there? Hurry up and wait?
I would start to pour over those statements and identify all charges related to identity theft as a start. Post an update with what you hear back and lets go from there. Citi may think this resolves the issue, but I do not want to jump to that conclusion.
In April/May of last year I found out that not 1, but 2 of credit card numbers were stolen. I’m guessing it happened through the trash, since both of them started being used around the same time. I had thrown out those two cards in an attempt to live credit card free, so both of my online accounts for First National Bank of Omaha and Citi automatically deducted $50 out of my banking account each month. In November of that year, I looked at my statement for the first time in 6 months, to see how close I was to paying it off and was alarmed to see that it had been maxed out! I called First National and they informed me that I needed to send in statements showing which transactions were fraudulent and to handwrite a letter explaining what was going on. Because of my paranoia, I checked Citi and found out that credit card was almost maxed out as well. Both of these should have been really close to being paid off. I called to explain the situation to them, and was told to do the same thing that First National told me. A few weeks later, I called back to see what the progress was, and was told that these charges were too old to dispute and they wouldn’t do anything about them. At this point, I tried to file a police report, and the sheriff told me that, unless I knew who it was (I still have no idea), there was no point. Since I could get no help with this, and didn’t think it was fair to pay the complete amounts (totaling close to $9000 now), I decided I would try and get help elsewhere. I went with a debt consolidation company, who told me to stop paying any money to either credit card company, and said they thought they could get those numbers cut in half, maybe more. 3 months ago, I was sent a summons notice from Johnson Mark LLC, saying that I had to pay the entire amount. I had a litigation response put together, notarized, copy stamped, etc. About a week later, I received a discovery request. I filled that out, and again, explained what had gone on with the identity theft. A few weeks after that, I received an Identity Theft Report to fill out. I filled that out as best I could (neither of the credit card companies online statements are available), had it notarize and again, sent it off. After that, I was received a letter of a Notice of Intent to Dismiss from the courthouse, that said the plaintiff had 17 days to take re-file the case. I called the other day, and as of now, they haven’t filed anything. I’m being told, however, that what happens is; the court sends papers over to Johnson Mark LLC and at that point they can refile again. So I guess that’s just a waiting game? In the midst of all this, I’ve been doing some more research, and it seems like a few things might end up hurting me. If there is a fraudulent charge that isn’t reported for 90 days, am I still responsible? Also, I thought I read that, if I continued payments on statements that had fraudulent charges on them, I’m assuming responsibility for said charges? Last but not least, yesterday I heard that if I went through a debt consolidation company, I’m also assuming responsibility for those charges. Is that true, what can I do? Citi hasn’t sent me a summons yet, and the consolidation company is supposedly working with them too, but I assume it’s only a matter of time. What should I do there.
gary – I do have some feedback to offer, but want to get a few more details from you in order to firm up what I have to share.
When did you first learn of the billing issues? After learning of the charges on the credit cards, and the identity theft, how long was it before you contact the Sheriff?
How long have you been enrolled with the debt consolidation company? Who is that company? Did you explain the charges that created those credit card balances were the result of identity theft?
Post your answers in a comment reply and lets go from there.
I learned of the billing issues in late November of last year, which was around 6 months after they started happening. It was December when I attempted to file a police report, because after I did what the credit card companies asked me to do, I waited a few weeks to hear back from them, and didn’t know I was supposed to do that in the first place. I had explained to Careone what had happened, and they pretty much told me, yeah that sucks, but it happens, we shouldn’t have any problems getting those cut in half.
Saturday I received a letter in the mail stating that case had been dismissed without prejudice. Careone said that they could re-file, but that rarely happens. Is that true? It seems like I’m getting a bit of a runaround with these guys?
gary – Glad to hear the lawsuit was dismissed. It is true that dismissal without prejudice means a suit to collect could be refiled. But given the circumstances, I too find that unlikely.
My issue is that you are negotiating a balance on those credit cards that were the result of identity theft. But it may be that the settlement company will get the balances reduced low enough to result in you paying back only the legitimate charges (depends on how much the thieved rung up).
What do you think I should do in regard to the other credit card company (Citi) that hasn’t, but I’m assuming will, send me a summons for the same thing? Right now Careone isn’t being very proactive with that fraudulently charged account. I’m guessing it’s because they would rather have these settled so I would still have to pay them money. Like I said previously, I had told Careone about my circumstances and they treated it like all I could do was to have them negotiate my debt down so I would pay less. It seems to me, that if these were fraudulent charges, I shouldn’t have to pay back any of that, legitimate ones aside, of course.
Gary – Can you post a breakdown of each account listing balances owed you know to be the result of charges you made, and balances that were the result of charges made after you stopped using the cards and tossed them?
What else can I do to settle this debt?
Settling with Portfolio Recovery associates is usually a fairly straight forward process. They started getting weird with sending out settlement letters a couple years ago. To the point they would not even send them to a settlement company any longer. They want to send emails, or letters after the fact, but that just does not cut it. I suspect their stance on this will change shortly due to some laws taking affect in California beginning in 2014, and heightened awareness from federal regulators about collection practices from all companies in general. None of which helps you now of course.
While PRA is fairly easy to negotiate with, and offers some good settlements, the letter needs to get kicked loose. You can stick to your guns until they do, but I have a couple questions before you decide to do that.
When was the last payment made on these accounts?
What state do you live in?
Hi Michael,
For Portfolio Recovery Associate I think the last payment she did was June of 2009 and she can’t remember when was the last payment she made on the others.
We live in seattle wa.
Thank you very much for the help you are giving us, We greatly appreciate the assistance we are getting from you, You and your site gave us hope specially our relationship between me and my wife, This bad credit account is giving as so much stress and it gets into our relationship most of the time. I really want to clear all our bad credit so we can start looking forward and start a business. please a guide us.
Napolean – Check out this comment exchange with a reader settling with Portfolio Recovery Associates from earlier this morning. She was sued by PRA, but my feedback in the comment string would be the same here.
Hi,
Im trying to negotiate a debt settlement for my wife account with all the collection agencies that is listed on her credit report, We are not being Sued or on judgement, I just want to negotiate to pay 50% to 60% of her balance But the collection agent want me to pay by credit card or our personal check by phone and they will send me a letter that they have recieved my payment.. which i refused I told them i can pay by money Order, cashers check or by western union right away if they could send me the agreed amount or the bill I will pay it in full. my wife total bad debt as listed on her credit report is less than $3,000. I even told them if they send me the bills i can even pay 75% of the total amount she owes but still they insist that They can take the payment now on the phone. How could i send my payments if they won’t even give me their mailing address. i’ve called them 4 times(diversified consultans and porfolia recovery association).
Napoleon – A good target for settlements with both of those debt collection agencies is 50%, and can often be less. If they do not want to part with a letter outlining the agreement, it is best to not part with the money. There are instances where someone needs to get a deal done for a time sensitive purpose, and there are ways to work around not having the letter upfront, but that does not make me like the options more than getting an agreement you can review and approve of before paying. See this report on settlement letters for more details.
When if comes to paying your settlements, I am not a fan of using Western Union at all. You should use a payment method you can track with next to no effort. Such as using your own bank account, or even a credit card. When I say use your bank account I am referring to having planned ahead by opening up a separate account at your current bank exclusively for the purpose. Here is an additional report about paying your settlements.
Hi,
Thanks for your help. I met with a bankruptcy attorney and did the means test for filing chapter 7 bankruptcy, I qualify. Debt settlement company kept pushing me off and told me to keep calling back. They also said they would send me paperwork as to the Summons but I still have not received it. I cancelled this program since I will be filing bankruptcy since I have now received 2 additional letters from 2 separate lawyers for 2 separate accounts.. I really believed debt settlement was the right choice but in my case it was not. Michelle
Thanks for posting the update Michelle. Debt settlement works for many people, but there are financial situations where you can just be past that point. And even if settlement is a great alternative, chapter 7 provides a quicker and less costly path to relief than debt settlement. I am glad you found what is going to work for you!
I appreciate your response… The program is with freedom financial.. 33,000.00 debt 44 months monthly payment 550.00 estimated payoff amount 24,000.00… I have 2,100 in account.. I was about 2 months behind when I started program.. These are the only 2 accounts at this point that I have received summons for..Plaintiff is Wells Fargo and attorney is Naderpour & Associates. Ft Lauderdale is larger city near us about an hour away. I was told by Freedom Financial they deal with this law office a lot. The law office only contacted me once in June which I sent to Freedom they never offered anything as to settle with them and then I received this. Freedom had told me this was a priority and they contacted law office but never heard back from them. I was also told by Freedom they contacted all of my accounts so they are aware I am in this program, I was also told to ignore the calls otherwise companies would not deal with Freedom. I believe I answered all of the questions, Thanks for responding I don’t feel as lost as I have been feeling.. 🙂
Freedom Financial Network does not charge advance fees for debt settlement or negotiation, so while you are not at a loss for giving that a shot, signing onto a 44 month debt settlement plan would likely have created lost opportunity. But let me hit the lawsuits first, as that is the priority.
Unless you can tap a sizable resource (or multiple smaller ones), settling the Wells Fargo accounts for less than the balances owed is unlikely. You may be able to consent to a judgment and get some reasonable monthly payments, but that will likely include paying the full balances. Using the 550.00 you are putting in escrow with Freedom debt relief now, and consenting to a judgment and payment plan, would take about 45 months. Not a great plan. Are there any cash resources you can tap into that would help you settle these?
There is also the other 9k in credit card debts that are part of your plan with the debt settlement company. You are at risk of being sued on those while contending with the current Wells Fargo lawsuits.
Freedom debt relief does not offer debt collection defense to my knowledge. If you want to defend against the suit with confidence you will want to connect with an attorney that has the experience you need. I sent you an email with contact details for a few attorneys near you who do this type of work. But you need to consider the costs and benefits here as well. Hiring the attorney to defend the suits has a cost. You could use the money that Freedom has you depositing into escrow for this. But to what end? Defending credit card lawsuits if it is the original creditor is suing (Wells in this case), is a mixed bag of results. If it were a debt buyer suing, the bag would be less mixed, and I would be able to convey a larger level of confidence in pursing the defense strategy with the higher likelihood the cases can be dismissed. But with Wells Fargo being the plaintiff themselves, I am not a fan of approaching your defense to the lawsuits as a means to get them dismissed. Instead, it may be more of a strategy of buying time. That time may help you come up with ways to accumulate money to settle. But if your only ability to raise money is the 550.00 a month you are saving now, it is not the most economical approach.
Florida has some really good consumer protection laws. If you do end up with a judgment, and if you are head of household, your wages cannot be garnished. But your bank accounts are at risk of a levy. That can be navigated with some creative methods until the judgments can be settled. But here again, if only saving up 550.00 a month, that is going to take years.
You mentioned you were trying to avoid bankruptcy. But your situation, based solely on the numbers you have shared so far, suggest chapter 7 bankruptcy is the quickest and most economical choice. The national average cost of a chapter 7 is 1800.00. The money you have been setting aside in the Freedom Financial program will cover this cost. The bankruptcy filing will put a stay on the Wells Fargo collection lawsuits, and would likely discharge those, and your other credit card debts entirely. Your bankruptcy could be over in 90 days.
Unless you have some other cash resources to tap, or really good financial reasons to avoid bankruptcy, if you qualify for chapter 7 it looks to be the better option. You would be out of debt in a matter of months instead of 44 or more. And for a cost of less than 2k instead of 24k quoted by Freedom Financial (which likely included their fees).
Here is some additional reading I would recommend for your situation:
Settling when sued.
Settling judgments.
Debt relief – your credit score – future access to credit.
What are your thoughts given this feedback? I can offer a good deal more about settling if you do have additional resources to tap other than the 550.00 monthly.