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Hello Again, I asked you a question on Wednesday, June 26, 2013 10:35 PM EST about debt settlement for a company that refused to settle. I kept trying but the "loss prevention dept" kept wanting me to send income and budget info. They finally charged off the debt last week ($5700). I sent a settlement offer for 40% this week, but I was sent a letter from the "recovery department" threatening to sue me if I don't pay 100% of the unsecured account. Here is part of my last settlement letter argument:" If ###takes me to civil court, it will incur legal costs that would likely exceed the loss from settling this ... ###'s risk profile would also increase. If ### XXXXX file a civil court case against me, then the legal fees will immediately double or triple. If the ### XXXXX a default judgment, then it can garnish my wages. My employer cannot fire me if all I have is a single wage garnishment, because that would violate federal law. This is provided I'm not laid off by (know local employer) in their staff reduction initiative. The civil court expenses would likely exceed the judgment amount, if you decide to sue me. Small claims court would allow you to recover no more than $3000, and although your cost is less than civil court it would still be more costly than settling with me. "
I do own a home but it's treading water right now with a 1st and 2nd mortgage. The creditor that I'm trying to settle with holds the second mortgage. I have a job. I did not pay the co-signed student loan payments and they are 4 months past due. (neither did my daughter) I was trying to pull the money together to pay this creditor a settlement. I did pay all my other debts, mortgages, and car payments so they are current.
You mentioned before that I may be better off settling with them in court if they sue me. How would that work? Would it be worth it for the $5700? I don't have the whole 40% now because I used part of it to pay some bills. I would let a couple lapse for a month or so to get this account settled.
How should I respond to the "recovery dept" now that it's charged off? If they are still trying to collect the debt, is it really charged off?
At this point, advise them you can pay 40% only, if it goes to collection or they try to sue you, in Court the Judge will usually force them to offer you something to settle the matter, you have to make sure you file an answer to any lawsuit,
This should give you several months as well, also, if you are in debt, I would consider a bankruptcy as well, that would help you with all your debts, and mortgage. A chapter 13 would reduce all your unsecured debts, so you can pay your mortgage, that may be a good option for you. In fact you may not have to pay the credit card debts more than 5% if you qualify
I saw a bankruptcy attorney at the beginning of 2013. He said that I am borderline and would have to repay all unsecured debt and just get a payment plan with Sallie Mae. That's why I decided to try to settle the larger unsecured cards. I targeted 5 accts and this is the last one. The rest are settled around 90 days.
I want to call them and say the following: "Look I know you can sue me, but how much more will you get than the 40% I'm offering right now. If you sue me it's cheaper for me to file chapter 13 and that risks putting the 2nd mortgage into an unsecured category and you may lose that too."
Once this is done, I will be in a better position to pay the Sallie Mae and maybe even pay down some principle. I will have just a couple of credit cards to payoff and they are both around $2000 each and I can get rid of them within the year. I want to hurry up and get this done since I might be in a position to accept a buyout offer from my employer for 2014 (just announced last week)
I appreciate your help.
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