Best way to handle this summons?

July 14, 2012 6:00 PM

Any chance to settle with a collections agency once I've received a summons to court?

Several years ago I got a small limit ($2k, I think) credit card from my bank because I couldn't afford needed dental work. Used the card for a while, was paying it down. Bank got bought by another bank. Missed a couple payments but had serious problems trying to find a contact at the new bank to help. Balance at this point was about $1400, about $1100 mine and $300 in fees (or more). I tried for a while to get someone to help me with it and finally just ignored it, was unemployed about a year. (Bad move ignoring it, I understand.)

Ignored initial collection agency. Next one is more serious. Got lawyerly letters at work. Told them I needed to see proof of the debt. They got back to me about a month later with all the details of the debt. (Damn!) Then a couple weeks after that (yesterday), someone came to work with a summons. I did not sign it, because it says "Defendant's home address:" and lists my work address. I said this is wrong. He said well you don't have to sign it. I said fine, I won't sign it, and he left it with me.

Anyway, I know they probably paid very little for this $2160 debt. 10%? I know people say "pennies on the dollar". So here I am, with a summons to appear in mid-August at a court date. Is it still possible for me to make a settlement offer? I was thinking of offering half. The summons says $2160 +costs. (No clue how much court costs might be.)

My SO makes decent money (but we have almost no savings and don't have loads laying around by any means) and has offered to pay it, clearly prefers to avoid extra costs added to it, and ideally would prefer we try to get a much lower settlement amount. I make $600 working 30 hrs/week. One check every month goes to my student loan which has been refused for income sensitive repayment, and is slightly more than one full week's take home per month. (I don't foresee being rid of it before I'm dead.) Normally I can pay for my own stuff but I know that dealing with this debt now is the only option. So.

tl;dr Got served with a summons from collection agency for a $2160.00 old credit card bill +costs. Any chance they will still settle?

posted by anonymous to work & money (7 answers total)

Yes. Most of the time if you call the law firm/CA, they will work out a payment plan and cancel the court date. If you can't afford their settlement or payment plan, go to court and tell the judge you can only afford $X a month.
posted by KogeLiz at 6:23 PM on July 14, 2012

I disagree. Do not just call. Answer the complaint. If you do not, then they will default you and enter a judgment for the entire amount.

Talk with a lawyer, even if you will represent yourself. It may cost $100 for half an hour of time. You will probably hear advice like this: Answer the complaint - and deny that you owe the debt. Make sure you plead the statute of limitations as an affirmative defense.

Then appear as scheduled and talk with them.

Yes, they will negotiate with you. A payment plan is good. If you offer to plunk down a portion, maybe 40%, in cold cash within 7 days, very often that will satisfy them. No guarantees here. You are playing the odds. So are they. Over 90% of the people they sue do not respond, and have judgments entered against them.
posted by yclipse at 6:56 PM on July 14, 2012

They will ask for your bank account numbers. Do not give them your bank account numbers.
posted by caclwmr4 at 7:22 PM on July 14, 2012 [2 favorites]

yclipse is right about answering the complaint and default judgement and the lawyer!

They filed this suit to force you to negotiate. They want to avoid the expense of fighting you in court. Get a lawyer to negotiate for you, unless you are very very savvy.

Everything you say to them is admissible in court. From the way you asked this question, I think you need a lawyer to negotiate this.

- I know someone who went to court, represented themselves, pleaded poverty, and got the judge to make the collection agency accept $5 per month to pay down the debt. No kidding.

- Odds are if you could offer them a chunk up front through an attorney ($1000? $1500?) they might settle out of court. I don't think they would accept a payment plan, but you never know. A lawyer knows, though.

- Likely you can end this without paying the full amount, but get your ducks in a row before you attempt this. Low ball, low ball, low ball.

- The classic move here is for you or your attorney to request they show proof of the debt.

Google this. It is a possibility this collection agency can not prove they legitimately own the debt now themselves, or that it is legally-speaking your debt - these types of collection agencies are super shady - they may have filed without proof of a debt other than a statement by one of their clerks stating in writing that the debt is yours (ask me how I know this!) An attorney - or- pulling the file from court yourself + googling - MIGHT help you knock this lawsuit out of court if they do not legitimately hold your debt (which you should never ever in writing or verbally acknowledge is yours in the first damn place...)

- When this is all said and done, you want some kind of written statement this debt is Paid In Full. You can then submit this statement to credit agencies, should the original debt or the remainder end up on future credit reports thanks to predatory-type collection agencies. Yes this happens. Yes, this is the type of entity you are facing right now.

good luck.
posted by jbenben at 11:03 PM on July 14, 2012

Oops. I see you asked them for proof of the debt, but your lawyer might still find problems with their "proof."

Lawyer.
posted by jbenben at 11:07 PM on July 14, 2012

Where are you? At least in my jurisdiction there are free legal resources to help people with consumer debt.

The friendliness to consumers can vary a lot from place to place and judge to judge. I saw one woman tell the court that she wanted to pay the debt she was already being sued for but she was currently paying off another card, and she wouldn't be able to start payments for another 6 months. The court gave her and the company another date to come back 6 months later. I got the impression she could have got a year if she asked for it. I've also seen companies accept settlements for tiny fractions of the original debt - in court.

This is where it would be helpful to have someone to advise you about what's realistic. But once they've established the debt (which they may or may not have done already, the court may not be as satisfied with their proof as you are), you might as well as ask. The more you can give up front in a lump sum, the bigger discount they're more likely to give you. So for example, you could say that it was a $1400 debt (before fees), and offer to pay $400 lump sum to finish the whole thing. In some cases that may be ridiculous and in some cases happily accepted.

There are some pitfalls. If you agree to a payment plan but then mess up at *all*, one payment a day late or a dollar short, you may be back on the hook for the entire amount (debt plus fees) immediately garnishable against your paycheck or tax returns. So only agree to something that you are positive you will be able to keep up.

Also, you may need to be careful about the language of the settlement you get, to ensure that whatever you pay really takes care of it, and even possibly that they will clear their claim off your credit record.

This is why it could be so so helpful to you to connect to a local consumer debt legal resource - not a commercial exploitative debt consolidation service, and maybe not even a legit nonprofit debt counseling service, but actual legal advice.
posted by Salamandrous at 10:59 AM on July 15, 2012

The answer to your short question "will they settle" is undoubtedly "yes."

My wife is an attorney at a law firm that does largely collections work. The amount that she is authorized to accept to settle a debt depends on the client/creditor; sometimes it's 85%, sometimes 20%, but it often falls in the 60-70% range or so. Their standards often relax if you can prove to them that you CAN'T AFFORD to pay more. It doesn't always work that way, but it may be worth taking a pay stub and student loan bill to court on your summons return date.

As others have said, you don't want to get defaulted. Either file an Answer (preferably through an attorney) or show up at court in accordance with your summons. The fact that someone handed the summons to you means they effected service properly -- the fact that you didn't sign the summons won't matter.

Standard caveats: INAYL, TINLA
posted by craven_morhead at 11:37 AM on July 16, 2012