How do I get out of this credit mess?
August 11, 2009 2:36 PM   Subscribe

Credit collection agencies. Should I call and make an offer? Help me get out of this mess.


Please call me Maxed. Replies can go here or to

My wife and I have had some difficult times over the past few years with credit cards. A lot of it was our fault, some of it was due to circumstances beyond our control. Regardless of fault, we’re maxed out, in collection, and watching our credit rating sink faster than we can blink.

Obviously, we want to repair our credit and do the right thing. In the mail, I have received two letters that appear to be from collections agencies affiliated with the credit card company.


Letter #1:
From Client Services, Inc. re: Citiban Professional MasterCard. Balance due: $7,056.28
“I am forwarding this letter to confirm that our client has agreed to accept $2469.70 as settlement in full for the above obligation. This offer is valid provided the full amount of this settlement is received within 10 days from the date of this letter. If the amount written off is equal or greater than $600, our client may be required to report this amount and issue a form 1099-C.”

Letter #2
From Pentagroup Financial re: Citifnancial Mastercard, Balance due: $3600.15.
“The account listed above has not been paid and has been placed with this agency for collection. Please remit the entire outstanding balance using the return envelope provided. Unless you notify this office within 30 days after receiving this notice that you dispute the validity of the dbet, this office will assume the debit is valid.”


Okay, here are my questions.

1. My wife and I cannot afford to pay the full $2469.70 from Letter #1 in one fell swoop. We could probably do it in 6 payments of about $400/month. Do I call them and make this offer?

2. Could I call and make an offer to Letter #2 collection agency as well?

3. Should I even call either of these two firms in the first place? A friend told me (probably incorrectly) that if I call, I’m legally admitting fault and somehow on the hook for more money.

Any suggested courses of action would be most welcome here. Especially ones where I am told what to say to these people on the phone. I don’t negotiate well, and frankly, am very intimidated by this. We want to do the right thing, but I’m scared of goofing it up and making more of a mess than we’re already in.

- Maxed
posted by anonymous to Work & Money (12 answers total) 2 users marked this as a favorite
Retain a lawyer. Don't solicit legal advice from Ask Metafilter (or well-meaning friends).
posted by dfriedman at 2:52 PM on August 11, 2009 [2 favorites]

I am not a lawyer, nor am I your lawyer, nor do I have any legal or monetary qualifications greater than that of an average layman, and I disclaim any liability for this freely-offered advice being in any way, shape, or form wrong or damaging to you.

That having been said.

(a) The Form 1099-C thing means that the write-off of $4,586.58 for your Citibank card means you will have to count that as income on your 2009 tax returns. FYI.

(b) Re: #1: Most likely, they will NOT be amenable to the six-payment plan, but who knows. The reason I say this is that the reason that the company is willing to write off $4,586.58 of your debt is because they don't think they'll actually ever get the full $7k from you. So they're willing to forego that in lieu of you giving them $2.5k now. If you don't give them $2.5k now, then they don't get their benefit out of the deal. With no benefit out of the deal, they have no incentive to agree to the $4.5k discount.

(c) Re: #2: If you've got the money for a lump-sum payment to them, worth a try. But it sounds like you don't.

(d) Re: #3: I have utterly no idea. And it's a good question that either a lawyer or others will have to address.

Good luck.
posted by WCityMike at 2:59 PM on August 11, 2009

In addition to legal help, you can research this on
posted by andreap at 3:08 PM on August 11, 2009

get a lawyer who specializes in debt. they do all the negotiation and dirty work for you. mine has saved me, literally, thousands of dollars.
posted by violetk at 3:40 PM on August 11, 2009

I think this issue arises frequently on ask.mefi, so search the archives. If you can pay citibank off great. If not there are great dangers involved in paying debt collectors. I repeat, debt collectors are so dangerous, you might benefit more from never paying anything.
posted by jeffburdges at 3:41 PM on August 11, 2009 [1 favorite]

Understand that if you do not contact these firms you run the risk of them seeking judgment against you for the full amounts owed and taking aggressive action to enforce those judgments - including freezing bank accounts and garnishing income.

You don't mention whether these are the only accounts on which you are in default. If they are, then you can probably negotiate a sustainable repayment plan. If you have other debts over which collection action is likely to be taken in the future, then it would be advisable to consult a financial counsellor (I'd strongly suggest using a not for profit financial counselling service as many of the commercial ones are extremely predatory and don't actually end up resolving the matter) before making any offers to your creditors. If all you owe is these two debts, a debt consolidation loan might be an option for you as the combined total is relatively small.

One thing I have noticed on the various credit forums is that Citibank debts seem to go to judgment quite often - you can't afford to assume that you won't be sued.

If you do contact these firms yourself, be careful what information you volunteer. As a former credit analyst, I could tell you some horror stories about information which debtors gave me which made me decide to seek judgment rather than accept a repayment offer. Try to keep the conversation limited to what amount you will pay and when - any extra information you volunteer about your financial situation could work against you, even if you think that information is innocuous.

Remember that the people you're dealing with are interested in getting as much of their money as possible from you as fast as possible and that they deal with about 80 debtors a day. They really aren't interested in whether or not recovering their money inconveniences you and they will usually try to get you to offer them an amount similar to what they would be able to obtain under a garnishment order - whether you believe you can afford that amount is irrelevant to them.

I understand that this is stressful and intimidating for you, but if these are your only debts then you are in a very manageable situation, even if it's a somewhat uncomfortable one.
posted by Lolie at 3:50 PM on August 11, 2009

Before you run off and get a lawyer, this is still very manageable by yourself. My personal experience is from the amounts they want you to pay, you will have to pay out as much for a lawyer. In essence doubling what you could've paid.
CreditBoards has hundreds of stories and how to's from people in all kinds of situations. Go there, read up.

P.S. Correspond with the collectors through mail. YMMV on who you talk with on the phone, and sometimes at the slightest mention of not doing what they say, they may automatically default to "Fine! We're going to court!"
P.S.S. Get a receipt.
posted by P.o.B. at 5:47 PM on August 11, 2009 [1 favorite]

Junk Debt Collection Alert!

Are these on your credit report? My guess is they are not. Why? The first is from one of the largest "Junk Debt" buyers in the country: Client Services, Inc. These debts are usually A) Older than 7 years so not on your credit report and B) Past the statute of limitations on collection of debt (that's a state-by-state thing - in my state it is five years).

These third party junk debt buyers purchase these debts for next to nothing because they know they have no legal standing for you to pay the debt, long charged-off by the original creditor. They have only one thing used effectively enough for these outfits to make millions - FEAR. They send letters that look very legal and remind you of your "obligation" (which your state probably no longer even recognizes) and they have ONE ace up their sleeve: your response. If you respond and acknowledge this debt to them or pay them a single dime, the debt is "re-aged" and you now legally owe "Client Services, Inc." as if it's a whole new debt.

I know nothing about Pentagroup Financial. They may - or may not be - junk debt collectors.

These are very different from legitimate debt collection agencies attempting to collect recent defaults on credit cards, loans, etc.

Look up Junk Debt Collectors on Google and you'll learn all you need to know. Including their underhanded lawsuit filings that would be thrown out if people only showed up in court! They make huge bucks off people who fail to show and have default judgments ruled against them.

Personal opinion: junk debt collectors are some of the lowest slime of capitalist predators in America.
posted by Gerard Sorme at 6:03 PM on August 11, 2009 [3 favorites]

Agree with Gerard. From the surprise that seems to in your response, before you write or call anyone, pull your credit report and make sure these are still viable debts less than 7 years old. This is especially important to check into if this is out of the blue and you have not received many phone calls or previous letters. As I am on no way a lawyer, once you figure out this information, you need to talk to one. Bring your credit report ad your letters. There are legal aid lawyers and others who might do this for you pro bono.
posted by itsonreserve at 9:55 PM on August 11, 2009

Seconding the reference to the Consumerist. Check out their posts tagged "debt collectors", and browse around for other great info.

Nthing contacting a lawyer. An investment in a competent lawyer will probably save you a lot of money in the long run. Metafilter is not a good lawyer.
posted by Jupiter Jones at 9:25 AM on August 12, 2009

I want to ditto Gerard and itsonreserve and encourage you to check your credit report. IANAL, but I have some experience in this area and they are correct about the statute of limitations on collecting debts. Once the debt has reached the statute of limitations it no longer appears in your credit report and they are no longer viable debts for collection. The statute of limitations is no longer than 7 years, but depending on the state, may be shorter. In Florida, I think it's five years.

That said, I have a vague memory of hearing that even after a debt has reached the statute of limitations, a creditor can *try* to collect the debt and take you to court. If you do not show up to point out that the debt has reached the statute of limitations, the court will award in the collector's favor and it becomes viable for collection again. Like I said, IANAL, but keep an eye out for any true legal documents (threats on paper do not count) so you can exercise your rights. I'm pretty sure I heard about this on the Clark Howard show, but regardless, here is a link to some archived show notes that might help. About a third of the way down is a blurb about zombie debt.
posted by Carhart at 2:02 PM on August 12, 2009

I didn't get to the point of collections being involved but you may be able to get some help/advice from They helped me get out of a *lot* of credit card debt. I was on the edge of missing payments when I called them.
posted by getawaysticks at 8:02 AM on August 13, 2009

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