Hope me dig out of this hole!
February 3, 2012 8:26 AM   Subscribe

Settling with credit card company and dealing with debt collectors. Hey, my husband has not been able to work for a few years and we stopped paying on our credit card bills over a year ago. One of the companies is getting really aggressive (calling me at work, talking to the receptionist, etc.) so I feel that I need to take action.

I would like to offer them a settlement amount. In your experience, would they accept 30%? I don't want my starting offer to be too high since I have other card companies just around the corner. If they take me to court, will I have to pay the whole thing?

I have some money in the bank from my bonus in December. Should I take that out and put it in my mattress so they can't get to it? Part of it is an emergency fund and part is savings for things like gifts for the kids (birthdays coming up soon).

Should I negotiate over the phone with them? I would get any agreement in writing before I gave them the money.

thank you
posted by anonymous to Work & Money (13 answers total) 11 users marked this as a favorite
If these are debt collectors, please read this article in full before doing anything else.
posted by zizzle at 8:38 AM on February 3, 2012 [5 favorites]

You might want to start reading or listening to Dave Ramsey. I think he's got good advice, and I just skip the religious part.

Never give your creditors your bank information. Do try to negotiate and get everything in writing.
posted by Ideefixe at 8:58 AM on February 3, 2012 [4 favorites]

Is your husband able to go to the library? Can you find time? Your state's attorney general office and other organizations may have, at the very least, some FAQs to help you. A good librarian may be more helpful in finding these resources than solo Googling. Also, if there is a law school in your city, find out if they have or sponsor programs that can advise you.
posted by Lesser Shrew at 9:07 AM on February 3, 2012

IF the collections agency is harrassing you to this extent, you may be able to sue them and actually make some money on the lawsuit! https://www.google.com/search?q=sue+collection+agency&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a
posted by zia at 9:22 AM on February 3, 2012

Check out this article on Consumer Reports' blog, Consumerist: How to Find Reputable Credit Counseling. (Their link to msn.money for the article "A consumer's guide to credit counseling," including information on what to watch out for, is dead. Here it is on another site.)

Re: debt collectors: Under federal law, debt collectors are not allowed to place repeated calls to you. All you have to do is send them a letter asking them to stop, and they must comply. They can call your workplace to verify that you work there, but if you tell them that you're not allowed to get calls at work, they have to stop calling you there. (More information about what they can and can't do and how you can fight back is in this article from Smart Money.)

P.S. You say that the debt collectors are "talking to the receptionist" when they call your workplace. If they're telling him/her any details about your debt, that, too, is out of line, according to that same Smart Money article. Good luck!
posted by virago at 9:33 AM on February 3, 2012 [2 favorites]

IANYL but yes, if they take you to court there will be a judgment for all of the amount, and possibly statutory attorneys fees too.

The suggestion above to contact state AG's office is a really good one. If I were you, I'd also check with local and state bar associations to see if there are any free legal debt clinics, preferably staffed with volunteer lawyers.
posted by bearwife at 9:34 AM on February 3, 2012

You can (and should) tell the compaines to stop contacting you at work and to communicate with you only in writing going forward. There are tons of good resources on the web regarding debt settlement. Here is one. Consumerist also has a lot of resources. Also, familiarize yourself with the Fair Debt Collections Practice Act. It outlines rules requiring collectors to follow certain standard practices, and gives you an outline about how to procede. Good luck!
posted by goggie at 9:41 AM on February 3, 2012

I got MBNA down to 28% ( i started at 20%) and citibank took 24% - both were balances around 24k.

i called and suggested it, there is an approval process. they'd say "we'll know in 10-15 days". i don't know if it helped but i would keep notes and call back in 15 days "jerry say we would have a result in 15 days" and they won't have one or it will be a counter offer not as low as you offered.

i would ignore there counter offer and ask them to submit a new short payoff offer, and it would be the same amount. it took about 6 months to get it done, they were coming back way high at first.

make sure it's debt forgiveness so they can't come after you later
posted by thilmony at 10:02 AM on February 3, 2012

It's pretty easy for them to violate the FDCPA if they are talking to third-parties (such as the receptionist at work) about your debt. I don't know whether they are doing that or not in your case.

There are a lot of other things they might be doing that are against the law. It's probably worth putting a call in to a consumer bankruptcy attorney* or a legal aid organization at least to find out what your options are.

The thing about the FDCPA (and your state's equivalent law) is that it comes with some interesting statutory penalites for violations, and it's easy for a single act to constitute multiple violations at times. Those penalties hit the debt collectors where it hurts -- the bank account -- and it might be worth getting a lawyer in your corner about this.

* You don't say whether you are contemplating bankruptcy and I'm not in a position to tell you whether you should be -- although I think it might help based on what you've said -- but a good consumer bankruptcy lawyer will have options for dealing with debt collectors outside of the bankruptcy process.
posted by gauche at 10:08 AM on February 3, 2012

You can certainly insist that all communications regarding your debt be in writing. This is a useful resource, including template letters.

After you get them off your ass, you'll have some time to look into whether or not they have violated the FDCPA and what your options are there, what the settlement options are, etc. But send the "stop calling me" letter right away. Send it by certified mail, return receipt requested, and save that documentation.
posted by Sidhedevil at 1:49 PM on February 3, 2012

Ramsay says if you get them to stop calling, that will bump you up the line and get you to the suing part quicker. Not good.

He also says and I concur; these folks are sharks and violate the rules all the time.

One thing that sometimes works is talk to them once and tell them to call you in two weeks for an update. If they call before then tell them they didn't wait and hang up on them. You can train them to treat you better. They are literally TRAINED to try to get you emotional and upset. That is their goal. Knowing that in the beginning helps.
posted by St. Alia of the Bunnies at 4:25 PM on February 3, 2012

Having them call the OP's workplace and yell at her seems likely to be worse, in her opinion, than any possible (and honestly I have heard people who work in collections say that's an urban legend) acceleration of the court filing process.

Having debt collectors call you at work is something most people want to stop ASAP, whatever Dave Ramsay thinks about how the debt collection process works.
posted by Sidhedevil at 4:32 PM on February 3, 2012 [1 favorite]

Document every instance of them talking to a third party about your debt. Then tell them they may only communicate with you by mail regarding the debt. Then go through your credit report with a fine toothed comb, looking for any inaccuracies in the way the debt is reported. Then sue them in small claims court for their Fair Debt Collection Practices Act violations, collect your money, and use it to pay the original creditor, after getting them to agree to remove all traces of the account from your credit report.

Never pay the scummy debt collectors and their charges. Always deal with the original creditor.

Also, and this is the most important thing of all (yes, I'm yelling): NEVER AGREE TO PAY THE DEBT, VERBALLY OR IN WRITING. That's right. Never even acknowledge that it legitimately exists, except by sending the original creditor a check to settle the debt in its entirety. If you do make a promise to pay, that just keeps it on your credit report for longer. If you make a payment or pay the debt in full without getting them to agree, in writing, to remove the item in question from your report, that just keeps the ding on your credit report for that much longer. They can only report the debt for seven years from the date of last activity.

For now, just go to Credit Boards and read all the information that pertains to your situation. It will be a lot. This will be a week long task, but armed with the information you learn there you can make this situation as painless as possible for yourself.

Oh, one last thing: Never sign a letter you send to a scummy debt collector, nor send them a check. They have a long history of using signatures to forge documents that they then later use against you in court and using the account information on your check to draft money from your bank account.

Remember, while the person who is calling you or writing the letter to you may not personally be the scum of the earth, their organization is the scum of the earth and each and every one of their policies is designed to further the company's goal of being scum. They will lie, cheat, steal, and even break the law in their attempts to harrass you over the debt. They do this because they bought it for pennies on the dollar and stand to make over twenty times what they paid for the debt if you pay it in full with all their made up fees.
posted by wierdo at 5:54 PM on February 3, 2012 [4 favorites]

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