Metaphorical question, but a serious one: Stuck at an intersection. How should I proceed when the light changes?
October 9, 2012 11:38 AM   Subscribe

I'm in a bad pickle at this time, so I'm reaching out to the Green to help me decide which the best next step is moving forward. To keep it as simple as possible, I got in a car accident more than two years ago, using a major car rental company. I got an unexpected bill from the car rental company almost two years later (late December 2011) for a high amount (let's say over $30,000) that the other party apparently were given by the rental company due to their alleged injures. I had no insurance when I was in the accident. For many reasons, I felt the collection of the debt was unfair. I had temporary legal representation (a family friend), but he was unable to get the car rental company to forgo the collection, so he bowed out early January.

Since then, I have tried numerous ways to get the debt waived. I created an online petition, contacted various social media outlets, and even contacted the rental company's customer service office with no success. Late summer, the company had a debt collection company contact me to collect the debt. I avoided contacting the debt collection company because I was in the process of finding a lawyer. Finding a lawyer has proved to be harder than I thought, as many lawyers were unwilling to represent me, probably due to the complexity of my case. It doesn't help that my budget/financials are limited at the moment (which means, in essence, that trying to collect $30k+ from me wouldn't succeed, to be frank). You can't squeeze blood from a turnip. As of now, the debt collection company has been contacting me almost everyday via phone, but at this very point, AFAIK, no lawsuit by the rental company/debt collection company has been filed. I advised the debt collection company that I was in the process of finding legal representation.

Now, I am facing a few possible scenarios, each of which has their own pros and cons. I'm completely unsure which is the best scenario to pick and proceed.

Scenario 1: Declare bankruptcy.

Pros: not quite that expensive to do, easy to liquidate the debt, and a way to 'wipe the slate' fresh.

Cons: student loan debt I have won't be liquidated, my credit would be tarnished somewhat, possibly not an option until an actual lawsuit is filed against me? also, I'm 26… I feel too young to be doing this.

Scenario 2: Negotiate the debt amount and pay a lump sum.

My parents has a certain amount of money saved up for me (under their name), so I was thinking about negotiating with the debt collection company and offering a lump sum of said amount (maybe going even lower, if possible). I have discussed this potential solution with my parents, and my father doesn't think this is a good idea, because the debt collection company would think I have a source of money (after seeing/accepting the final lump sum offer), and demand more even after the lump sum has been settled. However, numerous articles on the web suggest doing just that (negotiating down with a debt collection company, paying a lump sum, and coming to an agreement in writing that the debt has been paid in full). Here's an example of such an article.

Pros: paid off completely, peace of mind knowing I have paid this debt "in full"

Cons: would my credit score still be hurt? may have to pay 'back-taxes' on the waived amount; the fund my parents has saved is less than half of the debt, my father's concern mentioned above.

My father suggested I pay them (the debt collection company) a certain amount per month, in hopes that they may cave in and just write the debt off, but with such a high debt, I don't know if that's possible, and it's also the principle behind this that bothers me. I do not want to pay a cent, if possible.

Scenario 3: Find a lawyer and fight tooth and nail with the car rental company.

I have been searching for a lawyer to represent me and argue my case against the rental company, due to the circumstances in my situation (which I won't go into right now; it's a long story, and I'm focusing right now on finding solutions, not dwelling on what's wrong, what's right). I've found several potential leads.

Pros: possibility of winning, I may have a good case; standing up for what principles I feel is right.

Cons: it's a gamble; not guaranteed to win; may end up paying legal fees plus the debt if I don't win; this may drag on and on for a long time; legal fees are expensive; hard to find pro bono lawyers.

Scenario 4: Contact the rental car company personally.

I would try again, this time speaking with the executive office or even the President's Office if necessary. Probably not the best solution at this point, but as the rental company still has to authorize the final amount I owe through the debt collection company, it may be worth a try to try and negotiate with the rental company.


I hope I made sense throughout this. As you can probably see/sense, this really is bothering me and eating at me, and I am anxious to get this resolved as soon as possible, but am just not sure of the ramifications of every possible scenario and the potential positive/negative consequences. Most importantly, I want this resolved without paying too much out of pocket, and with my credit score being pristine (it's probably already tarnished, due to the debt collection company). I also, of course, want the debt collection company finally off my back and peace of mind restored. Any questions are welcome - I obviously do not expect sound legal advice, yada yada, and I really look forward to your suggestions/ideas/input. Thank you.
posted by dubious_dude to Work & Money (27 answers total) 1 user marked this as a favorite
It sounds like which route to take depends a lot on how successful you're likely to be at convincing someone you shouldn't have to pay. Without knowing why you don't think you should have to pay (i.e. why a lawyer fighting "tooth and nail" would have a shot), I don't think anyone here can provide even speculative advice.

For all (or nearly all) of these options, though, you'd need/benefit from a lawyer. I suggest consulting a lawyer in general to help you sort through your options. I realize that it's an expense, but perhaps you could use some of that money from your parents to pay for a consultation?
posted by cranberry_nut at 11:49 AM on October 9, 2012 [2 favorites]

This isn't a metaphorical question, so I'm not sure why you're posing it as such. Absolutely do not contact the rental car company personally until you've met with a lawyer or several.

Ask your parents to help you find a good lawyer and financial advisor. I think the investment will pay off here. As I'm sure you're aware, the time to have lawyered up was when you were first notified of the $30,000 claim against you, so waffling about it now is not going to help you. Good luck.
posted by These Birds of a Feather at 11:51 AM on October 9, 2012 [1 favorite]

Not to threadsit, but a quick clarification: the 'fighting tooth and nail' bit was a dramatic exaggeration. One lawyer I spoke with said I had a pretty good case, but he said that my case representation under him may would exceed $10,000.

While I originally didn't post why I feel this is unfair and why I'm fighting against it, the reader's digest version is: I'm Deaf, I was not communicated with about my options for insurance, and the rental company's website and office signage did not make it clear about one state's specific exclusion from insurance coverage. The treatment from the car rental company officials were also awful. It's not playing the Deaf card, it's because of the big picture and the lack of communication on their end. I have removed the petition and video, as I didn't want anything to be used against me.

Upon preview, I got the form mixed up. The metaphorical question was intended for the title (stuck at an intersection; how should I proceed when the light changes?) but I didn't realize the 'metaphorical question, but a serious one' part would appear on the 'feed.' Oops.
posted by dubious_dude at 11:56 AM on October 9, 2012

I am not a lawyer.

Well the rental car agency has you pretty good. When you don't take out additional insurance with them (those X dollar a day policies, which there are a variety of covering different things) they have you sign a contract declaring complete liability.

That part where you sign here, initial here, here and here. That moment Is you agreeing to pay any financial obligations brought against you or them for any reason. That is why you are not getting pro-bono lawyer help. They would be working against a very well defined contract procedure.

The other party in this accident knows about this. That is why they sued the rental car agency instead of you directly.

As noted above a lawyer would help no matter what route you take.

I would file bankruptcy and then use that money from mom and dad to start rebuilding my life. I don't know why "too young" is part of your calculation. You really want to be as young as possible for this option.
posted by French Fry at 11:56 AM on October 9, 2012 [5 favorites]

I am a lawyer but I am not your lawyer. This is not legal advice. Yadda.

Let's talk about the easy ones first:

As to scenario 4: that is almost certainly not an option at this point. In all likelihood the rental company has sold the debt (that is, sold the right to collect from you) to the debt collector and no longer have any real say in how you resolve things with the debt collector.

This makes scenario 2 somewhat more appealing, since it is likely that the debt collector bought this debt for some percentage of its nominal amount, which might mean that you have room to negotiate a lump sum. If they've paid (let's say) $0.50 on the dollar, that means that they can turn a profit on your debt if they settle for (let's say) $16,000. Your credit is already almost certainly suffering from collection efforts, but set that aside for now. You negotiate a global release of all claims, and you take your lumps.

OR: you talk to a lawyer. Either they fight the collection on the basis of any number of legal theories or the threat of declaring bankruptcy, or they help you through the bankruptcy process. This is the smart option. Do this. Your lawyer has done this before; he or she will know what is realistic in a negotiation; he or she will know what is realistic in a bankruptcy.

You've been handling the whole thing yourself all this time, and it hasn't gotten you anywhere. What does that tell you? Hire an expert. Do it right.
posted by gauche at 11:56 AM on October 9, 2012 [2 favorites]

If I were you I'd use some of the money your parents have saved for you to hire a knowledgeable lawyer for the purpose of evaluating the possibility of winning a court case (seems costly and unlikely) and then making a settlement offer through the attorney (not on your own), not for fighting the entire thing.

It doesn't sound like you have much of a case and bankruptcy would take much longer to put behind you than settling and it sounds like you need to be thinking about moving on from this, not dragging it out longer. Maybe you can settle for a small percentage of that 30K.
posted by A Terrible Llama at 12:00 PM on October 9, 2012

Tell your dad that "debt collector" doesn't automatically mean "the mafia". I mean, I hate these guys as much as anybody (maybe more, given my atrocious luck with phone numbers) but they are actual, regulated businesses and lots of people have had good luck settling on their debts with them.
posted by dagnyscott at 12:02 PM on October 9, 2012

Did you pay for your rental car with a credit card?

I was in a similar situation (no lawsuit, but totalled the vehicle), and found that the credit card provided insurance coverage. It was a long three year process to get the rental company to send the appropriate paperwork to the credit card's insurer to get the payout. During those three years, they went after me, my parents, and a ton of vaguely related parties trying to get this paid.

I would go back and start collecting paperwork from everybody. A copy of the judgment outlining the amount, a copy of the rental agreement that proves you agreed to pay for any insurance judgments. Evidence that the rental company appropriately defended your interests and didn't just agree to a random settlement knowing they wouldn't pay the amount. I would ask the debt collector for proof that the debt has either been sold or contracted.

In these dealings, I wouldn't agree or admit to anything. If they ask for a payment plan, I would simply say "I do not feel I understand these charges well enough to pay anything. If I could see [x], I might feel differently".

During these conversations, you might get a good feel for which option might be best. You might see a way out. And if not, you will have a good solid amount of gruntwork to hand off to a lawyer who will know better than you.
posted by politikitty at 12:08 PM on October 9, 2012

You need to speak to an attorney. No one can give you good advice without knowing the specifics of your finances, your liability, and the relevant laws involved. There's just too much in play.
posted by gerryblog at 12:12 PM on October 9, 2012 [4 favorites]

This sounds exactly like an anonymous AskMe from earlier this year. There were two pieces of advice offered there that may be relevant to this newer discussion: 1) Anonymize this question and 2) Lawyer up.
posted by macadamiaranch at 12:12 PM on October 9, 2012 [8 favorites]

In any case, you should know what Debt Collection Fair Practice is. This is why I hate renting a car. Good luck.
posted by theora55 at 12:19 PM on October 9, 2012

First of all, check with your credit card company. Your card may have rental car insurance.

Now, it's a misnomer to be sure. If the insurance does exist, it's usually for the cost of the deductable, unless you rented with a Diners Club card, in which case, it WILL cover all of the damage. The Diner's Club card went out with bobby socks, but I had one, and who knows...

Also, it's my understanding that is a company or a person gets a judgement against you in court that they aren't dischargable in bankruptcy.

You have a real mess here.

Also, when you sign your rights away upon declining insurance, you are shown where on the form the verbiage is, you should for sure read anything you're agreeing to, especially in the world of renting cars.

A guy I worked with got into this kind of trouble by wrecking a rental car secured with a company American Express. He assumed that the American Express would cover the entire insurance. He also didn't use a company sanctioned rental car agency. Also, it was over a weekend training class, an expense that the company didn't reimburse. He totaled the car and the company had to pay the whole thing. Surprisingly he was still employed after that. Hardly even chastened.

Assume that you don't have a leg to stand on re: the insurance and that you're 100% responsible for the amount. What would your plan be to move forward on this?

I am shocked that the rental car company allowed you to decline insurance if you didn't have proof of your own comp and collision. But weird things happen every day.

See a lawyer. Perhaps there is a pro bono lawyer who deals with issues pertaining to the deaf community who has experience with these types of cases.
posted by Ruthless Bunny at 12:44 PM on October 9, 2012

A few points, the first of which is IANAL.

Nobody cares what is fair or not fair or how mean the car rental people were to you. The only thing that matters is if this is a valid debt.

I was not communicated with about my options for insurance, and the rental company's website and office signage did not make it clear about one state's specific exclusion from insurance coverage.

What does the contract you signed say? Because that's what counts.

I'm 26… I feel too young to be doing this.

No. You're young enough to outlive the debt and return to good credit by the years you really need it. Please use some of the saved money to consult a bankruptcy attorney. Verify that this debt can be written of and then seriously consider pulling the trigger.
posted by DarlingBri at 12:51 PM on October 9, 2012 [4 favorites]

Back when you originally asked about this situation the answer was "lawyer up". It sounds like you only did so halfheartedly. I understand lawyers cost money. But I think it leaves you with only two options;

One, lawyer up properly this time. Two, pay the money. If you can negotiate a lower lump sum so much the better.

My own completely layperson non-lawyer non-legal opinion is that you're going to end up paying one way or the other. You signed a contract and your hearing or lack of it doesn't really factor. Personally I'd see exactly how low of a payment would make this go away. Even in that case you likely want a lawyer to look over any settlement to make sure it is final and for sure.

If you really, truly can't afford a lawyer I'm not sure what to tell you. But as you can see from your situation not paying a lawyer early can mean you end up paying even more later.
posted by Justinian at 12:57 PM on October 9, 2012

To answer the top-asked question here:

A) No, I did not use a credit card to pay for the rental. I already checked with the bank I was under at the time; credit/debit coverage definitely not an option.

B) If I choose Scenario Two, would my fathers theory come true: the debt collection company hears my negotiation for a lump sum of x amount, decide I have a source and a way of getting money, and demand more? Or would they likely agree (to the amount asked, or counteroffer a higher amount), agree to write it off, and then I'm done? Does that sound like a better option than telling the debt collection company I have limited income and paying only a small amount per month, then having them agree to write the rest off? (That's what my father suggested)

C) If scenario 2 succeeds, would my credit still take a hit once the company has agreed to write off as paid in full (for the neogiated amount)? How would I go about in recovering my credit? Also, can said collection agency come back later and ask for more, or is it fully done?

D) I am struggling to find a lawyer, as mentioned in the original post, which is why I am reaching out for thoughts here as well, and if it's even worth the expense to fight this through a lawyer, rather than just declaring bankruptcy or settling.

Those are the followup questions and answers I have at this point; if I come up with more, I'll ask. Thanks for your continued insight!
posted by dubious_dude at 1:04 PM on October 9, 2012

Have you considered talking to an advocate in addition to a lawyer? If you truly feel like your rights were violated when this all originally went down because you're Deaf and the other folks didn't put forth enough effort to contact you properly, then you need to collect and organize all the evidence you have proving that and get an advocate.
posted by These Birds of a Feather at 1:07 PM on October 9, 2012

If you negotiate a lump sum with the collection agency (who 99.9% likely bought this debt and therefore are the sole owners of it) that is that. You need to make sure you sign an agreement that absolves you of the debt.

They can not go back to well for more money. They are not the mob.

Getting the most out of the debt negotiation, making sure you are getting off clean from your liability, and making sure the credit agency is legit and trustworthy... will all be easier with a lawyer. Some of the debt specialist ones are pretty affordable.

Right now your credit is being murdered by this collection processes. Making that stop will improve your credit. Not hurt it.
posted by French Fry at 1:22 PM on October 9, 2012

Talk to an Attorney. Also, bankruptcy is actually better when you're younger. Get it over with, don't get into debt again.
posted by empath at 1:24 PM on October 9, 2012 [1 favorite]

I'm Deaf, I was not communicated with about my options for insurance, and the rental company's website and office signage did not make it clear about one state's specific exclusion from insurance coverage.

IAAL, IANYL. As it happens, I have a creditor's rights practice.

This argument is a non-starter. I presume that your deafness does not impair your ability to read written English. The merits of the case are bad for you. This is likely the reason you are having trouble finding a lawyer. Another reason is that you are in trouble for not paying a legal obligation, so any lawyer is going to worry about your ability to pay, especially on a case that is a loser.

Scenarios 3 and 4 are bad ideas. The only options are 1 and 2. I would favor Scenario 2. Offer the collection agency a lump sum and settle for that amount. Get a release and the matter will be resolved.

Also, it's my understanding that is a company or a person gets a judgement against you in court that they aren't dischargable in bankruptcy.

No. It depends on the nature of the judgment. Most judgment would be dischargeable. Those that are not dischargeable will generally be ones for fraud, conversion, and other such matter covered by Section 523.
posted by Tanizaki at 1:33 PM on October 9, 2012 [1 favorite]

Don't contact an attorney to fight the debt. Contact an attorney to discuss the facts of the debt and what led to it, to determine what options you have (if any) to reduce or eliminate this debt, and to help guide you through the process of working out a payment plan for any amount of the debt (possibly all of it) that you will have to pay -- and plan to pay the attorney as you go for this service.
posted by davejay at 2:04 PM on October 9, 2012 [2 favorites]

1 - too much identifying information in your post and profile history; ask the mods to anonymize this straight away and do the same anywhere else you have posted this. Because:

2 - the only leverage you have with the debt collection agency is that you haven't got any money or assets and if you declare bankruptcy they get nothing (assuming that to be true - get paid-for legal advice). Knowledge of 50% of the debt sitting with your folks means they have no incentive to settle for a small fraction of the total.

3- this debt is not small, but not big, in the debt collection universe, and it *is* negotiable if it's been sold to the collectors. Via a lawyer offer 10% of the debt paid over 24 months, and expect to work up from there. Commission structures for collectors are usually a mix of a proportion plus an increment for each settlement, so if you get lucky and the guy's hit his totals for the month he may not argue too hard.
posted by cromagnon at 2:14 PM on October 9, 2012

Threadsitting a bit, but I'm not sure if I should ask to anonymize this, because it creates more work for the AskMe team, and I've done more than the recommended 1-2 anonymous posts this year. If a mod sees this and agrees to anonymize this, fine, but it would be a lot of hassle for them. I don't see how this is exactly identifying information, as I'm sure there are other people in similar situations as me. However, if that's what everyone, including mods, think is the best solution, fine with me.

So, it seems like the best scenario would probably be Scenario 2. Are there also any negative aspects of declaring bankruptcy that can outweigh Scenario 2?
posted by dubious_dude at 2:34 PM on October 9, 2012

[Mod here, we can't easily anonymize this once you've posted follow-ups and it looks like you've already asked a version of this question earlier - please drop us a note via the contact form if you need to discuss this further.]
posted by jessamyn (staff) at 2:46 PM on October 9, 2012

Contact Glen Chulsky. He is an attorney specializing in this area. He will at least point you in the right direction. Google for number.
posted by Kruger5 at 2:58 PM on October 9, 2012

the debt collection company hears my negotiation for a lump sum of x amount, decide I have a source and a way of getting money, and demand more? Or would they likely agree (to the amount asked, or counteroffer a higher amount), agree to write it off, and then I'm done?

This isn't really how debt collection works. They are completely mercenary. They bought the debt for N pennies on the dollar, and that -- a number you don't really know, but maybe can estimate -- is what they expect to get from you, plus expenses and some profit. It's not really some kind of head game or full of private-eye shenanigans. In all likelihood this is just another $30,000 debt to them like the next one on their desk -- a credit card, say. They may hem and haw about any offers you give, but in the background they have a firm number and are trying to get you there.

The thing is, a lawyer is much better at the estimating, negotiating, and what have you than you'll ever be. Hire a lawyer with a cash retainer and ask them to negotiate a settlement. Borrow the money from the 'rents if you need to and get it over with.
posted by dhartung at 3:37 PM on October 9, 2012

Ruthless Bunny: "I am shocked that the rental car company allowed you to decline insurance if you didn't have proof of your own comp and collision. But weird things happen every day."

I have never been asked for proof of insurance except at a Toyota dealer that requires it for their rentals. (AKA loaners..I get them for free, so no credit card insurance) A couple of times I've even ended up without coverage because they gave me a car that my credit card wouldn't cover. (Too expensive, a truck, whatever)

OP, presumably the rental company billed you for damage to the vehicle at the time of the accident? How did you pay for that? If it was a credit card issuer's rental insurance benefit, get the company to send a copy of the policy. Mine all cover liability in excess of my personal auto insurance limits or all liability and damages (up to $100,000 or so) if I didn't have insurance. The policy language is the only way to tell what you're entitled to.

If you already have all the credit you need and don't have any assets or the desire to buy a house in the next few years, bankruptcy may actually be your best option here. If you maintain otherwise good credit through the whole ordeal, it won't count against you very much or for very long. What really screws up your score is all the late payments most people have lousing up their report from before they filed.

That said, if the collection agency is reasonable, you may be able to negotiate a settlement in which they agree to delete any negative records from your credit report when you pay them the money. Of course you need a contract in writing before you send them their money order. Do not give them your credit card number, do not give them your bank account number, and do not write them a check. Most CAs are scum and will scam you if you give them the chance. The key is to not give them the chance, so send them a money order. If not, just declare bankruptcy and get it over with. The sooner it's done, the sooner your credit will be rebuilt.

Either way, you're probably already on the rental company's do not rent list and will likely remain there forever more.
posted by wierdo at 6:18 PM on October 9, 2012

Talk to a bankruptcy lawyer ASAP.
posted by roboton666 at 9:01 PM on October 9, 2012 [1 favorite]

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