Need Help Understanding new charge off and steps to take

[Anonymous]

Hi All - after working so hard to rebuild, I made a huge mistake and now I am paying for it. I had a loan is now in process of being charged-off. If I had opened my mail, I would have been able to negotiate with the creditor, but the offer ended 6/16 and they charged off five days later. Total debt including interest is close to $9000. I received a letter from a law office advising the account had been referred to them. It also states I will be receiving a letter from the court also which is a separate process. I am assuming they are also trying to get a judgement but I dont know. Can anyone provide me any info as to how to handle. I do not have the money to PIF and I didnt pay because I was in a dispute with the creditor regarding their reporting (guess they won the dispute haha). I dont want a judgement, but not sure if I have a choice - esp considering the amount. Do I contact the law firm; do I write a dispute letter. I am trying to find what steps to take that will help lessen the blow to my credit.

All of my other debts (credit cards, mortgage, HELOC, and car payment) are paid on time with no lates, however I am using over 70% of my available credit. My husband thinks I should file bankruptcy, but I dont agree. I realize no one can tell me what to do, but I do need advice. Thanks in advance.

[RobertEG]

First, my understanding of where you are now.  The OC has charged-off the debt, and you have been contacted by a third-party.

As for the OC charge-off, that is an internal bookeeping measure taken by the OC to move your debt on their accounting ledger, and thus derive a tax writeoff of the bad debt.  There is very little you can do to compel deletion of a legitimate charge-off.  Goodwill requests, either before payment in the form of a PFD request for deletion in exchange for payment, or a simple GW request after payment, are your options.

But with entry of a third-party into the mix, you now have to deal with actions of a debt collector.  When any party who is not the party with whom you originally contracted with becomes involved in collection on behalf of the original creditor, they are what is referred to under the FDCPA as a "debt collector."  They have certain rights under the FDCPA, as do you as the consumer.

The fact that the letter came from one who also asserted to be an attorney does not relieve that party from compliance with the FDCPA.

Under FDCPA 809(a), their call to you constituted what the FDCPA refers to as an "initial communication with the consumer."  That immediately triggered a right of yours, and an obligation of theirs. 

Their obligation was to follow that initial communication with a formal collection (so-called "dunning") notice within five days of that initial communication, advising you of your rights to request debt validation from them within 30-days of their dunning notice.  Failure on their part to do so is a violation of FDCPA 809(a).  Did they do so?

Your rights, once you know that a third party is involved, whether or not they have made an intitial communication with you, or sent you a dunning notice, is to request debt validation from them under FDCPA 809(b).  If they did send you dunning notice, that then only sets a 30-day period thereafter in which you can send a debt validation letter that compels them to cease further collection of the debt until they provide the requested debt validation.

I know that is a whole lot of legalese and procedures, but next steps in the FDCPA process are dependent upon what has happened to date.

Do you write a dispute letter?  Disputes are separate from the entire debt validation (DV) process.  They are directed, not at their collection practices, but rather at the accuracy of any item of information they have reported to a CRA.  If anything reported is inaccurate, then you dispute its accuracy under one of the two dispute processes under the FCRA.  However, if their reporting was accurate, a dispute is not supported.

Should  you contact the attorney?  Yes, intitially, in writing, as a debt collector, and request debt validation.  This is referred to as a DV letter.

Can they sue?  Yes. at any time.  Will it result in a judgment?  Creditors and debt collectors dont "grant" judgments, a court does.  If they file suit, you can always pay prior to court date, and thus prevent a judgment, providing you have the $$ to pay.  If not, and you go to court, the judge will first hear any motion on your part that the debt is uncollectible due to expiration of its statue of limitations.  If the statute of limitations has expired, you can raise that as a affirmative defense in court, which will result in dismissal of their suit.   Has SOL expired?

If SOL has not expired, the judge will then hear the legitimacy of their claim to the debt, and if legitimate, then judgment will follow.  The judgement can then be reported to your CR.

If you cant pay at any step in the process. they are entitled to further their collection activities, up to seeking a judgment of terms by the court for its payment.

I know it doesnt answer all questions, but that is the process.  Both sides can take action, so it is not all about what you can or should do.

[Anonymous]

Robert thanks for your response. I know i wrote alot (and may have rambled) so others may have been confused to what i was asking. The debt just charged of June of this year. The debt is valid and I am not trying to get out of paying it. My concerns are (1) the letter from the law firm and (2) within their letter a paragraph advising I will be receiving a summons from court which is separate  from their collection.

I dont know if its ok to contact the firm via phone and try to make arrangements? The debt is valid - i just missed the custoff date to call before the company wrote off the debt because my mail was delivered to the wrong address. I am more concerned about the court process. Is that just so they can receive a judgement? If that happens does that mean my wages will be garnished?

[greg_the_egg]

If they win the judgment, they can subsequently pursue a wage garnishment. The garnishment is not automatic. Its up to the plaintiff to decide if acceptable payment arrangements can be made. If the plaintiff and defendant can agree on a payment plan, then a garnishment may not be necessary.

[Booner72]

Hi Greg - I had a CA move to the judgment phase bc I didn't keep up with the payment agreements.  When I got the legal notice I freaked and they said if I notorized their papers and paid as agreed, they would not garnish.  That was the stupidest thing I ever did (well, second to not keeping up with the payments).  I lost my day in court that way.  Make sure you have your day in Court and beg  or borrow to get this paid before the judgment hits if you can.  Just my advice of having been there and done that.  Good Luck to you!

[Anonymous]

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@Booner72 wrote:

Hi Greg - I had a CA move to the judgment phase bc I didn't keep up with the payment agreements.  When I got the legal notice I freaked and they said if I notorized their papers and paid as agreed, they would not garnish.  That was the stupidest thing I ever did (well, second to not keeping up with the payments).  I lost my day in court that way.  Make sure you have your day in Court and beg  or borrow to get this paid before the judgment hits if you can.  Just my advice of having been there and done that.  Good Luck to you!

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Thank you all for your responses. I think the part that is confusing me is the separate court case and the law firm stating this is totally separating from their "collection" attempt. Wouldn't the law firm be the entity that initiated the court case? Am I correct in assuming said court case would be to seek a judgement? If I am able to make suitable arrangements with the law firm; would they include that in the court case which could prevent me from having a judgement unless i didnt keep the arrangement?

[Booner72]

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@Anonymous wrote:

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@Booner72 wrote:

Hi Greg - I had a CA move to the judgment phase bc I didn't keep up with the payment agreements.  When I got the legal notice I freaked and they said if I notorized their papers and paid as agreed, they would not garnish.  That was the stupidest thing I ever did (well, second to not keeping up with the payments).  I lost my day in court that way.  Make sure you have your day in Court and beg  or borrow to get this paid before the judgment hits if you can.  Just my advice of having been there and done that.  Good Luck to you!

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Thank you all for your responses. I think the part that is confusing me is the separate court case and the law firm stating this is totally separating from their "collection" attempt. Wouldn't the law firm be the entity that initiated the court case? Am I correct in assuming said court case would be to seek a judgement? If I am able to make suitable arrangements with the law firm; would they include that in the court case which could prevent me from having a judgement unless i didnt keep the arrangement?

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From my experience ONLY, they pursued judgment because I didn't keep up the arrangements.  Yes it would be the "law firm" that is hired by the Collection Agency.  In my case the law firm and the CA were one big business.  Yes, I am sure the court case would be to seek judgment.  I'm assuming you didn't make "suitable arrangements" in time.  But they still worked with me to avoid garnishment.  They let me pay only 25 bucks a  month.   The debt started out at 1800 and when I paid it off 18 months later it was 2600.  ouch.  When I got the dunning-legal-letter, it got my attention.  I called begging and pleading for them to avoid further legal action.  I was too late.  I read that you didn't read your mail.  That was exactly what I did (or didn't do).  But this letter I was forced to read, bc it came certified, and I stupidly went to the post office to pick it up.  I suppose they would have had me served which would have cost me even more.  You will be responsible for all court costs associated with this by the way.  I went to an attorney when I got the dunning-legal-letter (through my EAP at work) and he told me it was within their rights to charge me all those fees and I should pay it now.  I didn't have the money so I didn't.

PS:  if you don't have any other legal issues going on, which I'm sure you would know about, then they are probably lying to you when they say it is separate from the collection attempt. 

[Anonymous]

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@Booner72 wrote:

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@Anonymous wrote:

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@Booner72 wrote:

Hi Greg - I had a CA move to the judgment phase bc I didn't keep up with the payment agreements.  When I got the legal notice I freaked and they said if I notorized their papers and paid as agreed, they would not garnish.  That was the stupidest thing I ever did (well, second to not keeping up with the payments).  I lost my day in court that way.  Make sure you have your day in Court and beg  or borrow to get this paid before the judgment hits if you can.  Just my advice of having been there and done that.  Good Luck to you!

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Thank you all for your responses. I think the part that is confusing me is the separate court case and the law firm stating this is totally separating from their "collection" attempt. Wouldn't the law firm be the entity that initiated the court case? Am I correct in assuming said court case would be to seek a judgement? If I am able to make suitable arrangements with the law firm; would they include that in the court case which could prevent me from having a judgement unless i didnt keep the arrangement?

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From my experience ONLY, they pursued judgment because I didn't keep up the arrangements.  Yes it would be the "law firm" that is hired by the Collection Agency.  In my case the law firm and the CA were one big business.  Yes, I am sure the court case would be to seek judgment.  I'm assuming you didn't make "suitable arrangements" in time.  But they still worked with me to avoid garnishment.  They let me pay only 25 bucks a  month.   The debt started out at 1800 and when I paid it off 18 months later it was 2600.  ouch.  When I got the dunning-legal-letter, it got my attention.  I called begging and pleading for them to avoid further legal action.  I was too late.  I read that you didn't read your mail.  That was exactly what I did (or didn't do).  But this letter I was forced to read, bc it came certified, and I stupidly went to the post office to pick it up.  I suppose they would have had me served which would have cost me even more.  You will be responsible for all court costs associated with this by the way.  I went to an attorney when I got the dunning-legal-letter (through my EAP at work) and he told me it was within their rights to charge me all those fees and I should pay it now.  I didn't have the money so I didn't.

PS:  if you don't have any other legal issues going on, which I'm sure you would know about, then they are probably lying to you when they say it is separate from the collection attempt. 

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Thanks for sharing your experience. The letter i didnt receive was from HFC. They had given me up to June 12 to respond and it would have remained within their collections if I made suitable arrangements. I just received their letter last week. I pulled my FICO report a few days before and noticed the account was charged off - this triggered me to call them. At that point HFC advised my account was in the process of being written off and there was nothing they could do. When I made this post is when I got the actual letter from the law firm advising they are now collecting the debt. So the fact they are collection, but their letter also states I will receive separate notice from court is why I am confused. I dont get the court piece.

Sooo... I dont know if I call them to make arrangements which can possible avoid the judgement, or do I have to go through that whole written process. The debt is valid and is mine, therefore I want to pay and make it current. What I dont want is the judgement. Sometimes reading the board gets confusing because I know collectors are not our friends, but I dont want to create unnecessary enemies

[kjm79]

Have you checked with your local courts to see if anything has even been filed against you?  They can't get a judgment without filing a complaint with a court and going through the proper procedures to procure the judgment which includes serving you with such notice.  And if you settle/pay the collection, then there isn't anything to get a judgment on is there?  If nothing has been filed then it sounds like they are using the threat of court part as a why to push you into paying the account. 

[Anonymous]

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@kjm79 wrote:

Have you checked with your local courts to see if anything has even been filed against you?  They can't get a judgment without filing a complaint with a court and going through the proper procedures to procure the judgment which includes serving you with such notice.  And if you settle/pay the collection, then there isn't anything to get a judgment on is there?  If nothing has been filed then it sounds like they are using the threat of court part as a why to push you into paying the account. 

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I have been checking daily for any litigation against me and thus far nothing. Since the debt is valid, is it appropriate to contact the agency and try to negotiate an arrangement, or am I supposed to send the letters asking them to prove the debt, etc? I appreciate any feedback.