A guy I know (not me =), married, on dissability managed to obtain a CC at some point in 2006.... Non-pay for many months and now is in collection. Balance is $5500 w/ interest because alot of the $ was cash advance. The collection agency has offered a settlement for around $3500. Wife refuses to pay because the husband has been diagnosed w/ frontal lobe dymentia (though he did not have formal diagnosis at the time of account opening). She claims the CC company should not have opened an account to a vulnerable adult. She also thinks that w/ this account in collection, he will be barred from obtaining credit in the future. Questions: What is the collection agencies likely next move? Wage garnishment, seize property...bank account freeze? If paid, will this collection bar him from obtaining credit in the future or will he have a clean slate to do it again? Any thouhgts would be appreiciated...
Offer to settle for 10 cents on the dollar and no more. They may take him to court. If they do hire a lawyer for $500. 90% of the the time the CC compnay will not show in court or cancel the day before the court date.
I had a rough stretch some years back and defaulted on about $60,000 worth of credit cards (had used to start business) You get a lot of phone calls. You get court dates. You get judgements against you and pretty bad credit. But nothing gets seized. No bank account gets frozen. If the person has a job they MIGHT get a small pittance deducted but its usually minimal as you can claim living expenses. I let this go on for about 3 years as I picked myself off the pavement. I simply got a different phone number so i didnt have to deal with all the phone calls. I should point out I DID repay my debts once I got my life back together and I dont condone defaulting unless theres no other choice. Theres always bankruptcy but not for a $5k debt.
With his account in collection right now, his scores would be pretty low. This will most likely barr him from obtaining more credit for the next few years. Credit Cards are unsecured. Therefore the collection agency/bank cannot do anything aside from harrassing phone calls, letters, etc. and freeze his Bank accounts (only within the lending institution). They cannot seize his property, garnish his wages etc... If the collection people are not getting anywhere with recovering the funds, eventually they will write it off (most likely). It will be on his credit report for 7 years (I belive). After which the slate will be wiped clean. Hope that helps.
If it's $5500 w/interest and they are offering $3500 settlement, that means the original debt is probably around 3500 too. The collection co will settle based on how much they think they can get. If they think they can get 5k from court, they will not take much less than their offer. But 0.10 on the dollar is a good place to start. Anyway, here is what they will likely do 1) Harass the hell out of him 2) File for arbitration under the national assoc. or arbiters which is sponsored by the CC companies. He will lose with 100% certainty and be issued a civil judgement 3) The CC will file in his jurisdiction to have the judgement "affirmed" which means to make it into a real and enforceable legal judgement 4) With a judgement they can garnish wages, sieze property, etc. They can also force a "debtors examination" which means they claim he has non-exempt property that could be siezed to settle the judgment. if they do this, he has to go to court and they will want a list of assets and the court could order some of them siezed It is always better to work something out with the collection company. He should not tell them he refuses to pay, but he SHOULD send them a certified registered mail letter stating they CANNOT contact him by phone. I believe it's called a limited cease and desist. If he flat out refuses to pay rather than ignores them, then they will likely move to the next step His best bet is to work something out with them. If he has nothing to lose if he declared bankruptcy, then he could threaten to do that if they don't settle. 10 cents on the dollar is a good settlement for debt that is totally dead and has no chance of being paid... for debt they think they can collect on, it could be 50 cents on the dollar.
All these folks settling for .10 on the dollar or just thumbing their noses must get lucky. Had a dear friend just a couple years back who was in CC debt for less than $10k. Towards the end, his wages were garnished. I say towards the end, because he took his own life because of the stress...
My condolences go out to you and your friend's family; but to commit suicide over a $10K debt is ludicrous, unless it was a juice loan which would have likely resulted in death if not repaid. For a CC company to write off a small debt like that is an everyday occurrence. At the least, your friend probably could have negotiated a very low monthly payment plan to settle the debt .
Thanks, this was pretty much what a laywer feind of mine said yesterday too. Most likely they would try to attach the judgment in the form of a lien to property and wait it out. The problem he could forsee is that the amount could continue to grow, and if the property was eventually sold the actuall number could be much larger. He encouraged an attempt at some sort of settlement and get the whole issue closed. Thanks, alll for some good insight.
To get a judgment they have to go to court. You can request a jury trial as well. I did this with a friend of mine who was disabled and in the same situation. They tried to get a summary judgment against her. We found some incorrect late charges on the bill and described in detail the harrasment some of which broke federal credit laws. The judge gave a summary judgement award to my friend of $2,500 which Capitol 1 still has not paid.
Yeah, It will cost them near $5K to bring it a court to get back their orginal $5K...not likely, but I'm thinking it would be best for him to settle in some manner so the issue is closed once and for all.
Thank you for your sentiments. He was an odd bird, but a good person. Fell on hard times through no particular fault of his own and was the type that would sooner skin a lawyer alive than hire one for advice/protection. He didn't leave any family behind (that I know of), but at least a few of his friends still miss him.
Not true, IMO. All the big CC companies have lawyers who work in various areas. There is virtually a 100% chance that they already have a lawyer who has lots and lots of cases for the collection agency already in the district court where this would be brought. To bring another case is really no cost at all. Usually they start talking lawsuits over $1,500 or so... of course, given the amount of the additional charges, they can get to $1500 pretty quick from even a $500 original debt. Does the OP know who the collection agency is? If it's one of the big ones like CACV or Cavalry, then he is worse off than if it's some small town place.
If they get a judgement from the NAA they can just have it "affirmed" which isn't the same as actully suing someone and IIRC does not involve a jury. It's either a judge or a magistrate in most jurisdictions and the burden of proof at that point is upon the debtor... unless the debtor can show the civil judgement is not valid, it almost always gets affirmed and becomes a real judgement.
I don't think the amount can really continue to grow once it's a judgement. If they get a judgement for $5,500 after fees, then that's the amount... if they file a lien on his property then they can't force a sale, it just sits there until the property is sold at which time it gets satisfied. When the judgement is paid off, they wouldn't come back and say "oh, it's been 3 years, it's $8k now". Do you know who the collection agency is? Some of them are full of tough talk and short on action. Some of them actually do sue. If you know who the original creditor is (which CC company - i.e. Citibank, MBNA, etc), and if you know which collection agency it is, and what state he lives in, I may be able to give you a more reliable guess on what they will do. Bottom line is that right now, a LOT of people are defaulting. It's always preferable 100% of the time for the collection companies to take a lower amount of 'easy money' vs fighting for more. $3500 is just an offer... they will absolutely take less. I have no doubt they would take $3k. They would probably take $2500. They may take $2k, or $1500 or even $1k. It depends how likely they think he is to declare bankruptcy, how solid they feel their case is, what assets he has they feel they can grab, etc. The best course of action is to get them to stop contacting him by phone (as mentioned above). Then, negotiate a settlement in writing. DO NOT send them a payment without FIRST getting something signed by them BEFORE you send the $$$. Collection co's are snakes... if you send a signed letter saying "this is my full payment for settlement of the debt" they haven't signed it, so they take the $$ and keep collecting on the rest. He should get a letter from THEM first, signed and on letterhead, stating the amount they are settling for. Then he sends it back, now signed by him, with the amount. He can also likely work out a monthly payment plan, but again you need something in writing. Good luck.
He shouldn't. Or maybe someone needs to explain why ANYONE would - or should - extend credit to this guy again? This is exactly the credit problem in this country. People borrow more than they can afford. Don't pay it back, then worry about how to borrow more money that they can't afford to pay back again.
Capital One is the CC company, the collection agancy is called The Northland Group out of Edina, MN (2-1/2) hours south of here, and he lives in WI, which is joint property state. You've given tons of good advice on this point so I will divulge, that the person in question is actually my father (and mother). At some point in 2006 while living at our family house in FLA, he obtained this CC and proceded to purchase and take cash advances with apparently no intiention to repay. The statments were sent to the FLA address, an no one in the family knew anything about it until the collection notices started to come to the home address in WI. My father has had a long and storied history of "financial unaccountability". His job of 35 years allowed him to charge items at the local hardware and other local merchants to the people who employed him. As time went by he became more and more liberal with what he charged to these people and many items ended up in his personal use.... The point is that his financial capacity has been suspect for many, many years and this latest issue of the CC default/collection is the one that is going to stick. Now that I have to deal with this directly, I am leaning towards an end all-be-all settlement so the issue is closed once and for all. Most of his assests have been moved into a living trust, (working with the lawyer freind of mine I spoke of before), but I'm not sure how much protection that will afford him. I also don't think bankruptcy is a viable option at this point. My buddy the laywer advised me to write to the collection agency/CC, (with a copy of my power of attorney docs) and demand a copy of the original application and copies of all the statements. After those are recieved, send them the doctors formal diagnosis from Mayo Clinic (Rochestor, MN) stating the frontal lobe demetia that.... might "scare them off", as in his opinion "incapacity" is a fairly viable defense in these matters. Having the ability to pull from their accounts held within the trust, I have no problem issuing a check to settle the issue. I just don't know how much to gamble on this issue as even $3500 settlement offer is a fair piece of the overall pie. IMO, the bottom line is he F-d up. Just like he has F-d up for the past 35 years, yet somehow got away with it in the past. Now it's going to hurt, not only him, but his family. I have little sympathy, but also feel sad. Overall it's a hard place to be in.... seeing your parents battle physical and mental illness and having to take over responsibilities like this so soon. Thank you for you insight, this is another reason why F-chat is such a valuable place.
I'm so sorry to read this revelation, I had no idea it was your parents in question. At least, it seems they raised a responsible offspring (you), and I wish you the best in your efforts!
Scott, I am sorry to hear that your dad is dealign with this. The Northland Group is a collection company that is part of a large group collectively called "LVNV" - one of the biggest collection agencies in the country. The bad news is that The Northland Group are real bulldogs, and they WILL sue your father, almost 100% probability, if he does not pay. Furthermore, Capital One is meticulous about keeping records, they are well known for bringing *everything* to court.. the original signed CC contract, all statements, copies of every letter ever sent to your father, etc. Cap1 is probably the creditor with which you have the least chance of success in a lawsuit. Thats the bad news. What your lawyer is recommending is called a "DV" - dispute/verify. When you get the letter from the collection agency, there is always some strong language followed by a "if you do not believe this is your debt, you must contact us within 30 days or we will assume it is yours", etc. When you DV, the collection agency is required by law to stop all collection efforts until they can verify the debt. Some verify just by sending you a stupid letter saying you do owe it, whereas others will send you photocopies of the original CC agreement. Since you are dealing with Cap1, it will be the latter. It would, however, possibly buy your some time on the matter. From everything I know, Cap1 has a timeline and during that timeline they *will* sue you... they aren't the kind of creditor who will just go away. Do you know what the original credit limit was? Usually you are looking at around twice as much as the original bill within 12-24 months. So if the original bill was $3k, you can expect it to be around $6k (after fees and interst) after 12-24 mos. You mentioned a settlement offer of $3,500...I am curious what % of the original card balance that represents? Usually when you hit around the 2-year mark (or sometimes earlier, but usually not within a year) of the original date that the account went into default, that's roughly when you could expect to get sued. If it is still early in the game, then the amount they say he owes may not be all that much higher than the original card limit. It would behoove you to do something sooner rather than later, because you can expect it to rise roughly at the rate I mentioned until the lawsuit is filed. I am not knowledgeable enough about the trust laws to know if that would help protect your dad's assets. I would check with a BK lawyer or a consumer lawyer on that one - they would know. You can buy an hour of a BK lawyers time for cheap money, but remember that BK lawyers make money from BK's and often recommend that as a catch-all solution. Cap1/Northland are not known for very 'generous' settlement offers. For many people, they will not accept less than the original owed amount. From the checking I did, it seems that 40% of what they are saying he owes is about as good as I've seen. Of course it also depends on how likely they think they are to win and collect. I am sure they think they can win but collecting is another matter. If they don't think they can collect - or (and this is important), if they can be convinced that they can't collect, they are much more likely to accept a lower offer. Legally they cannot discuss the debt with you or anyone else other than your father or his guardian/caretaker or his lawyer. If you have a friend who is a lawyer, it may go a very very long way to have him call the collection agency on your dad's behalf and let them know that he suffers from this medical condition, and see what they say. If he is a good negotiator, then he may be able to get them to take a very low offer. He can say something like "I have spoken to his wife and while we feel we have a very good shot at getting this dismissed in court, we would prefer to come to a reasonable settlement and get it resolved without further hassle". IMO, if he can get them to take 1/3rd of the original amount or less, jump on it... anything better (in your favor) than 1/3rd is a great deal for you. I am not sure what the timeline looks like from the time your dad got the card until he was diagnosed, or if the case could be made that he was already incapacitated when he got the card, even though it was not discovered until later. Then again, the collection co is probably going to make the case that he did infact use the card, and does owe the money, and does have the ability to pay, and that they did not solicit him and act in a predatory manner, and therefore are owed payment. Cap1 will not agree to remove the negatives from credit reports, so there would be no use in trying to get them to remove the negative info, but it sounds like that may not be such a bad thing either. If the settlement is a tough amount to pay at once, you can likely get them to work out a payment plan, maybe from 3 to 12 installment payments, although you will likely get a better settlement if you can pay it all at once. Again, if your lawyer is willing to call and if he is good, he can say "I have been authorized to make a payment of $x TODAY if this will resolve the account". Collectors are like used car salesmen - getting the money TODAY is where it's at for them. but whatever you do, whatever you arrange, make SURE that they send a signed, dated letter to you on *letterhead* BEFORE you send them money. Make sure you have something signed by them agreeing to consider the debt fully paid and resolved, and that no amount will be re-sold, or be subject to any further collection, etc, etc. Then once you have that signed, you keep a copy, sign a copy and send it back to them with the payment. NEVER send payment - not even a dime - without that letter. The statute of limitations on credit card debt is 4 years in Florida. If you pay even one cent on the debt, you reset that clock... which is a bad thing. So if they try to push you into paying something today "to keep good faith", etc, don't do it. I also highly recommend doing the limited cease and desist, so that way they are not calling your parents and calling their neighbors about your dad's debt. Hope this helps. Sorry again to hear about your dad... obviously you care and that's why you're trying to help. Taking care of this will help immensely to keep both their consciences clear. It will be a huge weight off your moms shoulders too. Just remember that the quicker you get this resolved, the better it is for your dad and mom and the longer it goes, the worse a deal you are likely to get (as the collector invests more $$$ in the collection). A quick, easy settlement is much preferred for a collector than a long drawn out affair. G'luck.
It sounds like you're on the right track dealing with this but, I'd have your attorney buddy send out the letters reminding them of his declining mental state and offering the .10 on the dollar to settle the matter. Legalese is the only thing they'll listen to. Tell them that he's broke and if this final offer is not accepted that he will be forced into a BK with no chance of them getting anything. Change the phone number to stop the harassment. Good luck.
