To make a long story short - I've been served! Actually my wife has. We have to appear in small claims court over an unpaid credit card dept. During Covid I lost my job and was out of work for almost 18 months. It was a struggle trying to keep up with all the credit cards and other debt that I have. One CC fell through the cracks and now we received a summons to appear in small claims court in about three weeks. We called the law firm handling the case and they say we owe $9650. They offered a settlement of $8200 but I don't have it. I would also have difficulty with the $400/mo payment they offered. I countered with $3000 but they said it was too low. I might be able to scrape up a little more. I asked them how low they could go and they wouldn't say.

Any suggestions from the Sig Forum Brain Trust on what I should do?

Assuming you're working again now, one option might be to go to your bank and take out a personal loan or HE line of credit, at what would be a much lower interest rate than the credit card charges, and use that money to pay off the card. Then make paying off that loan a priority.

This advice is not saying file bankruptcy yet, but in order to understand what can happen in this case consult a bankruptcy attorney in your area. there are plenty of them that do it, and ask questions, find out what is allowed legally in your state, what they can do with a judgement on your wife regarding joint accounts and assets. This will arm you with valuable information on what you should do, and what can happen to you depending on the route you both should take.

As far as the collection attorneys, keep notes, dates they call, time, have they provided you with the proper legal notices, there are federal laws on how they have to work. I would keep working on a payment schedule that works for you, explain your case, keep the dialog going, they don't want to go to court, it's the final resort and doesn't guarantee payment, they want to get paid.

Going to court to get a Judgement they can't enforce is a waste of time and money, not saying they won't, but uncooperative debtors, rude, or ignoring the debt causes some recovery companies, lawyers or not, to go full legal.

If it goes to court don't skip on the court appearance, they'll just get a default judgement, unless her attorney advises otherwise.

At Court she can show and present your case that you are in a financial situation you describe, lost job paying all your other bills, and could make $X payment, Judge might send you out to discuss it with the law firm to come to an agreement, I've seen it happen.

They can demand $400 all day but if you can't pay, you can't pay it.

Now without getting into your situation too deep, if you are in financial straights and barely getting by, you could consider bankruptcy for your wife only. You can specify which debts in her name only you want to submit, meaning no joint debts.

Probably cost you about $2K or so, tell the law firm this is what you are doing and instruct them to contact the attorney she hires.

I know that bankruptcy doesn't sit well, with a few here, but if the debts you have are killing you both financially due to the pandemic, loss of income, and this firm won't work with you, then maybe it's the right solution and you can start over...

Do not forget IRS tax implications. If you pay less than $9650 the difference is taxable income & is usually reported to IRS. The taxable income is negated if bankruptcy is filed or you have a negative net worth in the year the forgiven debt is filed with IRS.

Thanks for all the advice.

I have been working again for the last year and a half and have a good salary as a project manager. I hit 70 in a year and a half and would like to retire. I don't want to take on any long term debt if I don't have to.
If we go to court, what can I expect in the way of court costs that I would have to pay?

Small claims don't involve lawyers, do they?
I've won in small claims court but never got a dime.
Not a lawyer but seems this court may not have much teeth.

Make sure they show you proof that they are the right owner of the debt. They need to show the signed credit agreement and proof that it was properly assigned to them.
Don't be afraid to push back, there are no points for being a good guy in this situation.

quote:

If we go to court, what can I expect in the way of court costs that I would have to pay?

You'd need to contact the small claims court where you would be served and ask on that, again, a good consult with a bankruptcy attorney will answer all these questions you have, and get advice on what to do.

Thinks like, is your wife retired, is her income SSI only, is the debt only in her name, are you on the hook for it, it's not clear as you say it's her debt but we have to go to court, what assets are exposed, how does your state law handle this.

Get competent advise from an attorney in your area.

See if the current owner of the alleged debt (it has very likely been sold - in other words, the original lender is not the plaintiff) has at least copies of the original loan documents, i.e. credit agreement, loan application, etc. If the debt was sold, they may well not have the documents needed to prove the existence of the debt or the amount. In which case they cannot win. They also should have an assignment of the debt from the original lender to the them, if it was assigned. Without it, they cannot proceeed.

If this is the original lender suing you, your defenses may be weaker, as they are likely to have all the original documents.

I don't know the rest of your financial situation, but if this debt is your only problem, it seems a smallish debt to consider bankruptcy over.

This is a largish alleged debt. Maybe you should consider hiring a lawyer.

quote:

Originally posted by jhe888:
.... Maybe you should consider hiring a lawyer.

That always sounds like good advice until one realizes how expensive the hourly rate of any lawyer is.

With all due respect, if he can't pay this debt, how does he pay a lawyer?

Talk to an attorney. They’ll lay out your options and can advise on how to proceed in small claims. Your local legal aid orgs should be able to recommend somebody. Generally you want yo verify the debt, know who you’re dealing with, and figure out small claims.

quote:

With all due respect, if he can't pay this debt, how does he pay a lawyer?

^^^^^^^^^^^^^^
A couple of hundred for an hour of advice is worth it. He is not gonna hire some lawyer from a white shoe firm in D.C.

quote:

Originally posted by ZSMICHAEL:

quote:

With all due respect, if he can't pay this debt, how does he pay a lawyer?

^^^^^^^^^^^^^^
A couple of hundred for an hour of advice is worth it. He is not gonna hire some lawyer from a white shoe firm in D.C.

Some Bankruptcy attorneys will discuss your case over the phone, they want to know if you qualify or not and may give you general advice. Know of a few who do so... He may have to call around, of course they are best to find one and have a consult, $400 to an attorney for advice on a $10K debit isn't a bad investment.

I would keep in contact, tell them you want to pay, ask for copies of the debt contract, fine out who owns it as that determines the rules of how it is handled, 3rd party or if the firm bought the debt, the laws are different for each type.

As long as you are in contact, and working toward a solution it should keep it in play, you will have to make some kind of payment at some point, if not they'll have to decide to close, or pursue the case in court.

How old is the debt? In Pennsylvania there is a statute of limitations, 4 years, that after a 4 year period debt collectors can no longer sue you in court for payment. The debt doesn't go away but the debt collector loses their ability to sue for the debt. I had a couple of old debts in the past that a collection agency tried to get me to pay and I simply wrote a letter stating Pennsylvania's 4 year statute of limitations, mailed it to the collection agency via certified mail and that got them off my back. You can also check for any protections your state passed during covid that may protect you from collection agencies. As others have mentioned I'd suggest speaking with a attorney that specializes in debt collections and see what your rights are in your state. Hope you get it settled to your satisfaction.

If she goes into court and admits that she owes it, but just can't pay it, they WILL get a judgment in the amount of the oustanding debt, including interest, and probably 25% attorneys fees, and court costs, probably a few hundred dollars.

If she goes into court and says "I know I owe them something, but I didn't think it was anywhere near that much", then they will have to prove their case completely, including ownership of the debt and the correct amount of the debt.

A lot of times they just have a statement that shows she owes X dollars. That in itself is not sufficient proof of the debt. Although jurisdiction dependent, there could be something like if they sent certified mail a statement of the debt and it was not disputed, it could be considered evidence of the debt.

If she has not made any payments or admitted that it was owed, it's possible that the statute of limitations has passed, as creditors have limitations on the time within which they can bring suit-probably 3 or 5 years, but depends on jurisdiction.

Lastly, whatever judgment they may get, they still have to try to collect it. They can sieze assets in her name, cash in banks, and garnish wages, probably up to 25%.

If it's just in your wife's name, depending on if you're in a community property state, they may not be able to go after your wages. Is she working?

A local attorney familiar with debt collection in your state can answer these questions, and it's probably worth paying a couple hundred bucks to consult for an hour. Just make sure you have all of the information handy when meeting with an attorney.

quote:

Originally posted by bob ramberg:
One CC fell through the cracks

You can get free copies of your credit report, from each of the three credit agencies.

https://www.annualcreditreport.com

It would be a good idea to pull your credit and hers, and go through it to see if there are any other outstanding debts that had slipped through the cracks.

Many, many moons ago I had an ex open a credit card in my name, rack up a bunch of debt (though nowhere anywhere near $10k), then abandon the card and payments when they shut the card down.

I found out about it when I tried to take out a car loan and was turned down.

After consulting with, and upon the advice of, a lawyer friend I contacted the creditors (this wasn't the only one) and arranged to settle the debts.

This one particular creditor wanted much bigger payments than I could reasonably afford. Again, upon the advice of my lawyer friend, I quite simply informed them "Fine. You can take me to court and you might well obtain the judgement you seek, but, when the Court determines I haven't the ability to meet your payment schedule, you'll end-up getting what I'm already volunteering to pay you, anyway. Your choice. And remember: I didn't run up this debt and I voluntarily contacted you in order to settle it."

They agreed to my terms.

quote:

Originally posted by ensigmatic:
Many, many moons ago I had an ex open a credit card in my name, rack up a bunch of debt (though nowhere anywhere near $10k), then abandon the card and payments when they shut the card down.

I found out about it when I tried to take out a car loan and was turned down.

After consulting with, and upon the advice of, a lawyer friend I contacted the creditors (this wasn't the only one) and arranged to settle the debts.

This one particular creditor wanted much bigger payments than I could reasonably afford. Again, upon the advice of my lawyer friend, I quite simply informed them "Fine. You can take me to court and you might well obtain the judgement you seek, but, when the Court determines I haven't the ability to meet your payment schedule, you'll end-up getting what I'm already volunteering to pay you, anyway. Your choice. And remember: I didn't run up this debt and I voluntarily contacted you in order to settle it."

They agreed to my terms.

If you didn't sign anything, then the terms should have been to send them a demand for proof of the debt under the FDCPA and when they can't, or they provide a forged document inform them as such that the account was opened in fraud, and start a police case if necessary.

Then a letter under the FDCPA that they cease and desist..., probably would have given them my ex's name, address and employer address so they can file charges against her for fraud and arrest her at work...

^^ same thing happened to me as ensigmatic, ex split and opened a Victoria Secrets card account with my name and ssn. I found out just after our divorce was settled. It fraud, I know it she knew it, none of the paperwork was my signature yada yada yada. I called and closed the account-which they gave me a hard time about, but eventually did. I told them I was an E6, divorced, and listed all my bills, faxed it to them and said I could only pay (about a 1/3 of the amount). Went back and forth, and told them that if I went to the cops and filed a fraud case they wouldn’t get anything. They took the cashiers check I sent and removed them from my credit listing.

OP, call a lawyer, go to court, tell the court you don’t know the amount that they say you owe and MAKE the collections people prove their case. Someone else mentioned it above. Good advise.

If/when you do settle, make sure you get it in writing, spelling out that the debt is settled. DO NOT ALLOW THEM ACCESS TO YOUR BANKING-by draft or sending stuff electronically. Always send a cashiers check and make copies. If the court orders electronic debiting, creak a separate account and make sure it’s not tied to any of your regular accounts(I’d make it at another bank so there can be no questions)

Edited for spelling

This message has been edited. Last edited by: MikeinNC,

quote:

Originally posted by HRK:
If you didn't sign anything, then the terms should have been to send them a demand for proof of the debt under the FDCPA ...

When I wrote "Many, many moons ago..." I meant it. This was before the FDCPA even existed. Plus there were... "complications."