I am writing this blog today specifically based on what I have been observing with people I talk to and my clients. Now given all the talks from financial people about how we are heading into a recession it makes sense so allow me to elaborate to you and tell you what to expect as well as any possible options you may have.
The mini recap so everyone understands the basics of this, if this is a credit card ( a revolving account ) and it becomes charged off the definition of that is 6 months (180 days) of no payment. IF an installment account (ex: car payment/loan) the charge off is 4 months (120 days) of no payment. Now the 7 year clock starts ticking for the entire account to fall off your credit report.
At this point the original creditor can do a few things:
- Keep trying to collect on the debt
- Sell the account to a debt buyer
- File a lawsuit against you.
And of course the debt buyer/ collection company can:
- Put a negative collection on your credit and try to collect
- File a lawsuit against you.
From what I have seen most of these banks have been hiring Scott & Associates, Zwicker and Associates and Rausch Sturm.
NONE of this is legal advice so if it applies to you speaking to an attorney is always recommended. (will mention more on this later).
While initially they may say we are collecting on behalf of their client whoever that may be just know that if you do not pay them they odds are they are ready to move forward to file a lawsuit against you within 45 days of their initial contact to you (maybe sooner) by phone or mail.
NOW…. Many times people say to themselves, go ahead sue me can’t take blood from a stone so what are you going to do?
That used to be the case but as the saying goes….things change.
Now once the original creditor files a lawsuit against you, there are lawyers that purchase that data from the courts and start mailing you solicitation offers notifying you that you have been sued.
Many times this may be the first the consumer has heard they have been sued, now every state is different BUT it’s not like the movies, no one walks up to you and asks who you are and then hands you papers saying you have been served. That is mostly just the movies.
Now if you are sued by the original creditor I really don’t care what anyone else says, “experts, lawyers etc…”
At the end of the day you are going to lose that lawsuit, they have ALL the paperwork and tons of case law. you stand no chance of winning.
EVEN with the debt buyers you are going to lose majority of the time at least with the big three; Portfolio Recoveries, Midland Funding and LVNV Funding which typically works with Resurgent.
Yes you can do some research and make sure they can document and prove they have ownership and right to sue and collect and most of the time they do and you lose.
If they do not have enough of the right documentation their attorneys will typically ask the judge for a continuance on the case to get the additional documentation and the judge typically allows this.
You find out later down the road you were sued, maybe a year or more, then there is nothing you can do other than try to settle.
NOW…WHAT HAS CHANGED……………………
NOW I am seeing these companies both banks and debt buyers filing additional paperwork with the courts to take your money from your bank accounts.
It’s filing for a receivership.
In summary it’s the debt buyer/bank telling the court they want permission to actively collect on the debt that they are owed.
They take that paperwork and go to your bank, for example if you have a lawsuit against you for $5,000 and you have $900 in your bank at the time the bank takes the $900 and freeze your bank account.
You have no options, ANYTHING with that bank that has your name and social security number is now theirs.
Have an account with your spouse OR family member and most of the money in there is mostly theirs?
Have a parent whose account you’re on just in case something happens to them or helping them manage their account?
IF that account has your social security number attached to it in some fashion they are taking ALL of the money in there until the debt is satisfied.
AND you know how well that is going to go over with the other person whose name is on that account.
As always I tell anyone reading this go to my contact page and call me if you have questions. After 18 plus years in the industry and credentials behind me let’s see if we can put a plan together for you.
Quick story: (ok, I’m very detailed so long BUT good one)
NOTE: this story is coming from the man directly and not me so if the company reads it I will be happy to provide them the client name since I am not the one slandering them this is his story to me.
Just last week I had a gentleman come to me saying he was delinquent on 2 accounts totally $85,000.
He hired a “Law firm” debt settlement company to help him settle the debt, they never talked their fee when I asked him only what they said they can get the payments down to.
He was happy with that and started paying into the escrow account of sorts $1,100 every month expecting them to handle everything.
Now, he has some difficult family medical situations that kept him from paying attention to this and he followed up and logged into the account to see progress and what he expected his overall balance to be approximately $8,000
He saw his balance was approximately $1,900
I told him so they didn’t tell you their fee was anywhere from 20-25% of what you owed? Which was around $17,000 – $21,000
He said NO, I would never agree to that! I then told him that’s why they didn’t tell you that but it’s in the paperwork you signed. And JUST like a car payment they are going to get their money first. (crappy I know)
I then said those two bills are really high so let me check what I suspected and I was right he was sued literally 2 weeks prior before reaching out to me.
He said but they are a law firm so they will represent me right? I said of course…. For an additional fee, read the paperwork you signed it is buried in there I am sure.
So all they did was say send us your money and once it hits a certain number in your escrow account we will settle it for you.
So they really did nothing other than take his money. Now do they have legal reasons to keep the money they basically took (in my opinion) , that is unclear as I have not looked at the contract he signed.
I hope anyone reading this that it has not happened to you in any capacity. If it has reach out to me and maybe I can point out some different options you may have available to you or perhaps I can be of help.
Regardless I always tell anyone I speak to that at least after talking to me you will know all your options, good or bad and then you can make the best decision for you and your family.
I will tell you that if you do not have any access/ability to get your hands on a semi sum of money it does limit your options BUT you still have options SO…. Give me a call you can no longer bury your head in the sand with what they are doing to consumers now. go to my contact us page to get my phone number or email me below:
note: i spaced this out to prevent tons of spam bots so no spaces to any of this when you email me.
wayne @ waynethe creditguy .com