Discover Card threatening legal action

[MojoXN]

My question involves collection proceedings in the State of: West Virginia.

I'm a graduate student in West Virginia. I'm unemployed, and have been for two years now. I live off of a small scholarship that my University awarded me, and the excess monies from student loans.

When I lost my job two years ago, it became impossible to continue to make payments on my Discover Card. For nearly a year now, I have been continuously receiving bills from Discover, and though I have repeatedly informed them that I have no income, they have continued to send bills unabated.

Yesterday, I received a notice via priority mail that my account would be sent to an attorney who would proceed to file a lawsuit if I did not immediately pay the balance of $1800 and change.

Anyway, what I would like to know is whether or not this is simple bluster on account of Discover. I have never heard of an account with such a low balance being subject to a lawsuit.

Also, as I have no income, hiring an attorney is out of the question. Are there any free legal services of which I may be able to avail myself, should the need arise?

Finally, in the worst-case scenario that Discover proceeds with legal action against me, which personal property is exempt from collection?

I don't own a vehicle, I rent, and aside from two very old computers, an ancient window unit air conditioner, and one equally old television, I have no salable assets.

Would I be able to keep my clothing, and the books that I need to continue my education? For that matter, the books (novels, etc.) in my personal collection? My pots and pans?

What is a creditor allowed to seize in my state of West Virginia?

I would greatly appreciate any help or advice that anybody has to offer.

[smurfette in nyc]

Discover does sue for debts owed to them, and usually sooner than later. While $1,800 may sound small to you, I've heard of people getting sued for amounts less than $1,000.

Anyway, the worst case scenario I forsee here is that they obtain a judgement against you. You obviously want to avoid this at all costs.

Is there any way you can try to arrange some kind of settlement for what you owe before this goes to court? If you have no available funds now, do you have anyone who can help you, or can you get a part-time job to try and pay this off?

I would also look into "legal aid" which is assistance for low income people needing advice and guidance. Most of all, if this debt is truly belonging to you, you don't want it ending up in court where a judgement can be obtained against you for it. Good luck!

[ShortBus]

They can't seize any assets for credit card (unsecured) debt, so you can stop worrying about that. The absolute worst thing they could do is sue you, win, get a judgment, and then attempt to garnish your wages or your bank account. So, as a precaution, I would recommend that you open a new account at a new bank and move your money there. If you do pay Discover any money, pay it using a cashiers' check drawn on your old bank, not your new one.

I have heard that Discover can be a major pain when it comes to wanting to get paid. So I would recommend that you take their litigation threat seriously, especially after being in default for so long. But, like smurfette says, I would recommend that you attempt to settle with them ASAP. They may be willing to take a 50-60% settlement or better if you plead and negotiate (start by offering 30%). The caveat is that you need to have the funds on-hand; they're not going to want to to negotiate a payment plan. Can you borrow the money from family?

You could try the hardball approach by mounting a vigorous defense if they do sue. But if you legitimately do owe it and they have the documentation in order, it will be likely be a fruitless--and stressful--effort. Seriously, I would beg, borrow, and steal to get $1000 together to pay it. Having a judgment on your CR is an ugly scar to bear for seven, long years (I'm speaking from personal experience). It would be a worthy investment in your future if you could settle prior to court.

[MojoXN]

No, I don't have any family with that kind of money.

My parents are dead, and my one brother is in Iraq. No living grandparents, aunts or uncles.

I can't work due to a severe inner-ear disorder that plays hell with my balance.

I'm not able to receive public assistance because of my status as a student.

I have exactly $645 for living expenses (food, etc.) between now and the end of August, but my rent is paid up through then, which is good.

So basically, what I'm hearing is "You're screwed!"

Also, to whomever mentioned that my personal property is exempt on judgments against me for credit card debt, are you certain that that provision applies in WV?

As far as a mark against my credit, I don't care in the least about that. I'm sure that the charged-off balances from the other two cards that I had to quit paying when I lost my job have destroyed my credit rating, and besides, if this whole ordeal has taught me anything, it's that credit (of any sort) is for SUCKERS!

[fatherof3]

Mojo,

Try NACA.net Ihave not used them yet. I am waiting for some debt validations to come in first, then I plan on calling them.

Also, if you the time visit buddhibbs.com He has some good info there, read his book under media, and then decide what you need to do.

Good Luck! Keep us posted on this site, I would like to know the outcome.

[LadynRed]

They can't seize any assets for credit card (unsecured) debt

Of course they can ! Once they get a judgment they can definitely go after any NON-EXEMPT assets you might have - and that includes money in a bank account. From your description of your situation, I'd say you don't have any non-exempt assets, but you'd still have to file your exemptions if they get a judgment against you - and Discover IS aggressive about that.

[MojoXN]

I'd like to take care of as much of this as possible pre-emptively.

Do I have to wait for them to file suit? If so, what is the next step in the process of filing for exemptions for personal property?

I found some information at the following link:

http://www.uschamber.com/sb/business/P98/P98_12_assettables_WV.asp

West Virginia Post-Judgment Asset Exemptions

Homestead: Real or personal property, including co-op, used as residence, up to $15,000.

Pensions and Retirement Benefits: ERISA-qualified plans. Funds exempt for public employees. IRA exemptions for conventional, Roth, SEP and SIMPLE plans. IRAs limited to amounts that are necessary for the support of the debtor and his dependents. Warning: No protection for IRAs that are established by an "insider" of the debtor. This provision could eliminate the protection otherwise offered to small business owners by SEP and SIMPLE plans.

Insurance: Life insurance payments from policy of person who supported debtor, needed for support. Unmatured life insurance if debtor owns policy and insured is debtor or person who supports debtor. Group life insurance policy or proceeds. Health or disability benefits. Fraternal society benefits.

Personal Property: Animals, crops, clothing, appliances, books, furnishings, musical instruments up to $400 per item, $8,000 total. Burial plot to $7,500, in lieu homestead. Payment for lost earnings. Motor vehicle up to $2,400. Jewelry up to $1,000. Personal injury recoveries up to $7,500 (excluding pain and suffering). Wrongful death recoveries needed for support.

Tools of Trade: Tools and implements up to $1,500.

Miscellaneous: Business partnership property. Alimony. Child support.

Wages: Greater of 80% of wages or 30 times federal minimum hourly wage.

Public Benefits: Unemployment compensation. Workers' compensation. Social Security. Veteran's benefits. Aid to blind, aged and disabled. AFDC. General assistance. Crime victim's compensation.

Wild Card: $800 of any property. Unused portion of homestead or burial exemption for any property.

Anyway, I'm fairly certain that none of my household goods add up to anywhere near $8000 total (according to their resale value), but just out of curiosity, who makes the determination as to how much personal property is worth? Is depreciation taken into account in calculating fair value on my belongings?

Also, not that I expect it to matter unless I experience a miraculous recovery (doubtful, believe me), the section on wage garnishment is a bit unclear.

"Wages: Greater of 80% of wages or 30 times federal minimum hourly wage."

How is that to be understood? That if I earn less than 30x the minimum wage, my income is exempt? That my income is exempt as long as I make minimum wage and work no more than 30 hours per week? And how does the 80% factor in?

Finally, thank you all so very much for your help. I'm scared to death that I'm going to lose what meager possessions I have.

[MojoXN]

Any money in any bank account would be subject to seizure, correct?

Does that mean that I should go spend the $645 that I currently have for living expenses on non-perishable foodstuffs before they try to take it from me?

If I were to shop wisely, that should get me through the next four months.

If this is something that I should do, please let me know as soon as possible, as it will take me at least two weeks to plan a trip to a mega-mart with someone who has a car, if not greatly longer.

[fatherof3]

Mojo,

Slow down, relax a little. It takes time to do what they are saying they plan on doing.

Have you tried calling Discover to see if they would take a settlement. They may take a settlement over a period of months. After a year you are well past the 180 charge off date that is needed before they will work with anyone. I know this because I have been calling attempting a settlement and they won't budge. I need to be 180 late before they will work with me. Go figure.

At the very least try and contact someone that can help you.

[AISLE4]

$645 for 4 months of food and other living expenses?! Um, what are you eating? I gotta get on that budget.

You have nothing to take. They aren't interested in your books or old computers. You have no wage to garnish. If they sue and win, they will get a big pot of nothing. I'm sure they know this by looking at your credit reports. The threat of legal action may be bluster--it tends to scare people into finding money.

It doesn't sound like you are in a position to settle since you have no extra money. Declaring bankruptcy on a $1800 debt seems a bit rash and foolish.

If I were you this is what I'd do:

-Wait for them to sue and then answer the summons and go to court. Many folks who don't panic and don't pay at the threat of legal action will pay when a summons arrives. You can get help here with the summons if it ever arrives. It is important to answer the summons to let them know that there will be no default judgement.

-If a summons does ever arrive, immediately take action to protect your money. Get a bank very far away from where you live...or stop using banks.

-If they do sue and win, since you have no easily seizable assets, you will be in a perfect position to negotiate settlement at a later date when you do have access to more money.

You need to keep in mind that a judgement against you doesn't mean that they immediately get paid. They have to find and then collect assets, which is not necessarily an easy thing to achieve, especially if you have nothing to take and have taken steps to protect yourself. And mounting a legal battle for $1800 against someone with no money or property is hardly worth the time and money, especially if they learn that you will be actively defending yourself (do not allow a default judgement). Lawyers ain't cheap.

[m2aclark]

One suggestion to "hide" your money is a prepaid visa or mastercard. Take your cash, put it all on there and continue to live out like you would. Also, fight the suit if it happens, but it probably will. WV, Discover, I'm guessing Zwicker & Associates or Javitch, Block, Isen & Rathbone. Might not be either attorney, but those seem to be the favorites in that area.

Discover is a tough settle, they would rather get nothing and push you to BK than let you out of the debt the easy way.

Try to settle if you can, but don't hold your breath on that. The position you are in leaves them stuck if they do get judgment, not much to execute on. Maybe offer a pay plan of $25/month in a stipulated agreement and see what thta does for you, but if youdo a stip agree, do not miss a payment.

[MojoXN]

What are the odds that Discover would agree to a payment plan at this stage in the game, theoretically speaking? They have said that if I don't contact them by April 30, then they will place an attorney on my case. What would be the best way to convince them that I'm not worth the expense of pursuing legal action?

I don't have any spare money, but if I could convince them to agree to a payment plan, and throw them a token sum for a month or two, I may be able to prolong the inevitable.

Also, provided that Discover does obtain a judgment against me, how would they assess the value of my belongings? Would an agent of theirs show up with a cop, and start an inventory? Who decides how much my things are worth, and how do they do so? Do I? Do they? How does this work?

Thank you very VERY much to everyone who has offered advice on this matter. Thanks to all of you, I'm nowhere near as panicked now as I was when all of this began.

[lostindebtinVT]

I believe you should talk to them about a payment plan; they offered me 0% for 5 years after I was 90 days due. If they send you to a lawyer, it will take time before you will be summons to court, it is there that they will ask your asset position; they don't send someone to your home; you have to disclose your assets and liabilities for the hearing. If you do not show they will win judgment; if you do show you may be able to work out a deal there. Depending on the state you live you may just end up with a judgement on your credit report that you can try to settle for less at a later date; however, some states allow for wage garnishment and each state has rules on the maximum amount that can be garnished. In my state they can only garnish 25% of my income each month; not much but I have to have steady work and a job; which I don't right now. Discover is a tough creditor to deal with and usually will just keep calling for up to 210 days when they will finally charge off if you can't settle with them. I've tried to settle with them but they want more than I have and I'm hoping they will get more reasonable just before chargeoff at 180 - 210 days.

[trueq]

When the lawyer start calling you, SEND HIM AN FDCPA VALIDATION LETTTER!

If the attorney violates the FDCPA you could turn this into a payday for your self.

Just keep good records.

If he sues you without validating, motion to dismiss for conducting further collection activity in violation of FDCPA.

$1800 sounds pretty small, wouldn't it just be easier to get a part-time job for 2 months?

I settled with discover for 50% on $30,000.

I can't belive they would not take $1000 to settle this entire matter, especially when you are so judgment proof!

[Concar]

I also have received a letter from Discover threatening to sue me for roughtly $10,000. they are giving me until 4/30 to pay before it's turned over to a lawyer.

At this stage will they be willing to do some sort of payment plan or will they demand payment in full (or else take me to court) ?

[AISLE4]

Folks, they all threaten to sue. It's step #1 on their list of ways to collect on delinquent debts (Okay, maybe not #1 but it's among the first few steps). People generally don't like going to court. Creditors and CAs know this and use it. If you read this forum often enough you will see that many first timers become participants here because of the threat of legal action. It wakes people up.

Sure, creditors and CAs do sue but not as often as they talk about it. I have a mountain of debt and am threatened with legal action almost daily. This has been going on for a few years and still no lawsuit.

[Concar]

So you're telling me that Discover only threatens to sue but they won't?

I talked to them yesterday and they wanted me to pay over $500 right then and there to keep my account from going to legal then we could set up monthly arrangements. I didn't have the money to pay right then but offered to pay them that in 2 weeks and they said they have to have at least 3% of my balance by tonight. Well that ain't happening so I guess we'll see what happens next.

[trueq]

That $500 will go up in smoke to interest and fees!

Don't take threatening to sue seriously from a minimum wage butthead on commission!

It still has to go to an attorney for review. (most don't)

They have to determine whether its worth it to sue you. (most are not worth it.)

They generally send a dunning letter first under the FDCPA.

You can then send them an FDCPA validation letter to slow them down or stop them.

Most states require a written "notice of right to cure default" after all that.

Then they could possibly file suit.

If they do sue, they have to serve you a summons and complaint. THIS CAN TAKE MONTHS, DEPENDING ON HOW HARD YOU ARE TO FIND!

You have the right to answer the suit challenging jurisdiction, venue, the contract, "authorized use", FDCPA violations of further collection activity without validation, and the right to demand a trial by jury, just to name a few!

You then have the right to motion the dickens out of them. (dismiss, motion to strike inadmissable evidence, challenging subject matter jurisdiction, etc.)

You then have the right to trial by jury.

If the jury actually finds for the slimy debt lawyer, you have the right to appeal the judgment.

If the appeal fails you have the right to file a collateral attack in federal court.

And even after all that, and the judgment against you still stands, you can still...

1.) oppose the garnishment action (especially if your income is near federal poverty limits.)

2.) oppose any lien or levy action

3.) oppose any other collection action

At this point, IT CAN TAKE YEARS!!!!!

Even after all that...

You could still possibly negotiate a settlement on the judgment.

AND....

AT ANY TIME DURING ALL THAT YOU COULD FILE BANKRUPTCY AND CHALLENGE THE VALIDITY OF THEIR CLAIM OR JUDGMENT IN BANKRUPTCY COURT!

So "threatening to sue" only works on those foolish enough to buy into it! With BK as the ultimate deterent, you always have the ace card, if you completely botch your court defense and the judgment against you stands through all that!

[Concar]

So even though I know I owe them this money (well some of it is interest, fees, etc that have been accruing for months now that I'd expect them to waive) I should still act as though I don't owe them? I'm willing to set up some payment arrangements ( I would settle but I don't have enough to pay the settlement off) I just don't want this to go to court and have that mark on my credit and go through the embarrassment of dealing with it that way.

I just don't believe that they HAVE to send it to legal. It's Discover, they're their own bank. They can set up arrangements without me paying anything upfront to "prevent" it from going to a lawyer. That's my personal opinion on it. It's not with any collection agency so I figure if they aren't willing to set up something now then screw them. They can offer me a payment plan with zero interest and waive the interest and fees that have accrued for the last 6 months. Is that unrealistic at this point?

Can I send them a letter asking for some sort of payment plan or is it too late for that? I guess it's worth a shot. I figure this way I'm showing/proving that I'm willing to work something out with them.

[MojoXN]

I explained my situation, and they said that they would settle for around 60%, but that they wanted a check-by-phone for the full amount today, "Or else we'll send it to legal"

As I mentioned earlier in this thread, I have a little over $600 to live off of for the next three and a half months (not counting my pre-paid rent).

Do they really think that anyone just has $1097 laying around?

So anyway, that's the situation. I don't have the money to pay them, and even if I did, I need that to survive on until I get another check from federal student loans in late August.

I'm going to call them back a little later, and explain that I would like to make good on the debt, but don't have the money for a lump-sum payment. If they're insistent about getting $1000+ right then and there, I'm going to explain that they won't get anything if they sue me, because I have nothing that they can touch, and I have no salary that they can garnish. I'm then going to ask them if they'd rather waste hundreds or thousands of dollars on an attorney, and get nothing in return or be reasonable and work with me on this.

I'll post again with details of what transpires.

[trueq]

I was not suggesting you act like you don't owe it. I was suggesting that YOU DO NOT GIVE THEM $500 UNLESS YOU HAVE A WRITTEN SETTLEMENT PLAN IN PLACE TO PAY THE WHOLE DEBT!

You are just going to "piss the money" away by making a partial payment on the account now, without settling the balance in full. They will just continue to tack fees and interest on and your $500 will be eaten away in no time and you will be in the same situation 4-6 months from now.

[Concar]

Well I wasn't willing to give them anything anway (plus didn't have it to begin with) so they're sending it to legal. I find it very hard to believe they can't set up some sort of payment plan now. It's not like it's going to another collection agency. Oh well. I'll wait for their legal team to contact me.

[jackdog]

One thing that you can try doing is make sure they know that you do not have an assets worth suing for. Why would they want to pay for a trial if there is nothing to gain. Just be sure not to tell them anything they do not already know.