Jump to content

Disabled and in credit card debt, how do I best avoid getting sued?


Alex548
 Share

Recommended Posts

I'm disabled and I have $11,500 in credit card debt. I live with my parents and I asked them to stop paying my credit cards in order to eventually settle for as little as possible. I'm hoping to wait about four more months so the debt could go to a collection agency so I can settle for a small percentage of the total, or possibly letting it go and not paying at all because I'm not really concerned about my credit rating. I'd rather avoid bankrupcy though because it costs money, and I could use that to settle. The banks obviously started calling me about this  and I recently told them to communicate only by email. The debt amounts are $5,700 on Capital One, $2,700 on Discover, $1,500 on Chase and $1,600 on Bank of America. When they called, I would tell them that I live with my parents, lost my job (even thought I havent had one in many years), don't have any savings, but trying to 'save up', but not the entire health situation. I should mention that I stopped using credit cards and only deal with the cash I'm given access to. I want to avoid the hassle of a lawsuit, even though I know I can still negotiate after they sue, but I'd like to find out the best things to say to them so they really believe they won't get anything from me, and so they don't sue me, what things should I avoid saying, and what are the chances of actually getting sued for this?

Link to comment
Share on other sites

Best way to avoid getting sued is to make payment arrangments.  There is probably zero chance the original creditor will settle for 7%.  After a peroid of default I have seen them go as low as 50%, but not much lower.  Some people have had luck in getting them down to 30%, but I haven't seen it.

Cap 1 likes to sue on their own accounts, as well as am ex, B o A, and Wells Fargo.  Chase usually sells their debt although at the moment they are not selling any accounts as they are in some hot water, and have decided to suspend selling at the moments.  I do not know if this means they will sue on their own accounts, or if they will write them off.

If you do not make arrangements, I would expect the lawsuits to start coming in about a year after default, some wait for 2 years, all the while tacking on high interest rates (the default rate is higher than what it was when you were paying on it)

 

Sometimes you can talk with the CC companies and agree to a repayment plan where they will not charge you any interest as long as you keep your end of the agreement.

Link to comment
Share on other sites

 I want to avoid the hassle of getting sued. Should I tell them my whole health situation so they maybe forget about collecting, keep saying the same thing I used to for as long as they keep asking, or say something else? My main goal is to avoid getting sued. What's the best way to accomplish this?

 

The ONLY way to avoid being sued is not to default or to settle the accounts.  If you are not paying and do not get a settlement there is NOTHING else you can do to prevent the creditor from suing you.  

 

As for telling them your health situation  they do NOT care.   It will be one of thousands of excuses they hear daily from debtors who are not paying.  It will fall on deaf ears.  It is best to stay off the phone and not speak to them at all unless you are making payment arrangements.

Link to comment
Share on other sites

Alex,

 

Here are a few things you might consider, since you are so early in the process of considering defaulting on the debt.

 

1.  Get Google Voice or somenthing similar and change the contact informatoin regarding each account.  This will help with the phone calls from month 3-6 from the OC's after you stop paying completely.  Further once you give them the change via phone I would follow up with a letter of this change in writing, sent CMRR. This could bear fruit in the future with a TCPA claim if you are sued in the future.

 

2.  Generally, 6 months from your last payment they will charge off the account.  You will recieve a notice in letter form that this is going to happen.  Once you do you should send a letter disputing the debt and amount, again sent it CMRR.  This is a nice to have if you are sued, many times they say you never disputed to debt.

 

3.  Start saving money to build a settlement fund or war chest.  As others have said you will get sued based on the players you have mentioned above.  Having cash for lump sum offers gives you the best chance you don't want any payment plans generally.

 

As for the amount you might be able to save down the road depends on your abilities.  If you have the capacity to read and learn getting sued is not such a bad thing based on what you are proposing.  Civil litigation is about who can create the most leverage to get the otherside to give up.  My point is no one is going to take 10 cents on the dollar if they don't have a good reason to.  You have to create that reason....

 

Finally, I would start reading threads from posters from your state to see how there cases are going.  I will say beating a OC can be much more difficult that a debt that has been sold.  2 of 3 you have listed above tend to hold their accounts Cap One and Discover, the others have been selling off, which is better for you...

 

Best of Luck.

  • Like 1
Link to comment
Share on other sites

Read up here on all the strategies.  Research your rights under your cardholder agreements.  If JAMS is an option, it might provide relief if they decide to sue.  Understand that they depend on dealing with uninformed consumers.  You have rights, know them and use them.

 

It sounds like you have no assets, if that is the case, what is the worse that they can do?  You still have the BK nuke.  Unless you have student loans which cannot be discharged, they can't own you.

 

Here is another thing to remember, disengage from the emotion.  It's just business, it's not personal.  That will help you out mentally and that is what is really important.

 

The fact that you are here is a good sign.  It looks like you aren't burying your head in the sand saying "LA! LA! LA! LA! LA!" and hope it goes away.  I would say that you are already ahead of 80% of the crowd.

Link to comment
Share on other sites

Where did you ever get the idea that you could settle for 7%? 

Forget about them negotiating with you.  The only way they will negotiate is if you get into a debt management program and then all it will do is knock the interest rate way down to like 1 or 2% or some even 0% and consolidate your payments into one. 

Link to comment
Share on other sites

@Alex548

 

You mentioned that you are disabled.  If your disabillity is permanent, you will never be able to work, and your only source of income will always be disability and/or social security, creditors won't be able to garnish that income.

 

However, if you own or will ever own property, if they were to sue you and win, depending upon your state's exemption laws, liens could be placed on that property.

 

If your parents are co-signers on any of your accounts, they might be held liable.

 

I tend to agree with Tom that creditors will not settle for 7% on debts that are quite new and still within the statute of limitations.   It wouldn't hurt to talk to your creditors to find out for what percentage they'd be willing to settle.  If it's more than you can afford, bk might be the best solution.

 

I recommend speaking to an attorney to learn all of your options so that you can come up with a solution that works best for you.

Link to comment
Share on other sites

I am not judgemental  but I hope you made sure your attitude and actions doesn't jeopardize your parents situation and what you did with BOA is fraud. Wishful thinking on settling. Cap 1 is very very hard a$$ and vindictive. You will be dealing with them for a while.

Link to comment
Share on other sites

You need to be very careful here... if your parents manage your money, any judgment creditor can go after your assets in their care. If your money is lumped together with theirs in a single account, a levy could be devastating to them.

 

 

Given the OCs mentioned, it's only a matter of time before you are sued. 

 

 

You may want to explore BK - especially if your parents don't hold your money in a separate account. 

Link to comment
Share on other sites

...

I want to avoid the hassle of a lawsuit, even though I know I can still negotiate after they sue, but I'd like to find out the best things to say to them so they really believe they won't get anything from me, and so they don't sue me, what things should I avoid saying, and what are the chances of actually getting sued for this?

I don't lie and highly discourage it. The courts are not going to like it when the non-bank party lies IMHO. The OC (original creditor) DC (debt collector) attorneys always lie from my experience. The court will not be too concerned about opposing's lies (even if you can put them in the record as admissible evidence). It is what it is.

 

OCs and their DC attorneys are an amoral machine that refuses to hear the truth that they won't "get" anything until a judge explains it to them or they fail to find any non-exempt assets/income post judgment. AFAIK there is nothing that can be said to them to prevent their bad business decision (unprofitable lawsuit) which will result in a negative ROI. DC attorneys sue. It is like breathing to them. It is their most reliable tool since it tends to scare the defendant and provides them leverage. I prefer to avoid lawsuits but I have a deep seated fear of not winning. My time and resource commitment necessary to win is primarily what causes me to loathe being sued.

 

My experience tells me that settling is great, if you can do it. I have been unable to do so with OCs. Therefore they sued and lost. Stupid waste of time for all parties and the court but you cannot reason with an amoral machine. The court can tune up the amoral machine and assisted me in doing so.

 

From my experience settling is not easy during an OC lawsuit. I would want to be prepared to take it to a final adjudication in court. Some have elected to enforce arbitration agreements when they exist in the contract. Arbitration is a private dispute resolution alternative to court. It appears to work best when the alleged creditor balks at the cost and hassle of following a person into arbitration and the suit/arb is over, for the time being. Actual participation in arbitration is not something I would wish to do again, but if it can shut down a legal pursuit it can be a positive thing IMO.

 

...

As for the amount you might be able to save down the road depends on your abilities.  If you have the capacity to read and learn getting sued is not such a bad thing based on what you are proposing.  Civil litigation is about who can create the most leverage to get the otherside to give up.  My point is no one is going to take 10 cents on the dollar if they don't have a good reason to.  You have to create that reason....

...

Debt collection or non-collection is all based on leverage. Consumer fear or ignorance of how to properly prosecute a lawsuit is powerful leverage for the DC. Alleged debtors that are knowledgeable, engaged, not lazy, not lawsuit adverse nor highly fearful, and are "collection of judgment-proof" (only exempt assets and exempt income) have leverage no DC/OC/JDB could ever have. The bad news is they are amoral machines designed to get what they want or leave destroyed lives in their wake while blaming the party they destroy. The machine typically cannot see and will not acknowledge my leverage until they are at risk of losing or being embarrassed in court. Other than arbitration I do not see how a person, unable to pay a sizable chunk of what is alleged to be owed, can avoid litigation if there are multiple N.A. banks clamoring for money.

 

I believe treating an alleged default as a business decision is the most appropriate and rational way to go. It is either a contract or it is not. If there is a contract, the ones I have seen always provide remedies for any alleged breach. Typically the remedies may involve late fees, arbitration/litigation, etc.

 

I have never benefited in any way speaking to a collector for an OC. It has consistently been a waste of time.  Also, I do not recommend the typical alleged debtor speak with a DC for a JDB. The DC typically needs someone to feel guilty or they trick someone into a payment scheme that is likely to fail or be unilaterally changed or dishonored and cause more pain to the consumer. I would approach any payment scheme involving an OC with extreme caution. I cannot envision a situation where I would participate in a payment scheme with a JDB. Of course any negotiated settlement (preferably lump sum) must be in writing or it never happened IMO.

 

BK is an extreme remedy that I would try to avoid. It is a proper solution for certain situations but I would use with extreme caution. Discussing with a BK attorney or two should provide some insights. The state exemptions for BK are probably similar if not identical to those allowed in any (worst case scenario) post judgment enforcement. A discussion with a competent consumer attorney might be enlightening. Whether affordable services exist or are worthwhile is an investigation that would have to be done by an interested party.

 

Leverage is what I would want to have when dealing with likely litigious parties. My leverage starts when I decide I am not going to cower in fear if someone is insane enough to sue me when there is nothing for them to gain (and they know they cannot and will not be able to prove up the essential elements of their cause of action by admissible evidence). Unfortunately for me, leverage sufficient to discourage an OC is hard to come by and requires a couple of years of litigation. The modest alleged debts listed by the OP may not engender as long and as intense litigation IDK.

 

...

If you do not make arrangements, I would expect the lawsuits to start coming in about a year after default, some wait for 2 years, all the while tacking on high interest rates (the default rate is higher than what it was when you were paying on it)

...

My experience with N.A. banks is their DC attorneys filed a summons/complaint around 8 months after alleging default YMMV. I had a conversation with one where I explained there was no money to pay them. I sent a DV letter to the other. I don't believe the timing of the suits would have changed if I had not communicated at all. When they are going to sue they are going to sue IMHO. Other N.A.s are working their way up to 4 years since alleging default.

 

I am not judgemental  but I hope you made sure your attitude and actions doesn't jeopardize your parents situation and what you did with BOA is fraud. Wishful thinking on settling. Cap 1 is very very hard a$$ and vindictive. You will be dealing with them for a while.

In IL common law fraud has 6 elements:

Common Law Fraud

In order to establish a claim for common law fraud in Illinois, a plaintiff must allege and prove:

http://www.illinoislegalaid.org/index.cfm?fuseaction=home.dsp_content&contentID=1312

  • a false statement of material fact;
  • the party making the statement knew or believed it to be untrue;
  • the party to whom the statement was made had a right to rely on the statement;
  • the party to whom the statement was made did rely on the statement;
  • the statement was made for the purpose of inducing the other party to act; and
  • the reliance by the person to whom the statement was made led to that person's injury. Siegel v. Levy Organization, 153 Ill. 2d 534, 542-43 (1992).

Anyone that has ever plead fraud against another party has a feel for how hard it is to prove. If you cannot prove up a breach of contract by admissible evidence easily and every single time there is pretty much zero chance that you are going to be able to prove fraud. I suggest we don't use the word fraud lightly. The courts are not going to treat it lightly in regard to how easy it will be for a party to prove such a cause of action. BTW in AZ there are 9 elements that must be proved by admissible evidence. That said do not do things that others could even arguably view as fraud. If someone is going to perpetrate a fraud I want to be sure it is not me and I am not involved or contributing to any fraud.

 

I also view Cap 1 as vindictive. Similar to a master who has released the dogs on a stranger wandering on the property, their DC attorneys merely execute in a disconnected and non-managed manner each case as their masters send over in a digital file. Basically, their DC attorneys are independent of the constraints typically provided in a actual client/attorney relationship. Other N.A.s appear to operate similarly. The affidavits are often signed by a non-employee of the listed plaintiff indicating the preference for distancing the lawsuit from the named plaintiff and leaving the DC attorneys to operate autonomously.

Link to comment
Share on other sites

I was in a similar situation a few years ago (lost my unrealistically high paying job, tons of debt) and the biggest mistake I ever made in my life was not filing BK at the onset.  If you file when you are current, there is no negative history shown on your credit report and you can be back in the "700 club" within 2 years.

 

Once you go 30 days past due, you miss the golden opportunity to preserve your positive credit history.  Consultation with a BK lawyer is free.  Do it ASAP.

Link to comment
Share on other sites

Have you checked your credit reports?  What do they say about your employment situation?

 

OCs, JDBs, CAs, and collection law firms do check your credit reports.  IMO, the main thing they are looking for is employment, meaning wages to garnish.

 

I was employed, and my job was listed on my TU report, when I became disabled.   I was sued three times.   I informed the credit bureaus that I was disabled and receiving Social Security (which is true), and which they reported.  No more lawsuits. 

 

If you are getting Social Security benefits, creditors can't garnish them, but you do need to be aware of how to protect the money if it gets into a bank account.

 

I had accounts with all the creditors you listed.  None of them sued me.  Be thankful you don't owe Citibank. They are the worst when it comes to lawsuits.

 

I would not recommend talking to the creditors or CAs.  If you are lucky, the accounts will be sold to JDBs.  Actually, the balances involved are relatively small, compared to some reported here.  So they may not sue.  Or maybe they will, as they might think it's more likely to collect on a small account vs. a very large one.  It's largely a crapshoot as to if they sue.

 

But you are in the right place.  Do a lot of reading here.  Leverage, as has been mentioned, is important.  Be aware that a lot of CAs do violate federal and state laws, so that can be your leverage.  If you sue a CA, you will end up on a list known as WebRecon.   If you are on that list, a lot of CAs won't touch you with a 10-foot pole. (That also might be a reason for no recent suits, in my case.) 

Link to comment
Share on other sites

  • 2 weeks later...

Hello I am new here and would like to throw out some things that have worked in the past for me. 

1. Send a dispute letter to each of the creditors, something like this one...

 

Regular Mail & Certified Mail#: XXXX-XXXX-XXXX-XXXX

 

[bank Name]

[bank address]

[City, State, Zip]

 

[DATE]

 

RE: Billing Error on Account # XXXX-XXXX-XXXX-XXXX

Amount in Dispute: $[AMOUNT OF LAST STATEMENT, PLEASE ENSURE ALL CHARGES HAVE POSTED TO THE CARD AND ANY AUTOMATIC BILLINGS HAVE BEEN CANCELED]

 

Dear [Credit Card Company]:

 

I am writing regarding the above account. I believe that my most recent statement, [DATE OF LAST STATEMENT YOU RECEIVED, AND IT MUST BE WITHIN 30 DAYS OF RECIEVING IT, OTHERWISE CALL THE BANK AND ASK FOR A COPY OF THE LAST STATEMENT] is inaccurate.

 

I am disputing the above amount because I believe that you failed to credit my account for prepayments you agreed to credit on the statement dated [DATE OF LAST STATEMENT YOU RECEIVED]. It was my understanding that when I entered into the agreement with you that you would accept my signed note(s) or other similar instrument(s) as money, credit or payment for previous account transactions, and then reflect those credits in the statement dated [DATE OF LAST STATEMENT YOU RECEIVED]. They do not appear in the statement and I am wondering why. The amount of the credits on the prepayments of money or credit accepted by you should be the approximate amount that I list above. I am making this billing inquiry since I am uncertain of all the dates of the prepaid credits and also since there may be additional credits that I am entitled to. Please provide me with a written explanation why these credits are not showing.

 

I am requesting that you provide me with an acknowledgement of this billing error and complete a full investigation by sending me a written explanation report related to the subject matter of this billing error.

 

I am also requesting additional documentary evidence of indebtedness of the account showing that you did not accept any note or similar instrument from me without properly crediting my account as agreed, which includes copies of the account entries that made you arrive at the recent balance shown on my statement.

 

I may exercise my right to withhold the disputed amount until you comply. Thank you for your time and consideration in this matter. If you have any questions please contact me immediately at the address below, but make sure your questions reference an acknowledgement to this billing error dispute.

 

Lastly, please remove my phone number(s) [iNSERT HOME AND OR WORK NUMBERS HERE] from your solicitation list as I do not wish to do any business with [Credit Card Company] over the phone. I am requesting that all communications be conducted in writing, and I appreciate your honoring my request.

 

Sincerely,

 

[Your Name]

[Your address]

[City, State, Zip]

 

This will put the burden of proof on them and you won't be in trouble for just not paying.

Link to comment
Share on other sites

Next they will send some statement and maybe some copies of some BS papers.

Send the next letter...

2. 60 day follow up letter

 

[bank Name]

[bank address]

[City, State, Zip]

 

[DATE]

 

RE: Billing Error on Account # XXXX-XXXX-XXXX-XXXX

Amount in Dispute: $[XXXX CURRENT BALANCE AS INDICATED ON LAST STATEMENT OR WHEN YOU CALL THE BANK’S AUTOMATED SYSTEM FOR A BALANCE REQUEST]

 

Dear [Credit Card Company]:

 

I am writing because you have not responded to my billing error letter dated [DATE OF YOUR FIRST BILLING ERROR DISPUTE LETTER], 2004.

 

I encourage you to comply with the resolution procedures to avoid noncompliance. I therefore ask you to complete your investigation as soon as possible. If you have any questions please write to me at the below address.

 

 

Sincerely,

 

 

[Your Name]

[Your address]

[City, State, Zip]

 

Regular Mail

Certified Mail#: XXXX-XXXX-XXXX-XXXX

 

Again this keeps them searching and you waiting for them not the other way around.

Link to comment
Share on other sites

The credit company will turn you over to third party collections at some point so send them the next letter,

3. Cease and desist letter

 

[Name of Collection Agency]

[Collection Agency address]

[City, State, Zip]

 

 

[DATE]

 

RE: [Credit Card Company] Account # XXXX-XXXX-XXXX-XXXX

Amount in Dispute: $ [Amount in the Collection Demand letter]

 

Dear [Name of Collection Agency]:

 

I am in receipt of your demand for payment. However, this Notice is to confirm that I do not wish to be contacted again by you, and that you are hereby put on Notice to Cease Communication pursuant to 15 USC Section 1692c©. Failure to comply with said Notice shall result in a complaint filed and submitted to the Federal Trade Commission, and possible legal remedies in an appropriate United States District Court.

 

In addition, PLEASE TAKE NOTICE THAT, I am not waiving my right to dispute the alleged debt asserted herein, but at this time I am under no obligation to respond as a result of [Credit Card Company]’s default.

 

Sincerely,

 

[Your Name]

[Your address]

[City, State, Zip]

 

Regular Mail

Certified Mail#: XXXX-XXXX-XXXX-XXXX

 

You have established that the credit card company is in default for not providing you with the proper documents that are requested.

Link to comment
Share on other sites

Some times the Credit Card company may request more information from you wanting to know what the hell you are asking for.

send them this letter,

4. Additional information request

 

Regular Mail & Certified Mail #:XXXXXXXXXXXXXXX

 

[Credit Card Company

[Their dispute/inquiries address]

 

Date: [date]

 

RE: Billing Error on Account # [XXXX-XXXX-XXXX-XXXX]

Amount in Dispute: $ [current balance]

 

Dear [Credit Card Company]:

 

I am in receipt of your recent letter regarding the above-referenced account requesting further information. However, in order for me to provide you with further information, I need to know exactly what part of my Billing Error Dispute Notice you did not understand. Without such information, I am unable to assist you with clarification.

 

Please note that I am not disputing any merchant charges, a fraudulent application, the misapplication of any checks that I have sent in the past, or disputing that someone used my card without authorization. However, I am disputing the fact that credits have not been properly applied to the account. I have attached the original dispute letter again in case you need to reference it again. [Attach a copy of the dispute letter you sent them originally disputing the balance; then erase this sentence!]

 

If you have any questions, please contact me at the below mailing location.

 

 

Sincerely,

 

 

 

[Your name]

[Your Address]

 

Regular Mail

Certified Mail # [XXXX-XXXX-XXXX-XXXX]

 

 

 

cc: Enclosures

Link to comment
Share on other sites

Another thing to realize is if you get sued it will cost you even more.

I would just send as much as you can,.  Call them and tell them you are disabled and see if they can work out smaller payments. Waiting is the waiting and hiding is the wrong thing to do.

Link to comment
Share on other sites

waiting and hiding is the wrong thing to do.

+1

I cannot stress it enough - take action before you go 30 days past due. I'm on year #4 of doing battle with a 500 FICO when everything could have all been wiped out in one fell swoop and I could have bought a house 2 years ago if I had not waited until I went delinquent.

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
 Share

×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.. For more information, please see our Privacy Policy and Terms of Use.