Citibank debt..

[THELEGEND]

Guys i have a charged off debt with citi. The last 3 months it has been transferred to 3 different collections agencies. When they send me a notice i ask for validation and  raise arbitration and within 3 weeks its transferred. Why are they sending this to so many collection agencies? They dont have it  but 3 weeks and send to another.I cant lie its getting aggravating

[WhoCares1000]

It would help to know how old the bad debt is and when it got charged off. Also, are you sure you can elect arbitration based on the card agreement?

That said, this is typical of JDBs. Rather than deal with validation (even if it is such a low threshold) and arbitration, they sell the debt to the next buyer in line and so on and so forth. The timing here seems to be a little tight (most try for 6 months before selling it off) so my guess is that your letters are what convinces them to sell off the debt. It might drive you crazy but this is what you have to do. Eventually someone will either keep the debt longer by answering validation and/or try to sue you for the amount (note that once they purchase the debt, they can bypass contact with you and to straight to the court). You can then deal with that as it comes.

[Harry Seaward]

41 minutes ago, WhoCares1000 said:

That said, this is typical of JDBs

I didn't get that this was being sold. It sounds like Citi still owns it and keeps farming it out to different CAs when the last one didn't/couldn't validate. 

[Clydesmom]

1 hour ago, THELEGEND said:

Why are they sending this to so many collection agencies?

They are either buying time until they sell it or they just sue on the account.

You have several major issues.  First:  if CITI still owns it the FDCPA does not apply to an original creditor  so if they do sue counter claims based on FDCPA are off the table.  Second:  CITI has a carve out in their card agreements that arbitration is not an option for cases that can or are tried in small claims court.  So depending on what amount was charged off you may not be able to arbitrate at all regardless.  Even if arbitration is an option we have found that many creditors (AMEX and Discover especially) will follow you in regardless of the expense.  It does not hold the threat with an OC that it does with a JDB.

[Goody_Ouchless]

1 hour ago, WhoCares1000 said:

That said, this is typical of JDBs. Rather than deal with validation (even if it is such a low threshold) and arbitration, they sell the debt to the next buyer in line and so on and so forth.

None of the major debt buyers resell debts. That canard needs to go. As Harry said, these are just collection agencies (probably working on 100% commission) hoping to get lucky.

[BackFromTheDebt]

What you have for the time being is a game of whack-a-mole with the collection agencies.  

Fun while it lasts, but, at some point Citi will probably get tired of the game and send this off to an attorney.

Depending on the circumstances, it may be wise to negotiate a settlement at some point, especially if you find a CA that actually does validate the debt.  SOME collection agencies get desperate around the end of the month, and one could get a decent settlement.  For others, it won't work.  It's  a crap shoot.  

When did this debt go into default?

[Harry Seaward]

2 minutes ago, BackFromTheDebt said:

SOME collection agencies get desperate around the end of the month, and one could get a decent settlement.

If Citi still owns the debt, they and not the CA decide what offer they will accept. 

[BackFromTheDebt]

7 minutes ago, Harry Seaward said:

If Citi still owns the debt, they and not the CA decide what offer they will accept. 

True, but the collection agency has SOME leeway.  

The best settlement I negotiated outside of arbitration was before the account was charged off.  That window is passed.  With a collection agency, it is still often possible to negotiate a good settlement.  

[small-town-girl]

Yea, I was always under the impression that the OC gives instruction to the CA upon assignment of the lowest amount they will take for settlement, and they work from that.  

[Harry Seaward]

21 minutes ago, BackFromTheDebt said:

the collection agency has SOME leeway.  

They have as much as they are getting paid to collect the debt, and they won't do it for free. I would guess the collector's cut is 20%-30% of the face value of the debt.  For example, on a $2,000 debt, Citi will tell the CA they get to keep everything over $1,600.  $400 isn't much when you have to keep the lights on.

[THELEGEND]

from last payment around 10 months

[Debtguy393939]

Collection Agencies get a fixed commission based on dollArs collected. Balance doesn’t matter too granular. So if they collect 300k for month they get x%. 

Most if not all creditors give settlement authority to a certain point that they can accept. Anything lower they submit for approval. 

[BackFromTheDebt]

On 5/2/2018 at 5:00 PM, Debtguy393939 said:

Collection Agencies get a fixed commission based on dollArs collected. Balance doesn’t matter too granular. So if they collect 300k for month they get x%. 

Most if not all creditors give settlement authority to a certain point that they can accept. Anything lower they submit for approval. 

This is a good explanation.

 

Many of the CAs have monthly quotas.  There may be a minimum amount for which they will settle, and you are more likely to get the minimum near the end of the month, when quotas must be met.  Just like you are more likely to get a traffic or parking ticket near the end of the month.  Also, the CA is more likely to contact the OC to allow for a lower settlement.

 

Of course JDBs have a much bigger leeway for settlements.  

[Harry Seaward]

On 5/2/2018 at 5:00 PM, Debtguy393939 said:

So if they collect 300k for month they get x%.

Yes and no.  They have commission agreements with the owners of the debt.  But they can 'sell' some of that commission to the debtor of they want to collect a particular debt more than others.  I don't think they do this much, especially on low dollar debts.  If their cut is $5,000, they will be more willing to knock $500 off than they would if their cut is only $600.

[Debtguy393939]

1 hour ago, Harry Seaward said:

Yes and no.  They have commission agreements with the owners of the debt.  But they can 'sell' some of that commission to the debtor of they want to collect a particular debt more than others.  I don't think they do this much, especially on low dollar debts.  If their cut is $5,000, they will be more willing to knock $500 off than they would if their cut is only $600.

I will say I don’t know what debt buyers do. But original creditors with law firms/agencies pay a fixed commission to their firms and collection agencies. It’s based on total dollars collected, except in extremely rare instances individual accounts don’t matter. 

Its a set settlement floor, anything less than that amount must be sent to them for approval. Some creditors have an aggregate settlement floor, that’s where you’ll get more leniency end of month.