SolTraveler

I hope you all don't mind that this is sort of off topic, but I figured that many of you have been through this before or something similar.

Anyway, my ex-husband was addicted to painkillers that he was prescribed as a result of a back injury. He did not work for four years, and we racked up a ton of debt as a result (I was in grad school at the time.)

Most of the debt was in my name, unfortunately, because I was the one who had good credit. So, like an idiot, I couldn't hold him responsible for any of it during the divorce (I tried and failed.)

Anyway. Today I was served papers that one of the credit cards is suing me to the tune of $1450 plus court costs, etc. It is the credit card, not a third party collector. From what I understand, that matters.

I have 2 weeks to file a response. This is what I know about being sued for this sort of thing in Texas, from what I have read:

1. They cannot take my house, car, or garnish my wages in this state. I don't have anything else of note.

2. They CAN take the money from my bank account, however, which is a problem because I get both my paychecks and my child support direct deposited.

3. I must show up or they get a default judgement and everything they ask for, including those funds from my bank account.

4. I do not qualify for chapter 7 bankruptcy nor would I wish to - I don't owe much anymore - maybe a grand total of $7,000 total. Not worth it.

What concerns me, obviously, is having the judgement against me, which will be a black mark for ten years, plus having them take all my money. That would be a problem, as you can imagine.

I do not want to go out and hire a lawyer for a couple hundred since the amount is relatively small. it seems to me that even if they negotiated a good deal, it would be eaten up by their fees.

My inclination is to call the lawyer representing the credit card company and offering a lump sum of $1000 immediately to drop the case and consider the debt settled. Clearly, I would get this in writing before I paid them a red cent. From what I understand, this amount is about 70% of the amount they are asking for, and it was the original amount of the debt before they tacked on additional interest. I understand from what I have read online (which may or may not be accurate) that this is acceptable for most companies.

Then, if they won't play ball, call my lawyer because then I will have nothing to lose.

I am not asking for formal legal advice - I know it is against the rules nor would I want to put anyone out. However, if you have been through this, or if you know about this sort of thing, pointers would be appreciated.

Thanks!
Alex

Hammer

What was the date of the last activity on the account?

By that I mean charges or payments.

In Texas that starts the clock against the 4 year limits.

Beyond 4 years and they cannot sue. Well, they can sue, but you have a defense.

Settlement numbers usually start between 25% and 50%, depending on from which side.

You offer 25%, they demand 50%. Settles out somewhere in between.

SolTraveler

The last payment was a year and a half ago, so they are within the limits. For awhile I worked on trying to pay it off but I lost a major client for my freelancing (second job) and just couldn't swing it.

Anyway, hmm. I suppose 25% is a good place to start. They will tell me to take a walk, but I am willing to pay up to 70% so if they come back anywhere under that, I am good.

Thanks! I appreciate any input - I have zero experience with this.

LexieCat

The only downside to negotiating a settlement is that it can adversely affect your credit rating, I believe. One other option, since it isn't a huge amount, would be to ask them to dismiss the lawsuit on the condition that you make agreed monthly payments until it is paid off. That way you would be able to spread out the payments and hopefully avoid a ding on your credit history (of course, if no payments have been made for some time, it may already be dinged).

Otherwise, I think your proposal sounds reasonable--but I don't practice in this area, so even if I could give you legal advice, I wouldn't try to on something like this.

SolTraveler

Thanks, Lexiecat.

Yeah, my credit already is in the toilet because of this divorce, so I am not very worried about that aside from the fact that I have been working on improving my rating for the past year and a half or so - living totally within my means, paying off what I can, etc. If I can, I would rather pay a lump sum and reduce the expenses, but even small payments would be preferable to getting a judgement against me.

Hammer

Amazing that they are even bothering for a $1500 claim. Just not worth the effort.

So you are looking at between $400 and $1000.

Is that a big amount? If you can put together $500 cash, tell them that is all you have, and they will likely take it and go. Cash today beats a judgment later.

AVOID any payment plans.

SolTraveler

I can get $500 without too many problems. I will definitely try that and see where it goes!! Thanks so much - you guys have made me feel a lot better. At least I have options.

Hammer

And make sure you were REALLY sued.

While it is illegal to create and serve a false Court Process Document, some of the collection letters come pretty close to that.

wicked

I agree with Hammer here.
I went thru a bankruptcy and did a lot of research before I made that decision.
Get a paid in full receipt from them.
Keep checking your report to make sure they remove it from your list of creditors.
There are some who are absolutely upright and upstanding companies to deal with, and then there are others who are less than stellar.
Protect yourself.


Beth

SoloMio

Are the papers saying that the judgement has already been made, or that they are taking you to court? Usually you have 30 days to dispute the claim. I'd definitely speak to them and see if you can settle for a certain amount, for cash. Get it in writing before you pay, and try to negotiate "Paid as Agreed" on your credit report.

DO NOT give them any information about your checking account.

BTW, this advice is from Dave Ramsey.. google him. He has the best advice when it comes to this stuff.

SolTraveler

It is a court summons from my county and I was served, so I assume it is legal.