First time dealing with a collection agency... Advice Needed!

[theduc]

My wife is from Europe and we have been married for 2 years now. This past weekend I found out that she walked away from an overdraft of about 10K Euro ($13,000) just before we married. She had a business that she was getting out of and was told at the time by her attorney to walk away from it, that once the business was closed there was nothing to come after. The bad part is the business and the account were both in her name.

This is the first I've heard about the $13,000 as it is now in the hands of a collection agency. My wife has not worked now for almost 3 years due to chronic back pain. We currently have no medical bills but we have been looking into possible surgery options for her back if the pain continues to get worse as it has seemed to be doing lately.

We purchased a condo for $140K about a year ago were able to put $95K down due to a previous property I sold. Shortly after, we had to move because I had gotten laid off from my job and we now use the condo as a rental property. The mortgage is in my name but she is on the deed. Just last week we were talking about how good we were doing and came up with a plan to pay off our car ($8,000) in a few months and to pay off our condo mortgage in 4 years. We currently have about 17,000 in savings.

I know she (now we) owes the money but is this negotiable and if so, how/how much? She is heart broken having brought this into our marriage and it kills her to see my income going to pay her debt (it doesn't bother me). We are also in the process of dealing with immigration and extending her green card. When she came crying the other night, my worst fear was that the green card extension was rejected. To find out that it was a debt was a huge relief compared to losing the love of my life! I told her that the worst case scenario is that we have to pay 100% and that we would slowly build up the savings again.

Should we work with a debt negotiation company or try negotiating with them ourselves? My wife wants to speak to an attorney who deals with this type of business but I'm not sure if that is necessary. Do we send them a check right away or not and if so, for how much? Any advice would be a thousand times appreciated and more!

We have sent them a request to validate the debt so this should buy us a little more time but we both are pretty sure it is her debt.

My wife also thinks I should take her name off the deed to our condo and off our joint bank account and create an account just for her to show that she has no income and no assets. I'm not sure if we can do that or if it would even matter.

Thanks in advance for the advice!

[~bs]

1st: know your rights. even as a debtor, you do have rights, and creditors are not allowed to engage in certain collection "mis" behaviours.

2nd: where is the creditor located? does it show on your credit report? might not be ethical, but since they're in europe, and you're in the US, maybe you can thumb your nose at them and walk away?

Understand that collection agencies buy bad debt from companies for pennies on the dollar, and will attempt to recover any amount they can to turn a profit. The more they collect, the better for them. You may be able to negotiate the amount down. But make sure you have any agreement in WRITING before making payments.

[theduc]

Thanks ~bs!
The collection agency is located in the U.S. (MN I believe). I've done a lot of reading since we got the letter and I'm assuming we could start off by offering them 25%... of course they will say no and they want 100% (even though they most likely bought the debt for 5-10%). Would a 25% offer be to low/high to start?

This is why we are thinking about setting up a bank account only in my wifes name with very little in it to help sell that she has no money. She hasn't worked in 3 years so there would be no point for any judgment against her to garnish her wages (as she has none). She is afraid that they can come after our condo since she is on the deed or even my wages. I don't believe they can legally come after my wages though.

We have not spoken to anyone on the phone and will try to keep it that way so that everything is in writing... that or record the phone conversations for proof of harassment if it occurs. So far we have only received the one letter but we know this is most likely going to be a rough process. We have not checked her credit report yet but will do so tonight.

[siggy_freud]

How was her company structured? You may still have some protection options from that that neither you or the creditors are taking into consideration.

[theduc]

she was the sole trader/proprietorship... and therefore is responsibility for all losses and debts.

[Gailete]

Not sure about dealing with the collection agency, but if you both live in a community property state, even if she doesn't show any income or savings exclusively in her name, you showing $20K or whatever, she would be considered to own half of it. The sort of thing that some couples hate upon a divorce when one wants to literally steal all the assets from another. Anyhow, you need to find this out before you go to the bother of setting up a new bank account for her.

[theduc]

Not sure about dealing with the collection agency, but if you both live in a community property state, even if she doesn't show any income or savings exclusively in her name, you showing $20K or whatever, she would be considered to own half of it. The sort of thing that some couples hate upon a divorce when one wants to literally steal all the assets from another. Anyhow, you need to find this out before you go to the bother of setting up a new bank account for her.

This may end up being more complicated to figure out... We use to live in Texas (which is a community property state) and our credit union and condo are both in Texas. Last year we moved to Oklahoma (which is a common law state) for work after I was laid off.

Maybe the answer is to set up new bank accounts in Oklahoma?

[Gailete]

This may not be what most would say, but as she owes the money and you have it in savings, why not pay the bill and be done with it? Why should whoever she borrowed it from suffer (even if they are a big wealthy bank) becaus someone abdicates their responsibility? What happens is it makes problems for others that need to borrow money. It seems in our society that everyone is trying to get out of the debts they owe instead of paying them. I have problems understanding that mindset.

[weddingshoot]

I fully realize this was my own fault for ignoring this for so long, but need advice on what to do next. Over a year ago I moved out of my apartment and into a house. When I moved out, I didn't realize I had to let my renters insurance know I moved. I kept getting bills and called them and told them I had moved and to stop billing me (six months after the fact). They informed me I needed to prove I moved and they would maybe prorate it. I am in school and working so although I knew this was important, I put it on the back burner. In the summer I started recieving warnings that it may go to collections.

[theduc]

This may not be what most would say, but as she owes the money and you have it in savings, why not pay the bill and be done with it? Why should whoever she borrowed it from suffer (even if they are a big wealthy bank) becaus someone abdicates their responsibility? What happens is it makes problems for others that need to borrow money. It seems in our society that everyone is trying to get out of the debts they owe instead of paying them. I have problems understanding that mindset.

Hi Gailete,
This was my first thought exactly... we have the money, so just pay it. The issue is more that the collection agency most likely bought the debt for 5-10% of the amount owed ($650 to $1,300 at most) and more likely closer to the 7% ($910) mark. The bank is no longer in the equasion... Therefore negotiating them down is not taking away from the money they have invested and offering them 25% ($3,250) would most likely more than tripple their investment. Of course they would like 100% as it would give them roughly a 1,400% increase in their investment.

If we received the letter from the bank it would be a totally different story... but like I mentioned before, this is the first notice we've received and the debt has already been sold for pennies on the dollar to the collection agency.

Has anyone on here had any experience negotiating with a collection agency? or maybe this is posted in the wrong section...

[Ant81]

Has anyone on here had any experience negotiating with a collection agency? or maybe this is posted in the wrong section...

I have worked in this field, on the original lender side, for yes and I say settle the account. You are correct, they probably purchased the debt for about 7-10cents on the dollar and they will probably settle as low as 50 percent. Collection agencies are taking people to court more often today than ever; so ignoring them won't work, especially for a balance this high. Don't hire a third-party negotiator to settle this for you; do it yourself, but push the negotations as far as possible.

Good luck.

[theduc]

I have worked in this field, on the original lender side, for yes and I say settle the account. You are correct, they probably purchased the debt for about 7-10cents on the dollar and they will probably settle as low as 50 percent. Collection agencies are taking people to court more often today than ever; so ignoring them won't work, especially for a balance this high. Don't hire a third-party negotiator to settle this for you; do it yourself, but push the negotations as far as possible.

Thanks for the advice! We're not ignoring the collection agency... we're actually taking a proactive approach. My wife is tried to contact the original lender today to find out if we can settle directly with them but had no luck reaching anyone over the phone (there is a 6 hour time difference). We are still waiting for the credit agency to validate the debt and I have read on this site that it is better to settle with the original lender if possible. If we do end up having to deal only with the credit agency, does anyone have any tips on how to push the negotiations as far as possible without pushing it to the point of going to court over it?

I've read post on here of some people being able to settle for as low as 17% (though I've also heard the norm is around 50-60%). My thoughts were to start at 25% and negotiate up to 50-60% rather than starting at 50% and trying to stay at that amount.

[elfen lied]

Humberto is correct, although this s currently before the courts.

Suggest you draft them a written letter stating that in terms of section 103 of the NCA, you have settled the debt by virtue of having paid twice the original debt. Hence any balance they hold must be written off. Also maintain that should they prejudice you in any way henceforth (credit bureau listing etc) you will hold them liable for any damages you may incur.
refer them to the following case law. Nedbank v NCR judge Malan states:
Once the amounts referred to in s 101(1)(b) to (g) that accrue during the period of default, whether or
not they are paid, equal in aggregate the unpaid balance of the principal debt at the time the default
occurs, no further charges may be levied.

[Gailete]

I fully realize this was my own fault for ignoring this for so long, but need advice on what to do next. Over a year ago I moved out of my apartment and into a house. When I moved out, I didn't realize I had to let my renters insurance know I moved. I kept getting bills and called them and told them I had moved and to stop billing me (six months after the fact). They informed me I needed to prove I moved and they would maybe prorate it. I am in school and working so although I knew this was important, I put it on the back burner. In the summer I started recieving warnings that it may go to collections

I'm having a hard time understanding why they want proof that you moved! Unless you are getting a new policy through them for your house, why aren't they just canceling the policy which even without moving you are free to do at any time for an apartment rental (not the same as a house with a mortgage and you are required to have insurance through with a pay out to the mortgage company). Most policies will give you a month or two leeway in case you miss a payment but telling you that you have to prove that you moved while still expecting you to pay on a policy is ridiculous. Send them a letter with PO signature card telling them flat out that you have moved and that your policy needs to be canceled as of whatever date you moved. If they send it to collections, tell them the same thing, that you moved and there is no way in the world that you will pay tenants insurance for when you didn't even live at a place.