Hi. I posted this over on FatWallet but several of the members said I should try my luck on this board, so here goes. I'm going to cut and paste my post from over there below. Thanks in advance for any advice: -------------------- So I've been reading some of the collection agency threads and was hoping someone could give me advice on a problem I'm having. Please don't bash me for posting this question; I've sincerely read all the threads and don't know what to do, so I'd appreciate the help. I've always had excellent credit and have pay all my bills on time. The question is actually in regard to my spouse. A couple of years ago, before we were married, she moved and her Bank of America CC bills stopped arriving to her. Not being as sensible about finances as I am, she totally forgot about them until she just recently got a letter from a collection agency. The way I see it, she has three options, and I don't know what she should do: 1) She can ignore the letter, as the account is already closed and marked past due and has messed up her already bad credit even further. 2) She can send one of the sample validation letters mentioned in the other threads and see what she hears back. 3) She can pay the settlement amount, which is said to be 80% of the full debt. At this point, since it seems the damage has already been done, does it make sense to just ignore this letter? The debt is around $900.00, in case that info helps. Also, will her bad credit (she has a couple of other bad items on her credit report) affect me? Can the collection agency come after me as her spouse? I realize the debt was run up before we were married, so I don't know. Again, I apologize if this is a question I should already know the answer to, but as I said, I've never had to deal with missed payment, closed account, collection agencies, etc in my life, so I'm not as knowledgeable as I should be on this topic. Thank you.
If this is the initial contact letter, your spouse should not ignore the letter and must respond within the 30 day frame to preserve her rights. Is the CA listed on her credit report? The best DV I've seen is: "RE: Alleged Account 1234567 I dispute this entire alleged debt in its entirity and full validation is demanded." Signed, Your spouse If she's within the 30 day time frame of an initial contact, she should dispute it with certified mail return receipt requested. The question is is the debt true and accurate? If you want to settle the debt, you can negotiate and do better than 80%. Don't pay it unless there's a signed agreement that in consideration for $XXX (whatever you come to) the CA agrees to remove any degrogatory reporting to any Credit Reporting Agency. If you don't live in a community property state, your biggest concern should be any joint bank accounts if there's quite a large amount of bad debt. Her bad credit *could* affect you from auto insurance to loan interest rates if both of you are on the application.
Is this within SOL? You mentioned a "couple of years," how long is it? Is it reporting on credit reports? Never *ignore* collection efforts. That's a sure way to get a default judgment against your wife. Many will suggest that you never DV within SOL, but I think it really depends on the situation. If the CA is aggressive and SOL has a while yet to expire, I would always DV to, as Always said, preserve my rights. Does the OC still own this debt? Maybe more info would help us help you.
Ok, some more info: 1. Yes, this is the first contact we've gotten from the CA. it's dated April 18. 2. Yes, this is a valid debit. We know it is, I'm just trying to find the best way to minimize the payment (which was about $500 to begin with and has now grown to $900) and make sure it's taken off her report. 3. Since it IS a valid debit, is the VC even necessary, or should we go straight to negotiating? 4. Her latest credit report from March DOES list that the account is in collection. 5. How much better than 80% do you think we can do? I haven't any experience at all with this, so I don't even know what tone to take when negotiating. 6. We have one joint bank account, a checking account, and the balance of that is very low (we're not in a community property state). 7. The original account was closed for non payment in 2005, so it's recent. 8. I don't know if the OC still owns the debt, but it seems like they do. Thanks a lot for your help, I appreciate it.
"2. Yes, this is a valid debit. We know it is, I'm just trying to find the best way to minimize the payment (which was about $500 to begin with and has now grown to $900) and make sure it's taken off her report." If it's within the 30 days, dispute *immediately* and demand validation. The CA must provide validation on *how* this debt has been calculated right down to the penny. This is about process and preservation of consumer rights. FWIW, DV it. You don't know *how* it grew to $900. "Her latest credit report from March DOES list that the account is in collection." By the OC? or the CA? "5. How much better than 80% do you think we can do? I haven't any experience at all with this, so I don't even know what tone to take when negotiating." Generally speaking, 50% is viewed as normal and average. 80% is no deal at all. If you prefer to negotiate, start at 10% of the total. Pause. Say nothing. (Even if it kills you, say *nothing*.) Let the other person speak. They'll tell you "no." You can tell them to call you back when they're ready to get serious. Go up in increments of 5 but keep your cool and refrain from speaking too much. Your money is your leverage, they want it. CEO's view 10-20% on the dollar as an acceptable settlement for debt and only fools pay more. Think like a businessman. If you want to negotiate it, know *your* terms. Get it in writing before you ever send any money. The best term is "no degrogatory reporting at any Credit Reporting Agency." (If they do, after payment, it's breach of contract.) Negotiate at the end of the month. (You're not special, you're just an account and at the end of the month they're more motivated to close it out.) "6. We have one joint bank account, a checking account, and the balance of that is very low (we're not in a community property state)." This is really a small debt and there's a cost/benefit ratio considered even with this business. Larger accounts owed generate much more interest and effort.. "I don't know if the OC still owns the debt, but it seems like they do." Double-check the report. You don't want a "paid collections" from the OC.
You know, I just double checked the last report we have and there's actually no mention of collection of this account on this report. This is the status: "Status: Account charged off/Past due 150 days. $9XX written off. $8XX past due as of Jan 2006." This is the account history: "Account History: Charge Off as of Jan 2006, Dec 2005 150 days as of Nov 2005 120 days as of Oct 2005 90 days as of Sep 2005 60 days as of Aug 2005 30 days as of Jul 2005" Of course, the report is from March 2006 and this collection letter is from April 18th, so I don't know if it would be different if I looked today. On the letter, the creditor is listed as Bank of America, so I guess the debt is still theirs. I was thinking of using this DV letter: http://www.creditinfocenter.com/forms/sampleletter9.shtml So what I'm getting here is that my course of action should be: 1. Sent the DV 2. Wait to hear back. 3. Call the CA and offer a 10% payback. 4. Continue increasing offer until they agree to as small a portion as possible and also agree to send me, in writing, a notice that there will be no derogetory reporting of this to any Credit Agency. 5. Send payment. ?
