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Settling Lawsuit with Collection Agency

I guess my first question would be: why? How about I send you a summons and claim you owe me $5,000.00. Would you call me up and ask me to settle? It’s the same thing here. Think about it. I wouldn’t have any proof that you owed me that $5,000.00, would I? So why would you call me to ask me to settle for a lower amount or ask me to accept monthly payments?

What makes you think the collection agency has the proof to back up their claim? Do you think because they are a business and not a person that you must settle with them? Is it because you know you owed the original creditor and now assume you owe them all that money? Isn’t the amount they are asking for totally inflated and now thousands of dollars above your original credit limit? Don’t you want to know how they came up with that number? Don’t you want them to prove all of this? Proving things to you personally and proving things in a court of law are two totally different things. They can pass papers on to you that you would assume would be good enough whereas the courts would totally disagree. I would like to know and would appreciate any comments on this post as to anyone’s reasoning for wanting to settle a lawsuit with a collection agency before getting your day in court.

Here is something to think about before you pick up that phone to call the collection agency’s lawyer. Just picking up the phone and talking to the lawyer in an attempt to settle is basically an admission of the debt. Just by you talking to someone and saying “Hi, I’m John Doe and you are suing me. I would like to settle with your company and get on a payment plan”, you flat out admitted that you owe them money. Now let’s say the lawyer laughs at your offer and says ‘no’, you cannot come to any agreement with that company and the phone call ends with a “We’ll see you in court”. Now the lawyer can tell the judge that on that date you called them and admitted that this was your debt by wanting to settle but both parties couldn’t come to an agreement. The judge would then ask if this was true, you’d say ‘yes’ and just like that you are assumed guilty. The judge would probably ask that you both come up with a settlement etc., but my point is that you ended up in court anyway. So why settle? Fight them back!

Did you know that if you come up with a settlement agreement with the collection agency and miss a payment, that they can enter a default judgment against you anyway?

Let’s imagine that following your settlement you make 10 payments but then unfortunately you fall into financial hardship. You call them up and explain that you are unable to make the next few payments. The collection agency don’t accept this and threaten that if you don’t pay, they will enter a default judgment against you. You are unable to resolve your problems and cannot pay, so as promised, they enter a default judgment against you. That means they can still come after your bank account and wages for the rest of the amount of money owed.

About 10 years ago I had a law firm working for Capital One Bank come after me. I didn’t know what to do back then and I figured since it was Capital One I’d better settle (I wish I knew back then what I do now). Anyway, the lawyer told me that they would accept monthly payments of $200.00 and file this with the court. So I make all of those payments on time and paid the amount in full. The following month I get a $60.00 plus bill and I call them and tell them that I paid this amount in full and don’t owe them anything. They tell me I do. I had all my cancelled checks proving otherwise so I didn’t pay that $60.00 bill and guess what? About three months later my credit report showed a default judgment on it. Capital One did not warn me or tell me that they would or even could do that. They never sent me a copy of any default judgment. Legally they had the advantage because they said I still owed them $60.00 because I did not uphold my agreement to the settlement. So after all of this they get a $60.00 judgment against me anyway. They didn’t tell me; they just entered a judgment. I got that removed from the court and my credit report down the line with my proof but they don’t care and they will stop at anything to get what they want.

So, beware and know all the facts before you panic and pick up that phone. If you come to some sort of agreement, you cannot mess up that agreement or any payments because they’ll still be able to enter a judgment against you. Most people do not know this. They sue you; you call them; you agree to settle; they say they’ll handle the court proceedings, not telling you that if you mess this up they’ll still file a judgment. This happened to me and can happen to you.

So all of you who are giving up and thinking that just because you call them to settle that they are going to accept whatever offer you have, keep in mind that you have just admitted you owe the debt by speaking with someone and if they turn you down, you will lose in court because of that settlement offer. This is with a collection agency.

When people find themselves in debt, they browse the internet and find a lot of advice telling them to call the collection agency and offer a settlement for 50% of the amount owed. It’s rarely that easy and it’s unlikely that an offer like that will be even considered, let alone accepted. The agency can now proceed to court and collect 100% of what they want simply because you made the mistake of calling them to settle. In their book, and to some extent the court’s too, your communication with them equals an admission that you owe the debt. That could result in losing your case.

Don’t believe everything you read online. Before taking any steps, do your research and reflect on how it might leave you if it it gets to court.

Dealing with an original creditor may be a different story. Settling with an original creditor may be your best option as because you beating them in court can be much harder. They tend to have more of the documents needed to win the case, although this is not always true. For example, in my case, the original creditor, Capital One, didn’t have everything they needed. But if you are confident that they do and will win and you call them and agree to a settlement, don’t miss those payments or they will get a default judgment and you are back to square one with your credit ruined.

This is just my opinion from my past experience with a law firm from Capital One 10 years ago. 10 years or 10 days, does it really matter with these companies? They don’t care. In my opinion, if your instinct tells you that you have not seen enough evidence that proves that you owe them all this money, then don’t call and take your chances in court.

Are you calling to settle to avoid court? I wouldn’t. In fact, I would look forward to my day in court when they have to work hard to prove every single document and complaint against you. At least while you’re in court you have a judge there so that they cannot get away with the tactics they normally use on you when there isn’t a judge present. You have more rights in a court of law than on a phone with a collection agency’s attorney. So, I’ll say it again: calling the collection attorney to settle is an admission to the debt which could lead to you paying every single penny.

On another note, please be aware of the collection agency’s attorneys who pull the defendants to the side, or in a room to settle before appearing in front of a judge. The lawyer will try to convince you that you will lose so you might as well settle. Don’t believe a word the lawyer says. You are about 15 minutes from appearing in front of the judge, and there is a good chance that attorney doesn’t have the documentation needed to win a judgment against you. So, turn down any offer the attorney makes. The attorney may get aggressive, but keep your cool and proceed with your case.

So, if you have been served a summons, the best way to proceed is to answer it and not call to settle. This will put the collection agency’s attorney at a disadvantage (because of time they do not have proper proof to prevail in court) and there is a good chance they will drop your case and focus their attention elsewhere.

Additional Information

  • avatar terri echols

    “Our case never went to court. We were so freaked out, we settled with them. What bothers me the most is that we received a letter from the law office that stated: “You have not made your payments as promised. Please use this opportunity to bring your account current and avoid the possibility of our client withdrawing its agreement to resolve this matter as previously agreed. If we do not hear from you we will notify our client and await their further instruction”. When I called her, she said that she knew we had been making our payments and the letter was just to get our attention because the couldn’t get us by phone. The number they had wasn’t working. I know they had the correct phone number because I called them in April 2010,after 3 months just as requested. I left a voicemail with the correct number. I have a recording of it and of the lady saying that she knew we had made our payments. I don’t know what is going on, but Saturday we received another letter stating that we have not paid and I mailed the check on the 17th. I do not know why it hasnt got to them but I have been trying to talk to them all morning. I was told that the lady who sent the letter dated 2/24,2011 is no longer there and I was transferred to the person taking over for her and got his voicemail. I left a message. The 866 numbers that are on the letter do not work. They ring, then a recording says they nolonger accept voicemails. I did receive a call on 2/23/11 but when I answered they hung up. When I tried to call the number back, a recording said that this number did not accept incoming calls.

    Another thing that bothers me is we have been paying $100 an month since 1/20/2010 and according to the balance on the letter we have only took $174.07 off the account.

    The original amount was $4691.36 from capital one
    1850.92 interest
    1563.77 lawyers fees
    total $8106.05
    balance on letter dated 2/24/11 $7923.58

    Also a company called MRS Associates was handling it and took money out of my account each month. When the money stopped coming out I thought we were done. When I got letters from this lawyer, I thought it was a fraud. Is there anything I can do?”