Expert: Christine Janklow - 4/6/2007

Question
QUESTION: I received a call today from a collection agency on a business credit card of which I did not personally gauruntee.  He stated that their client was considering criminal and/or civil charges for the debt, which was 12k.  We have not filed for BK, its' too costly.  I told him we could work something out but presently the business is struggling.  He wanted a post dated check, I said no.  He then said I can choose the legal route, or pay.  I said I would pay something but we'd have to figure something out.  We have not paid for about 3 months, ... what can I do?  I don't want to be arrested nor go to court but I also don't have the 12k.  Any thoughts?  Thanks.
ANSWER: Shawn:
Thank you for your inquiry. Sadly, you are a classic case of a business owner at the mercy of his creditors and their collection agents. Based on my experience in working for a successful business debt resolution firm, here is what is likely to be happening. If as you say your business is struggling and you have gone delinquent on at least this one account your creditor seems to have turned it over to a collection agency. As I don't know how recent the debt was incurred or how founded their claims are that there is any criminal wrong doing, you need to know this; that the collection agent calling and threatening you does have a right to attempt to collect the funds, but not to make false claims. There is no debtors jail in the US that I am aware of, so unless they can justify such a claim, then they are using "fear" to motivate getting payment from you. That being said, how do you resolve this if servicing the debt by giving them monies you don't have and won't get you out of debt help? It won't, it is simply to pacify the collector who is calling for the next 30 days and adding money to HIS bottom line, while you struggle to make ends meet. If you truly have a legitimate hardship, there are companies including ours that can help through debt settlement. I can not speak to our competition, but the plans we have enable struggling business to achieve reductions on the debt and get it paid off within three years as opposed to servicing or filing a BK. If this business is your sole source of income and you did not personally guarantee anything, than it befalls your company to pay it and if the company folds as a result of collection efforts, the debt will be unrecoverable. The collectors know this, and place enormous and undue pressure to get the money. Again, they do have a right to collect, but on the debtors behalf you also have options. If you want more information you can check my profile for the firm I represent as this is not a solicitation forum. As well if you find this answer to be helpful please take a moment to rate it so others who share your concerns will be able to find the answers they need too.
Thank you and best wishes in resolving your situation.
Respectfully,
Christine Janklow


---------- FOLLOW-UP ----------

QUESTION: Christine, if this debt has been turned over to this collector, do I not have the right to ask for thier relationship in writing, i.e. assignment, what tehy're being paid, etc and if the company that gave us the card has in fact charged it off, hasn't the parent company already acknowledged that they'll seek relief in a tax credit at tehir corporate tax rate, thus in a sense reducing the debt, already.  And, if they have already charged it off, wouldn't they have chosen to take me to court, priot to?  Some of this was rambling but I wanted to feel empowered knowing answers when I call the collector back.  I, as compared to him, would not be mean, I would just say I'm willing and trying to figure out amicable ways to work this out, threats go no where, and go from there.  Lastly, can I request that they conduct all future communication in writing, or letters, and no more calls/  Thnk you.

Answer
Shawn:
Thank you for your kind comments. Your follow up question is good to however, this is where it gets tricky. The more combative or inquisitive you are, the higher the risk that they will turn it over to legal and put it to rest. The collectors are not paid to argue, talk things through or inform you of your rights, simply to collect monies owed, period. I don't know if the debt has charged off at this stage, seems unlikely as it is only 90 days delinquent.  I also don't know who you are dealing with or their methods of collection. Trying to negotiate terms or reduction yourself is difficult because A) you are emotionally attached to the outcome and your money B) you have already lost credibility because you have not made timely payments. So it would not be a good use of your energy to discuss this with them. In fact the less you tell them the better. Every minute you are engaged in conversation, that by the way is being recorded is fuel to support them if they choose to take further legal action. If you are really sincere about working something out yourself, then ask to speak to a supervisor, express your hardship and see what type of payment arrangement can be made. That is likely all you will be able to do to get some relief short term. I also do not recommend you request that they communicate only in writing otherwise known as a Cease and Desist letter, that usually is the fastest way to get your file sent to the legal department. Again, if I were you, consider settling the debt. That way you are not dealing with these creditors directly and you'll truly have a professional firm doing a work out for you which should cost you less even with fees than you risking a legal battle that you won't win.

Sincerely,
Christine Janklow