Expert: Apex Credit Services, LLC - 1/7/2008

Question
Back in November of 2004 I co-signed a contract with my mom in a Ford dealer for a car she was getting. They told her that they needed me in the agreement so that they would give her a loan and I was pretty much told where to sign. Then on July of 2005, my mom ended up in a car accident which totaled the car just a day or two after her insurance had ran out, and this also lead to her being convicted of a DUI. The insurance company refused to take care of any of it since she wasn't technically insured that day, and due to all of this my mom decided to stop paying for the car. She tried getting Ford to pick up the car but they refused to since it was no use to them. At the end of that year my mom filed for bankruptcy and the car became a charge off on both mine and her credit report. Now a year and a half later I receive a letter from a collection agency stating that I owe $18,543 and that their client is willing to take 80 percent the amount due to close the account. This is only the first letter which was dated 12/28/07, and I am wondering what is it that I can do about it. I only work one job as a waiter, in which my income from checks is little less than $600 a month while the rest comes from tips, and I use this money for rent, car payments, and school. I understand that I am legally entitled to this debt by being the co-signer of the loan, but is there anything that could protect me. It was a car that I never owned, never drove, and was only trying to help out my mom. If not, is there anything I can do to postpone this collection agency from taking any actions against me. I would not liked to be sued at the moment as I am in no position to pay off this debt.

Any advice would be appreciated.

Sincerely,

Robert  

Answer
Robert:

    First and foremost, the debt should have been included in your Mother's bankrupcty matrix.  You would need to refer to the discharge order from the Federal Bankruptcy Court wherein filed to verify this.  Really, this is a matter for your Mother's bankruptcy attorney however, there are a few things you should note until he/she addresses the issue.

    Second, send a request for validation to the collection agency assigned this debt.  I wouldn't be surprised if some distressed debt purchaser bought this account in a portfolio but, I digress.  In any event, request validation of the debt from the agency in writing.  You would be well advised to also convey to them that the underlying amount was discharged.  You have thirty days from your receipt of their initial communication if you wish to prevent them from taking continued collection activity.  They can however, take further collection efforts "if" they provide you validation within a reasonable timeframe.  Most authority on the subject has prescribed 90 days as being reasonable.

    If this is indeed a debt purchaser, you may never hear back from them.

    Third, you will want to dispute the account tradeline reported by Ford through the credit reporting agencies.  It should not be reported as a charge-off and the fact that it is is very damaging to your credit scores.  At the very least, the status should report as included in bankruptcy with a zero balance.  I would first request a re-investigation upon the premise that the date of status/major first delinquency is inaccurate or incomplete and then attack the balance if one is reflected.  The same would apply to the collection entity if they're reporting.  If these measures fail, request a second re-investigation and simply state the matter was included in bankruptcy.

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