Expert: Jason Shear, Esq. - 12/24/2008

Question
QUESTION: Hello and I'm so glad I finally found this website.  I'm sorry this is so long but I'm trying to give every detail I can.  I just need to know the best way to handle this.  Basic background--I live in SC.  I got a Spiegel credit card back in 1987 when I was married.  I never missed a payment and they kept increasing my credit line, up to $6600.  Even after my divorce and while not even receiving child support I made every payment on time.  Then Spiegel went bankrupt and my account was closed.  It was taken over by Card Member Services out of Old Bethpage, NY.  I have read many other complaints about them on Internet sites.  They would claim they did not receive a payment on time and charge me late fees, over the limit fees, etc.  They would not work with me to help me pay off the debt.  I asked one time if I could make two payments of $110 each month instead of one payment of $220 and they said yes.  Then they claimed they only received one payment and added on more charges.  Finally my statements were showing that only $1.00 out of over $200 was going to the balance and the rest was interest (I have these statements).  That is when I quit paying.  The last payment I made was January 2006.  I have received calls and letters ever since, different companies have tried collections, settlements -- such as I could settle for $5000 but they wanted it all at once or in 2 payments, etc.  I am a divorced parent whose daughter still lives with me and I work 2 jobs to make ends meet.  No savings, only own a 1992 mobile home, a 97 Honda which my mom bought me.  I do not have any money for legal defense or to pay this debt off.  I now have to pay income tax because I can no longer claim my daughter.  A Summons for Non-Jury Collection Action was delivered to my house while I was not at home on Saturday, December 20.  It is from Korn Law Firm in Columbia, SC, representing Midland Funding, LLC.  The total they show now is $8,276.39.  I received a letter from them in the past regarding this, and I sent a letter back asking them to validate the debt and I told them I disputed it (because my high credit limit was $6600 and I dispute anything over that).  They sent back a letter saying the original creditor was Spiegel and for me to call them, but I did not because I didn't want to be tripped up.  I just need to know what to do.  Should I call them?  I don't want to say anything they could use against me.  I don't have money for a lawyer.  I represented myself before during my divorce; I don't have a problem with that but I need to know what is the first thing I should do.  I understand if I don't appear they can get a default judgment -- don't want that.  I want to do what I'm supposed to do to protect myself.  I don't have a problem with paying the $6600 I owe, but I can only afford maybe $50 a month and that would take forever especially if they keep adding interest.  My hours at my second job have been cut and we are facing state budget cuts on my primary job--I have been employed for almost 23 years with our local school district as a secretary.  If I could get the money out of my retirement and pay it off, I would, but they do not make loans.  I do not want to embarrass my family.  I just want to be able to explain my side of it and the fact that I have no money or nothing of value but I am willing to make small payments.  If they demanded I pay more, then some of my other bills -- which are all current -- would fall behind.  I was advised several years back, prior to child support ending in 2003, to file bankruptcy because I was so in over my head -- but I did not and I kept working with the companies and paying them until today I am in much better shape except this one outstanding bill.  My ex started out not paying child support and then would not pay it on time, and I kept borrowing money trying to pay my bills on time but of course, that caught up with me and backfired.  Can they garnish my wages or take my car or mobile home?  Should I transfer title?  I do not have good credit obviously so I cannot borrow this kind of money.  I already have a $2500 loan against the car at my local credit union.  The mobile home title is free and clear but it is too old and in disrepair to borrow against.  Please just advise me what I should do first.  I want to do the right thing, I'm not trying to get out of paying the money.  In the best case senario they would reduce it to half or less of the $6600 balance and let me pay it off by the month.  Is this reasonable?  The SOL would expire in January here in SC - 3 years - I guess that's why they're on the ball all of a sudden.  They say June 2006, and that is probably because when I talked to a collection agency after making that last payment in January 2006, I did tell them to lower the interest rate, cut out the late fees, and give me a payment I could live with and I would pay it off.  When I received a bill in the mail, it stated it was due 2 days prior to my receiving it, so I knew they would just add on more late fees and not try to help, so I never did make a payment after January 2006.  Also I have a 90% + hearing loss in each ear and have just had ear surgery on December 17.  I will not be able to hear in that ear for about 3-4 weeks and I won't even know if it worked until then.  So I cannot really do anything until after my follow up appt. on January 20.  This has really ruined Christmas, their intent I guess, and I'm so worried and stressed out and in pain from the surgery.  Please just give me a little advice on what to do, and what not to do, please.  I thank you so much in advance and wish for you and yours a very Merry Christmas.

ANSWER: Joanne:

Sorry to hear about your situation.  If you do not want to file bankruptcy you should file an Answer to this collection lawsuit.  If you default, they can garnish your wages, freeze your bank accounts and put a lien on all real property you own.  As I put in previous posts, to walk someone through how to defend themselves in a consumer credit transaction would be the equivalent of typing out a small book.  If you want, feel free to call and perhaps I can assist you.

Jason Shear
NY Consumer Lawyer
(716) 566-8988

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

QUESTION: Hello,
Thank you for your quick response.  I will plan to call after Christmas for any assistance you can offer.  In the meantime, one question.  By "filing an Answer," I assume I have to prepare an "Answer," take it to the Clerk of Court and pay to File it, then - do I have to pay someone to serve this document back to the law office that served me or can I simply mail them a copy "return receipt requested?"  Their 866-automated line has called me every day since they served me but I have not answered because I'm afraid I'll say the wrong thing.  Now, it is ringing my house before 9 a.m. each morning and they do not leave a message.  Thank you, again, and Merry Christmas.

Answer
Joanne:

After you prepare an Answer, no you do not have to physically take the Answer to the Court and there is no filing fee.  You just mail a copy to the Court and the Collection Agency's Attorney.  Also, be sure to document this telephone harassment you mention by making a log of when they call.  This can be used for a future case against the Collection Agency and their Attorneys under the Fair Debt Collection Practices Act (FDCPA).  Hope this helps.  If you have any other questions please do not hesitate to call.

Jason Shear, Esq.
Attorney at Law
(716) 566-8988