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About Jack Hall
Expertise
Will answer questions about consumer or small business bankruptcy, foreclosure, evictions, wage garnishment, bank account seizures by creditors, creditor harassment, repossession and/or surrender of vehicles and other personal property, and civil lawsuits seeking to collect credit card and other debts. Can also answer questions relating to debt management and the effect of bankruptcy on one’s credit history. Can discuss the various options an individual or business may have relating to pressing financial difficulties. In addition to sending me an email, You can also call me at this number if you want to discuss any question on the telephone: 915 261-3893

Experience
Over thirty years of experience assisting clients in all aspects of debtor/creditor relationships. This experience has primarily involved assisting individuals and small businesses that are having financial difficulties, and have also had some experience assisting creditors attempting to recover financial losses.

Education/Credentials
Law degree (Juris Doctorate, J.D.); Bachelor of Arts and Masters degrees in political science/government

You are here: Experts > Business > Corporate Law > Collections Law > debt "buyout"

Collections Law - debt "buyout"

Expert: Jack Hall - 11/7/2009

Question
Is there means for me to check the validity of a debt collector's offer to settle a debt? Recently I have been contacted by agencies offering to settle my debt at a lesser amount than is owed. My concern is knowing whether or not the original creditor has written off the debt and the offer is only a "see what we can get" that will not help my credit standing or if it is even still showing on my credit report. Thank You

Answer
Perhaps there is a misunderstanding here as to what a charge off is - All that a charge off means is that the original creditor has taken a tax deduction of the amount as a business loss - it does NOT affect the enforceability of the debt one way or the other. What usually happens is after so many days, say 90 or 120 days of a debt being delinquent, the original creditor will charge off the debt and sell or assign the account to a collection agency.   The collection agency, for all practical purposes, is in the same position as the original creditor insofar as enforcing the debt goes.

Insofar as being concerned about whether they are making an offer to see what they can get, that is of course what is happening - The collection agency representative usually works on a commission basis so the more they get you to agree to pay the more they will make in their paycheck as a collector. However, an important fact to know is that settling is virtually always not the best option. They will tell you that they will mark your credit report as a paid account but what they will really do is to mark it as a paid collection account that was settled for less than the amount due.    And that is a bad mark - and if they say they won’t they are simply not telling the truth. So you not only have to pay the amount settled for but you still get a bad mark on your credit.    You are better off in almost all cases just making a fresh start and filing for bk protection.   Then the creditor gets nothing, and you can really make a fresh start and rarely lose anything, and the mark on your credit report is not as bad for a bankruptcy as would be the repeated late pays, non pays, settled accounts, lawsuits, etc.   Besides, the bk, of course a bad thing when considered by itself, can actually be a positive in the sense that you will then have a better income to debt ratio (because you have no more debt because it is all discharged in bankruptcy), and income to debt ratio is more important of a factor than credit history anyway. Of course they will not tell you that because bankruptcy lets you get relief right away and completely takes away any control they may have.     I am going by what they do though, rather than what they say.

If you want to talk about your particular situation in more detail, you are welcome to call me or send me an email if you wish.   You can send an email with your phone number to jhfx@live.com or if you would like for me to send you my phone number, you can send me an email and I will be glad to give it to you so that you can call me at your convenience.

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