Collections Law/settlement

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Expert: Creditwrench - 1/20/2010


Question
I live in Az and have heard that even if one settles with there creditor or collection agency by making a lump sum payment and has in writing that the account will show paid, that they can turn around and still sue you for the unpaid portion....This true?  Why would anyone attempt to settle if that is true and just file bankruptcy instead?...

Answer

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There has to be a way to stop such treachery and there is. Formal bankruptcy is most often considered the only way out but informal bankruptcy is a much more desirable option which is being used by more and more people all the time. The differences between formal bankruptcy and informal bankruptcy are indeed great. Formal bankruptcy costs quite a bit of money, often $3,000 or more before it is all said and done but money may not be the only cost. The courts can force divestiture of valuable property in order that creditors be paid to the greatest extent possible. The actual end costs can be huge indeed. Many of those costs are hidden at the outset and not revealed to the bankrupt until it is too late to back out.

Informal bankruptcy on the other hand has no such hidden costs and is not only far cheaper but can not only rid oneself of their debts without leaving any adversities on credit reports but can actually be highly profitable and get rid of judgments as well.

Both forms of bankruptcy are accomplished in federal court but each requires a different type of federal court to complete. Bankruptcy courts are known as courts of equity and are the only courts of equity in our current judicial system. All other courts are courts of law with the exception of the Maritime court of which there is only one and is located in Washington, D.C. It deals with law upon the high seas.

Those who file bankruptcy usually need attorneys who specialize in bankruptcy law. Those attorneys know how to fill out all the required forms and use computer generated forms. Those forms are usually filled out by their computers as well and the whole process is done by computers with little or no human intervention. That allows the attorneys to take on greater numbers of clients and make much more money with less work than would be required if they had to do it all by hand.

Those who use the informal bankruptcy method usually can't find any attorneys who are qualified to do the job so they normally learn how to do it themselves. That isn't a problem if you can find someone competent to help them with the learning process. The informal method relies on such laws as the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA). By learning what debt collectors and collections lawyers must do and cannot do they are able to use their violations as causes of action and sue them in federal court making them pay for their violations and get rid of judgments, debts and other related problems and get paid by the debt collectors and attorneys in the process.

Therefore it is easy to see that the informal method is far superior to the formal method. You just uncovered one of the possible violations debt collectors can make which is telling you in writing that if you pay what they demand they will report the fact of your payment to the credit bureaus. That violates the Credit Repair Organizations Act (CROA) and you could use that to make them pay you to go away and leave them alone.

So why would you want to pay them anything? Don't make no sense to me.

Creditwrench

Expertise

Debt Collections law, Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA), federal law, how to properly answer court summons for collection cases, how to prepare federal cases against debt collectors, how to deal with debt collection phone calls.

Experience

I've been an active consumer advocate for more than 40 years and have helped hundreds of people win cases against debt collectors as well as helping them defeat demands for summary judgment lodged against them by banks, debt collectors and defeat mortgage foreclosures and keep their homes.

Education/Credentials
Paralegal courses for the most part.
I have been teaching people how to deal with judgments, mortgage foreclosures and other such problems both on and off the internet for many, many years. I am a Richard Cornforth information provider ever since 2000 and worked with many other organizations and causes since 1980. I was Oklahoma State Chairman for the nationwide drive to defeat the Constitutional Convention which was proposed by various factions within our federal government such as the Council of State Governments and the National Organization of State Governors who were working hard to organize a Constitutional Convention to be held in 1995 for the purpose of rewriting our American Constitution to be more acceptable to the United Nations. I worked with Senator Charles Duke of Colorado and Senator Don Rogers of California and many others across the nation to keep them from getting the number of delegate states required to lawfully hold a Con-Con and we were successful. I have worked with many other legislative issues in Oklahoma and have always been very successful.

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