Expert: Regan Shinski - 7/20/2010

Question
I was served papers by a collection agency 02/2010 about an outstanding medical bill. I immediately contacted the collection agency for a resolution. I told them I recently lost my job, no money, no unemployment. I was told I had to appear in court 02-17-10 to avoid the judgement or make payment arrangement to cancel the court date. 02-15-10 my dad gave me $100 to pay. I paid by phone and received an auth code for the payment. the agreement was they will dismiss their case with court since i made good on my arrangement. I was quoted $600 and I paid $100 so that brought me down to  $500 remaining. I told the lady once i get a job I will pay the remaining balance. she agreed as long as I paid $50 a month until debt was at a zero balance. i still stressed the fact of unemployed, no money but agreed to try to pay what i can each month. Little did I know they never cancelled the court and neglected our verbal agreement. since i did not appear in court the collection agency was granted "default judgement" and today July 20,2010 the bill is currently $725.00 the judgement is on all 3 credit reports. What can I do? can i go to court to explain my case? do i take them to small claims court? i have unemployment proof and the fact I was served 2-13-2010 and paid 100 on 2-15-10 is proof i am trying to settle the debt. why else would i go through the hassle of begging my dad for the money if the agency had not made that agreement with me. is it to late to send them a "debt validation" letter? what are my options? I hope you can help. I need this judgements removed off my credit report

Answer
Hi Jaime:

I'm afraid you are not going to like my answer.  You have limited options.  Written or court proceedings will always take precedence over any verbal arrangement.  I know it's easy to say now, but you should have made a written arrangement, confirmed with the court that it was cancelled, or shown up to court for the appointment.

You can try to petition the court to have the judgement vacated.  The process to do this varies by court and jurisdiction.  The problem is this they can just retry the facts of the case at the hearing to vacate the original judgement.  If you can't pay in full at that time, a new judgement will be entered anyway.  There is a small chance a judge may deem their collection techniques unfair but it is unlikely.

What evidence do you have to support the arrangement?  If you have evidence like a recorded call or letter supporting the arrangement, it's a different ballgame but your word against theirs (and the judgement# is not a good position to be in.

If you think you have evidence to support your position, you can file a motion to vacate and then also sue for damages under the FDCPA.  If you win, your damages would offset the $725 and then some.

Perhaps you can try to get evidence first.  Call them or send communication to them asking about the verbal agreement.  LEGALLY record the call #see notification laws for your state).  If you get them on tape acknowledging the verbal agreement, you now have grounds for vacating the judgement and probably getting statutory damages for FDCPA violations.

Otherwise, your options are through standard credit repair but newly entered judgements are among the hardest to remove.

Good luck, I hope this helps and I wish I had better options for you.  Don't give up, start by trying to collect evidence of the verbal agreement through letters or legally recorded phone calls.

Regan

RESPONSE TO YOUR FEEDBACK:  I don't know if Missouri is a 1 or 2-party recording state but 1-party means 1-party - that would be you.  If it's a 1-party state you don't have to tell them you are recording the call.