Expert: Michael Brotherton - 5/26/2007

Question
QUESTION: I am now dealing with two different collection agencies for medical bills.  One is for $800 and the other $1,800.  I have to call one by tomorrow at 5:00 and the other on Tuesday.  My question is, can I possibly expect to negotiate for half or maybe less of what I actually owe them?  I've heard that you can, but I am not a very good negotiater and need some advice on how to deal with them.  Any help would be greatly appreciated!

ANSWER: Yes, you can negotiate settlements on virtually any type of debt. Do not negotiate by phone until you put your situation to paper and determine what you can realistically afford to pay. Put your offer in writing. Do not give more information about your situation than is necessary such as employment informaiton. If you need help negotiating let me know, this is what I do.

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QUESTION: When I called the CA on Monday (the one for $881) I offered a settlement of $300. The lady said there is a slim chance they will accept it but she doubted they'd go for anything less than 50%. She said I would hear from her is 7 to 10 days with their response.  The one I called Tuesday ($1,700) is a clinic bill.  The lady I talked to said that they would only offer a 15% discount, which is ridiculous.  She said the most they have given is 20% and she's seen them turn that down.  I set up a payment plan for $50 a month, which I really can't afford with the other monthly medical bills to the ER and hospital.  She said I could get the 15% off anytime I wanted to but I would have to have the money in hand.  I offered to settle for $700 and she laughed at me.  I would have been willing to go as much as 50% but she said they would not settle for that. My question is, what would happen if I refused to set up a payment plan and they refused my settlement offer.  What would happen then?  Surely they'd rather have some money than none!  I would file bankruptcy if I had not already filed 2 years ago.  I was told by someone that I could file to reopen the bankruptcy and have it dismissed and then file again including the new debt incurred along with the old.  Do you know if that's true?
ANSWER: You may need someone to negotiate for you. Their response to you is common. It takes a collector to negotiate with a collector and make any real headway. It  mostly depends on your financial picture. Your income, your assets, what they could reasonably collect if they wanted to take the legal route. If you have few assets or are on a fixed income you may be "judgment proof". This means you are virtually untouchable from a collection or legal standpoint. Right now I would suggest you hire a negotiator or climb the chain of command.

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QUESTION: The ONLY asset I have is my car which is paid for.  It is worth about $9,000. Other than that I am flat broke.  I only bring home $1,050 per month and after I pay rent, utilities, and my medical bills each month I am in the red.  The only thing of value I have is my car.  I have heard that a collection agency can sue you and take your car and garnish your wages for 25% of your net income.  My question is, if I just don't pay these collection agencies anything, would I be considered judgment proof, or could they get a judgement against me and take my car and garnish my wages?  I'd hate to gamble and lose my car plus not have enough money to live on after the garnishment each month.  Thanks for the advice!

Answer
Potentially they may be able to get a judgment and could levy your car but you may be able to avoid that. Other than that you have the upper hand and should be able to get the terms you want once you show them your situation. They cannot get what you don't have so at this point you need to show them you are untouchable, then make your proposal.