Trusts & Estates Law/Debt settlement with old creditors
Dear Mr. Fritzler, I have a follow-up question concerning the administration of dad's estate. It's passed the statute of limitations stage; I know it, the creditor's know it, and they know that I know it. As far as dates, I have a copy of dad's credit report. In this week's mail, I get a 1099-C from the last of the original creditors. And in dad's will, it stipulates the paying of all "legally enforceable debts". The courts not being an option for the creditor's now, I'm concerned with how to proceed. I'm getting ready to file the last of the estate taxes and I'll also have the accounting to do with probate. So my real question is, how do I go about negotiating a debt settlement? Who goes first? It's a lot of debt and I have the money to cover it now, but almost 4 years have gone by. I wonder if they have tacked any additional amounts on to the past due balances at the time of death? In my research, it's always stressed not to talk to them. Only communicate in writing. I'd like them to settle for less than original amounts anyway, because of the outlandish interest they were charging my poor father#and everybody else too#. From the old time period, there are some billing statements indicating that they would accept 75% of the actual balance. I wonder if they would still be willing to accept that lesser amount. $40,000 is a lot of money to pay out. If I could whittle it down some. Do you have any suggestions on how to approach this matter. Keep in mind, there is the original card company vs. collector's they may have either assigned or sold to. If those debts were sold already for pennies on the dollar to a collection agency, well, that changes things. If a card company choked and sold a $10,000 debt to a collection agency for a $1,000 or so, well, that ain't my doing. Plus, they reported a 1099-C for those years, thereby reducing their overall tax liability, and I had to report those cancelled debts as "income". I'm just trying to come out on the good end of the stick here. Everything I've read about debt collectors is that you can't trust them, and there's things they don't have to tell you. Do you have any ideas/suggestions that you would like to share? You were helpful before, I'm hoping you can be again. Thanks so very much. Mark S.
In any negotiation a position of strength and advantage would be best, but knowing the lay of the land is important too. Perspective can also be a strategic advantage. Also any negotiation is fruitless if the opposition does not believe that you will truly go to battle.
You mention the statute of limitation having expired. If that were the case then no negotiations would be necessary, a simple dismissal would be effective. Here is the problem. The statute of limitations applies to an estate that is "settled". Settled includes a complete exposition of assets.
I believe that this last asset was not disclosed by the Executor/Trustee #you#. Claiming that you didn't know is not a defense. You had the fiduciary obligation to find out #or as in this case# as soon as you did find out, take the proper action.
Fiduciary is a special title. Fiduciary requires personal financial commitment. If you are wrong, you personally are responsible.
Their primary right to get all the money they are owed supercedes your rights as an heir to get anything.
That goes against you.
But you can always try to negotiate.
Who is in possession of the debt?
Can they prove it? In Mortgage vernacular right now the term is "wet sig". The actual signed original document, not merely a photocopy. You can claim that you are unable to negotiate with anyone other than the proven holder of the debt. If it a collection company they may have a hard time getting valid proof that they have the right to settle the debt.
Is it the original creditor or a collection company?
You are right collection companies might be willing to negotiate a smaller return that comes quickly. Although they often threaten litigation, the cost of litigation is a deterrent to actually try and collect.
From my experience Negotiation is far more Art that Science. And when someone tries to reduce it down to a straight formula #science# they will always lose.
Some Know-it-alls will claim an arbitrary percentage will be the result "10 cents on the dollar" "30% of the debt" or some other lame claim. It could be one of those, it could be better than one of those.
Some people are so automatonic regarding negotiations that they are deeply entrenched in the belief that you will end up exactly half way between your starting offers.
Some focus solely on an amount and refuse to consider process. "What will it cost them to proceed to the next level?" "Are they even engaged enough to be proactive?" "What happens if nobody does anything?"
Being single-minded and ignoring all other tracts is not the best negotiation plan.
The more you know about your opponent, the better.
I'm not trying to keep any secrets, but negotiation is such a dynamic thing, proper reaction based upon a broad base of information is far more important than detailed pre-planning and formula.
Also, when it comes to debt negotiation, you don't have to accept their offer. You can promise to consider it and then try again later. If it is a debt collection company, you probably will talk to someone different who may be more reasonable.
And if it does become a real throw down, up until the moment you walk through the doors of the courtroom as the trial begins you can always satisfy the debt.