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Next steps if your settlement offer to a debt collector is rejected

By

Let's Talk Credit
Let's Talk Credit columnist Jane E. McNamara
Jane E. McNamara is president and chief executive officer of GreenPath Debt Solutions, a nationwide, not-for-profit, providing financial literacy through consumer education and counseling for more than 50 years. For financial literacy tips and assistance visit GreenPath on Facebook or YouTube.
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Question Dear Let's Talk Credit,
My question is pertaining to a debt that I have with a major bank. Two weeks ago, I got served with papers from a law firm stating I have 30 days to respond to their letter. When I called, I was told an agent from the collection agency will work with me. I wanted to see if they would offer me a settlement from a debt that accumulated to $34,158.82.

They asked me how much I would be able to pay off if settled. After carefully checking my funds, I told them a lump sum of $8,600. They said no, they would need at least half, which would be $17,079. I told them I do not have that amount, and they dropped it to $13,000. I told them all I have that I can pay off immediately within one month is $8,600. He was very rude. I even went to $9,050. They still said no.

The conversation ended abruptly. Now I have no idea what to do. Filing bankruptcy is my last resort, and I'm running out of time. Do I wait to see if they call me back? Any suggestion would greatly help. Thank you in advance. -- Soraya

Answer Dear Soraya,
Because you have attempted to negotiate a settlement that you can afford on your own and were unsuccessful in reaching an agreement with the collector, it may be time to seek professional help. Hiring an experienced debt-collection attorney could be well worth the money. For most of us, once collection efforts reach the legal stage, it is better to have your own attorney to help navigate the legal waters.

Your attorney can help you determine the best course of action. Filing bankruptcy may be an option, but I encourage you to explore all your options first. Another advantage of hiring an attorney is once the collector is informed that you have representation, all communication about the debt must go through your attorney.

If the papers that you were served include a court date or date you were required to submit documents to the court, don't ignore it. It is essential that you attend court or submit the required documents on time, with or without an attorney.

You were smart to carefully review your finances before offering up a settlement amount. If you happen to be contacted by the collection agency again, be sure you stick to the amount that you can pay and do not overpromise.

Let's keep talking!

See related: Yes, debt collectors have the right to collect, and sue, Credit score impact of settling past-due accounts, Old debt, new collector: Negotiate? Ignore? Or pay up?

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Published: January 9, 2014


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