Lawsuit, debt settlement and assets

[steve_d]

My gf was laid off from a job making about 20/hr. After several months of unemplyment and incurring further debt than the typical cc's she already had (just to get by,) she had to accepted a job making about 15/hr. None of her bills went down obviously. After about a year of trying to make minimums and getting further behind, she signed on with Option One for debt settlement. They set her monthly pmt about 1/3 of what her cc minimums had been. This was an amount she could (just barely) handle. They told her to stop paying on all her credit cards and give callers the info/case number from Option One. Well, her biggest creditor - Target - kept calling and saying they don't deal with companies like Option One. Now they have served her and are taking her to court. She can't afford anything more than what she's paying to Option One. The big concern is assets. Although she has almost no equity in her home and her car isn't worth much, her two youngest kids (high school senior and college freshman) both have their cars in her name. She didn't pay for either of them, but for insurance purposes, put them in her name. I also bought a second vehicle and put it in her name for insurance purposes. Then last spring, some friends of ours were selling an older recreational vehicle really cheap ($2k.) We figured it would give us a chance to get some enjoyement during the summer so we decided to go half and half on it. Again, we put it in her name. I raised my half by selling a bunch of electronics I had on eBay. She borrowed her half from her then 16 year old daughter. She paid back some of it, but then re-borrowed it (and more) before Christmas to buy gifts for her parents and kids. So she still owes her daughter at least a grand. We need to make sure that Target can't get their hands on any of this property. Is her agreement with Option One any protection from a judgement? Does the fact that she didn't actually buy any of the vehicles matter if her name is on the title? What will the court look at in a case like this? (it's Wisconsin)

Thanks

[MomIcantFindmy]

YOu need to look at the exemptions for your state. My big concern would be that her bank accounts could be levied if the creditor got a judgement or possibly wage garnishment. I think I would call a few attorneys and ask for advice regarding debt and judgments. I think this is the reason why so many of us here are afraid to use debt consolidation companies.

[steve_d]

There's nothing in her bank accounts. We're concerned about them trying to take the cars that aren't really hers or our rv (it's not a motorhome, I just don't want too get to specific.) I'd really like to know if the instructions from Option One (IN WRITING!) to not talk to any of her creditors and refer them to Option One, is any form of affirmative defense.

[keepmine]

There's nothing in her bank accounts. We're concerned about them trying to take the cars that aren't really hers or our rv (it's not a motorhome, I just don't want too get to specific.) I'd really like to know if the instructions from Option One (IN WRITING!) to not talk to any of her creditors and refer them to Option One, is any form of affirmative defense.

Option One had nothing to do with the credit arrangement between her and Target. No affirmative defense issue.

[steve_d]

Option One had nothing to do with the credit arrangement between her and Target. No affirmative defense issue.

But she contracted with Option One - in good faith - to settle her debts. They informed her in writing that she was to no long make any payments on her credit cards and to refer the creditors to them. She was to only make the one payment to Option One and they would deal with the creditors. If this isn't a defense, it should at least be cause for her to sue Option One!

[steve_d]

She just spoke with an attorney. This is what the attorney said:

"...enter all the information from the summons - what court, judge, attorney, etc on the top and reply that "I do not agree with this debt" and get it to the clerk of courts-she said I should actually have 21 days to respond (just a technicality.) Then in 2-3 weeks, the plaintiff will decide what they want to do from here. They will know from my response that this will cost them more and may come back with something else. I told her that I did owe the money and she said that I can still disagree with the debt because of late fees add'l fees, etc. "

Does this sound reasonable?

[keepmine]

But she contracted with Option One - in good faith - to settle her debts. They informed her in writing that she was to no long make any payments on her credit cards and to refer the creditors to them. She was to only make the one payment to Option One and they would deal with the creditors. If this isn't a defense, it should at least be cause for her to sue Option One!

Target has no oligation to deal with a 3rd party.

[Minnymouth]

Listen to the attorney and send the letter................
Also Target does not have to deal with a 3rd party if they do not want too...... only third party they HAVE TO DEAL WITH is bankruptcy Trustee if she files bankruptcy......

Any vehicle (over one) that is paid for that has her name on it is in question to be seized and sold by the Trustee if she files bankruptcy unless they can be exempted under state laws. Doesn't make any difference whose vehicle it is, if it's in her name - IT'S HERS.

Yes Target can take her to court, get a judgment, and eventually garnish her wages up to 25% of her take home pay to satisfy the debt......

If she is considering filing bankruptcy, then she needs to sit down with an attorney and see what options are open to her and what exemptions she may have to cover the vehicles that have her name on them..... If she has no other assets (home, etc) then she might be able to salvage keeping the vehicles depending on what state she is in and the laws.

The sooner she checks into this the better off she will be and will be more at peace of mind......

[steve_d]

She has no intention of filing bk. That's why she signed on with Option One.

[FreshLikeADaisy]

Steve, I have a feeling that bk may be her only way out of this, because the way you say it is now, even if her income rose considerably she'd still be paying the minimums for years to come. Many people have been pushed into bk by "debt settlement" companies far worse off than if they'd just filed bk to start with. If I remember correctly, one of the moderators on the board had exactly that same scenario.

The letter recommended by the attorney sounds like good advice; it will delay any further legal action, and may stop it entirely if Target decides it will cost too much to go after her, at least for now.

May I make a suggestion? It really sounds to me as though your gf is very invested in having this debt settlement thing work out *as promised*. I think it would be worth your while (hers, actually ) to pull her credit reports and see exactly what is still being reported as delinquent, because there may be other accounts sitting out there heading toward legal action, not just Target. When we want to believe in something, especially something as high stakes as this, it's hard to acknowledge that it's not only not working as promised, but is actually leaving us worse off than when we started. My fear for your gf is that she's already in deeper trouble than she is aware of, because of the very broad (and obviously bad) advice she was given by Option One, but is assuming that Target is the only bad loan because of what Option One promised. Does that make sense?

Anyway, do yourselves a favor and look into it as thoroughly as you can, starting with the credit bureaus, and make sure that the companies Option One is claiming to represent actually do concur that gf is paying "as agreed". In the end, if she wants to save her assets and repay her debts, a Chapter 13 where everyone is on the same page -- and in writing! -- will be a lot cleaner and less painful/expensive than a debt "settlement" agency that has not settled her accounts and has not been honest with her about who they do and do not represent. That, and a bk may actually clean up her credit, if there are a gazillion past due/slow pay/overlimit/etc trade lines on it.

I wish you both the best. Good luck!!!!

[woeisme]

All this property that is in your GF's name is a real problem. Yes, Target can put a lein on any one of them, they are legally your GF's, not her kids or your buddies that you went together in on the motorhome with, because she/they made the choice to put them in her name. That choice, whether it was to save $ on insurance or for whatever other reason, has consequences. If she's not planning on BK, then there shouldn't be a problem with transferring them over to the people who actually use/own them, and she should do this soon before the creditors start coming after the assets (she should have some time because I would guess they'd go for a wage garnishment first, if possible, but some states, like Texas, don't allow wage garnishment, so in a case like that they'd put leins on her property.) The thing is, the creditors don't care who "really" owns the property, the only care about getting paid. And if putting a lein on your GF's kids car is the way they can force her to pay, that is what they will do. I also agree with the other poster who said she should look carefully at her credit report, possibly even contact all her creditors to make sure they are being paid as promised by the debt settlement company. Unless she has a binding contract in writing from them, just some guy from that management co. telling her on the phone to "not worry about paying anyone but us" is no guarentee that there are no problems, as she has unfortunately already found out.

[woeisme]

[QUOTE]Well, her biggest creditor - Target - kept calling and saying they don't deal with companies like Option One.[Quote]

I've just re-read everything you wrote, and see that she did have it in writing from Option One, but you also said that she knew Target wasn't on board with the plan (probably why they were able to reduce her payments to 1/3, since they weren't paying her biggest creditor anything). Did she ever check back with Option One when Target kept calling and saying they weren't dealing with Option One? What did Option One say in response?

[steve_d]

[QUOTE=woeisme;135434][QUOTE]Well, her biggest creditor - Target - kept calling and saying they don't deal with companies like Option One.[Quote]

I've just re-read everything you wrote, and see that she did have it in writing from Option One, but you also said that she knew Target wasn't on board with the plan (probably why they were able to reduce her payments to 1/3, since they weren't paying her biggest creditor anything). Did she ever check back with Option One when Target kept calling and saying they weren't dealing with Option One? What did Option One say in response?[/QUOTE]


Yes, she did and Option One said it was no big deal she'd just have to show up in court and the judge would look at her situation and give Target a token amount that she could handle. I don't believe that for a second. I think Option One is full of sh*t. She is going to put her kids cars in their names but we can't put mine or the rv in my name because I'm filing bk next month. If we can drag Target out for awhile until my discharge then we can move stuff to me, wait six months and she can file. I believe there needs to be much stricter regulation of these debt settlement companies. I think she may bring her Option One contract to an attorney and see what they really promised to do.

Our debt problems occured to each of us before we met and it's a weird coincidence that the poo is hitting the fan for both of us at the same time. Mine was caused when my ex-fiancee dumped me and left me hanging with bills I could never pay. She made almost three times what I do when we were living together. My current gf's problem, as I mentioned above, came when she was laid off by a company she'd worked for nearly 20 years and the best replacement job she could find in this area was 8-10k less per year. Basically it was the same position only starting over from the bottom.

[tay666]

You are probably going to have to wait longer than 6 months after tranferring the cars for her to file.
Trustees go back quite a ways for info on property transfers.

[steve_d]

She has an appointment for a consult re: Chap 13 next week. Here's the deal with the cars. Her son has a loan on his and is/has always been making the payment. Her daughter's was a gift from Grandma and Grandpa. Mine I paid cash for and the previous owner could state they received the money from me. I also paid a cash deposit on the rv and wrote a check to the previous owner for the balance. All four of these vehicles combined would be lucky to be worth what she owes Target (10k.)

Since she has always wanted to "do the right thing", Chapter 13 seems like it may be the way to go given that Option One is not doing what they promised. That way the court could take the payment she's making to Option One and disburse it to the creditors.