Served today for $9600 debt to creditor

[zizzled]

Hi everyone... today, I was served and am being sued by a collection agency for $9600. I am contemplating whether to attempt to contact them to pay this debt. My question is... if I would pay this in full, would other debtors that I owe then come after me more aggressively, thus warranting my possible need to file a Chapter 13? I really don't want to file bankruptcy, but I have about $25k outstanding debt that I am in arrears on... and that includes this 9600. Thanks in advance for any help!

[bcohen]

It is extremely difficult to predict how creditors will behave with regard to defaulted/charged-off debt. Some are quick to file lawsuits, some wait several years to allow the balance to grow, and the debtor's circumstances to improve before filing a lawsuit, others just sell their defaulted accounts to junk debt buyers (who may or may not file a lawsuit themselves). Of course, there are criteria which creditors and collections attorneys use to decide which accounts are worth suing on, but those criteria are a guarded secret. It goes without saying that creditors are more likely to sue a debtor if they have long-term verifiable employment, if they own real estate or investment accounts, or if the credit report shows that the debtor is continuing to pay other creditors.

One thing which is easy to predict is the fact that for most people--especially those who have reached the point of being sued by creditors, bankruptcy will offer a much better "settlement" than anything your creditors would voluntarily agree to. This is especially true for people who are considering Chapter 7 bankruptcy. Since you mention Chapter 13 bankruptcy, I assume you either have non-exempt assets to protect, or your income exceeds the median for your state. Chapter 13 bankruptcy can often reduce the total amount paid to creditors, because the interest which can be charged is limited by law, and because some creditors may fail to enter a claim, which means that their debt will end up being discharged. Another important advantage of bankruptcy (whether Chapter 7 or Chapter 13) is that any debts which are discharged or reduced will not result in tax accrual. If you negotiate your debts outside of bankruptcy, any amount discounted or forgiven is considered "income" for tax purposes, and you may find yourself issued a 1099C and expected to pay taxes on this amount.

[flashoflight]

Your creditors probably know more about you than anyone else except yourself. They can order reports from Lexis Nexis and EWS to figure out what assets you have (cars, houses, boats, businesses, etc.) and how you are doing income-wise and with bill payment. So they got a good idea if judgment enforcement will be easy or not. So yeah, they will probably find out and react accordingly. You also would not settle for a dime if you knew you were going to file BK and the creditors know that. Your credit is already trashed anyway so there is little reason not to file bankruptcy. Why don't you want to file bankruptcy? Why struggle with creditors who are very willing to use judicial process to make your financial life miserable? You should not hesitate to do the same via judicial means by filing bankruptcy.

[womanonfire]

Hi everyone... today, I was served and am being sued by a collection agency for $9600. I am contemplating whether to attempt to contact them to pay this debt. My question is... if I would pay this in full, would other debtors that I owe then come after me more aggressively, thus warranting my possible need to file a Chapter 13? I really don't want to file bankruptcy, but I have about $25k outstanding debt that I am in arrears on... and that includes this 9600. Thanks in advance for any help!

Sorry that this happened. Who served you? There is another forum that helps people deal with this kind of thing *IF* you're trying to avoid or delay filing bankruptcy. Yes, there are reasons to delay it in some instances.

The easiest thing would be to call them first and see if you can negotiate a settlement. Next would be to fight it and that is not an easy route as you'll want to look for FDCPA violations and other counter claims. You will want to see if you can arbitrate, again this will require research.

Whatever you decide to do, DO NOT ignore this. Show up.

[BxRcvor]

Hi everyone... today, I was served and am being sued by a collection agency for $9600. I am contemplating whether to attempt to contact them to pay this debt. My question is... if I would pay this in full, would other debtors that I owe then come after me more aggressively, thus warranting my possible need to file a Chapter 13? I really don't want to file bankruptcy, but I have about $25k outstanding debt that I am in arrears on... and that includes this 9600. Thanks in advance for any help!

I know I faced the exact same situation. Only my total debt was for a lot more and it was one of the creditors that sued/served me directly (not an collection agency). It was, at that point, I filed CH7. And, while it hasn't been the easiest thing to do, it definitely saved my derriere in re: any court proceedings. Filing Ch7 halted that one active legal action to a dead stop, and it prevented any others from starting.

What happens next depends on the standards for BK in your state. In mine (Florida), your primary residence/house is exempt from collection as is the first $1000.00 of your car. All other property of yours is "on the table," but there are certain exemptions in each category that are available, to be worked out by you (and/or your legal team), and the BK Trustee that's assigned to your case. Most types of debt are covered also with some exemptions for "Taxes," "Child support payments, etc. etc. " I'm sure your state (or your BK Attorney) has resources that tell you of those details.

BK is a very personal decision and I won't recommend it. You need to decide if it works for you or not. I can only tell you what happened to me. I did lose my car and some cash (my Trustee preferred that, rather than having to deal with selling the property). But I had to sell some of my valued property myself to come up with the cash I needed to pay the trustee. I did. I was discharged in July 2019 by the court, and my case was "terminated" by August, 2020. Since then, I have recovered (bought back) some of the tangible property I had to sell. Not yet for the car, as I'm currently evaluating whether or not it's more economical to use Lyft transportation for local needs, and then renting a car for a day or two for everything else. With Lyft, I don't pay for Fuel, Auto Insurance and general maintenance (the car had been paid for years ago), but it does cost $$$ for each round trip I do (mostly to the grocery store or the hair salon). I'll see how things go this year. I still have yet to recover much of my diving gear, and one piece of electronics (my 5.1 surround sound receiver) but I might get the receiver done in another month or two. Or, sooner if they pass that 3rd stimulus payment...

Best of luck... Let us know if you need more info.

[Scarlett1234]

I know I faced the exact same situation. Only my total debt was for a lot more and it was one of the creditors that sued/served me directly (not an collection agency). It was, at that point, I filed CH7. And, while it hasn't been the easiest thing to do, it definitely saved my derriere in re: any court proceedings. Filing Ch7 halted that one active legal action to a dead stop, and it prevented any others from starting.

What happens next depends on the standards for BK in your state. In mine (Florida), your primary residence/house is exempt from collection as is the first $1000.00 of your car. All other property of yours is "on the table," but there are certain exemptions in each category that are available, to be worked out by you (and/or your legal team), and the BK Trustee that's assigned to your case. Most types of debt are covered also with some exemptions for "Taxes," "Child support payments, etc. etc. " I'm sure your state (or your BK Attorney) has resources that tell you of those details.

BK is a very personal decision and I won't recommend it. You need to decide if it works for you or not. I can only tell you what happened to me. I did lose my car and some cash (my Trustee preferred that, rather than having to deal with selling the property). But I had to sell some of my valued property myself to come up with the cash I needed to pay the trustee. I did. I was discharged in July 2019 by the court, and my case was "terminated" by August, 2020. Since then, I have recovered (bought back) some of the tangible property I had to sell. Not yet for the car, as I'm currently evaluating whether or not it's more economical to use Lyft transportation for local needs, and then renting a car for a day or two for everything else. With Lyft, I don't pay for Fuel, Auto Insurance and general maintenance (the car had been paid for years ago), but it does cost $$$ for each round trip I do (mostly to the grocery store or the hair salon). I'll see how things go this year. I still have yet to recover much of my diving gear, and one piece of electronics (my 5.1 surround sound receiver) but I might get the receiver done in another month or two. Or, sooner if they pass that 3rd stimulus payment...

Best of luck... Let us know if you need more info.

Hi , I came across your response but I don't understand why your chapter 7 made you come up with cash to pay the trustee? And made you lost the electronics? I thought the exemption at federal or state level can mostly cover most of the things in the house, and if it is chapter 7, not chapter 13 , why do you have to come up with cash to pay the trustee? Was it because you had too many assets that cant be exempted and you wanted to keep them? It sounds so scary and I am confused.

[Scarlett1234]

Sorry that this happened. Who served you? There is another forum that helps people deal with this kind of thing *IF* you're trying to avoid or delay filing bankruptcy. Yes, there are reasons to delay it in some instances.

The easiest thing would be to call them first and see if you can negotiate a settlement. Next would be to fight it and that is not an easy route as you'll want to look for FDCPA violations and other counter claims. You will want to see if you can arbitrate, again this will require research.

Whatever you decide to do, DO NOT ignore this. Show up.

May I ask what is another forum" help people deal with this kind of thing" ?

[womanonfire]

May I ask what is another forum" help people deal with this kind of thing" ?

It's called Credit Info Center and I would link you but I'm not sure if it's allowed. There is an entire section there that helps people specifically deal with debt collection lawsuits.

If you're wanting just bankruptcy information, this forum here is the very best.

[Scarlett1234]

Thanks for your quick response. I might need info from both, I knew little about neither. I will check that out.

[justbroke]

womanonfire yes, that's the best way to reference the site. By name only.

[flashoflight]

IMHO on Credit Info Center. It's very good for delaying the inevitable. But the outcome is inevitable. You are going to lose the debt lawsuit. Lots of tricks from the early 2010s don't work anymore. But if delay is the goal, it's a great resource.

[BxRcvor]

Hi , I came across your response but I don't understand why your chapter 7 made you come up with cash to pay the trustee? And made you lost the electronics? I thought the exemption at federal or state level can mostly cover most of the things in the house, and if it is chapter 7, not chapter 13 , why do you have to come up with cash to pay the trustee? Was it because you had too many assets that cant be exempted and you wanted to keep them? It sounds so scary and I am confused.

Well, it was the trustee himself that made me come up with the cash. He evaluated how much property I had that was still "on the table," (including my car, less $1000.00), and said, "pay me x% of that total value, and I'll recommend a total discharge to the BK judge." In fact, the trustee gave me a "discount" off of that X% if I paid it all in cash. That, simply because he didn't want to deal with auctioning off the property himself. He did take the car, though. And the $1000.00 exemption on the car also reduced the amount owed by that much. I guess used cars are easier to sell than other tangible items. Hence, my selling the other property directly to come up with the cash the trustee wanted.

[Scarlett1234]

Thanks for educating me . I am sorry you had to do that , does that mean if a car has negative equity on it , it would be fine ? Did you have to pay a lot of cash?

[BxRcvor]

Thanks for educating me . I am sorry you had to do that , does that mean if a car has negative equity on it , it would be fine ? Did you have to pay a lot of cash?

I would imagine, for the trustee to accept the car, it has to have some "saleable" value. It would, most likely, be "sold for auction." So the trustee will take the "Blue Book" value in mind, factored by the current condition of the car and come up with a value they'll accept for it. If they don't think they can auction it off for a reasonable value, they may refuse it or require that you sell it and pay the cash.

The bulk of what I had to pay was covered by the car. My giving back the $1000.00 exemption also helped. The rest was a nominal value (under $5K) that I had to produce to get the trustee to take action. He even let me pay it in several installments. I made sure I paid it on time.

[Scarlett1234]

Thank you . I am not fully understanding the exemption , I will read more on that , we have a little electronics, tv , sound bar ,computer ,headphone. Not much , when you said you had to surrender or pay for yours , it scares me because the computer is essential to take care of many stuff in our life, and I hope it would be left alone .

[BxRcvor]

I would imagine, for the trustee to accept the car, it has to have some "saleable" value. It would, most likely, be "sold for auction." So the trustee will take the "Blue Book" value in mind, factored by the current condition of the car and come up with a value they'll accept for it. If they don't think they can auction it off for a reasonable value, they may refuse it or require that you sell it and pay the cash.

The bulk of what I had to pay was covered by the car. My giving back the $1000.00 exemption also helped. The rest was a nominal value (under $5K) that I had to produce to get the trustee to take action. He even let me pay it in several installments. I made sure I paid it on time.

Thank you . I am not fully understanding the exemption , I will read more on that , we have a little electronics, tv , sound bar ,computer ,headphone. Not much , when you said you had to surrender or pay for yours , it scares me because the computer is essential to take care of many stuff in our life, and I hope it would be left alone .

The "exemption" is something based in Florida Law. Your state's exemption laws may be different.

In Florida, when assessing what property of the debtor that must be surrendered to the Trustee to satisfy the obligation of the BK Court (all of which should be listed on the filing application), some of what is listed can be "exempt" from being claimed by the Trustee in satisfaction of that obligation. First, one's primary house (not sure about secondary or summer 'vacation" homes) is fully exempt (i.e. only the building/grounds/structures. The contents inside it is *not* fully exempt). Also exempt is the first $1000.00 of value of your primary vehicle (not sure about other family vehicles). If the Trustee has to auction off your car and gets the agreed upon price, they have to kick back $1000.00 of it. That said, it's just easier I think to stipulate that you surrender the $1000.00 to help fulfill the whole obligation. And that's what I did.

If your lawyer is really good, s/he can cut a deal with the Trustee for an "all cash" settlement. That does several things. First, it relieves the Trustee's agent from having to come to your house to collect the property. It also relieves the Trustee from having to auction that property off (where s/he'd most likely not get much for it). And, third, it gives you the opportunity to sell what you want to sell to raise the cash (and protect what you want to protect, like your computers). In my case, the only tangible property I had to hand over to the Trustee was my car (and the $1000.00 exemption that would have been returned to me). The rest I paid in cash by selling some property on my own.

[Scarlett1234]

The "exemption" is something based in Florida Law. Your state's exemption laws may be different.

In Florida, when assessing what property of the debtor that must be surrendered to the Trustee to satisfy the obligation of the BK Court (all of which should be listed on the filing application), some of what is listed can be "exempt" from being claimed by the Trustee in satisfaction of that obligation. First, one's primary house (not sure about secondary or summer 'vacation" homes) is fully exempt (i.e. only the building/grounds/structures. The contents inside it is *not* fully exempt). Also exempt is the first $1000.00 of value of your primary vehicle (not sure about other family vehicles). If the Trustee has to auction off your car and gets the agreed upon price, they have to kick back $1000.00 of it. That said, it's just easier I think to stipulate that you surrender the $1000.00 to help fulfill the whole obligation. And that's what I did.

If your lawyer is really good, s/he can cut a deal with the Trustee for an "all cash" settlement. That does several things. First, it relieves the Trustee's agent from having to come to your house to collect the property. It also relieves the Trustee from having to auction that property off (where s/he'd most likely not get much for it). And, third, it gives you the opportunity to sell what you want to sell to raise the cash (and protect what you want to protect, like your computers). In my case, the only tangible property I had to hand over to the Trustee was my car (and the $1000.00 exemption that would have been returned to me). The rest I paid in cash by selling some property on my own.

I just saw your reply . Thank you . I will find the exemption ,hope he can keep all his computer related stuff.

[BxRcvor]

I just saw your reply . Thank you . I will find the exemption ,hope he can keep all his computer related stuff.

Like I say, if your lawyer is any good, they'll negotiate that "cash settlement" and free you to decide what you want to sell to raise the cash, or get it elswhere.