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CreditDeluxe

Working with collectors?

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Posted (edited)

Hi Board!

 

So, I got myself over my head credit card debt-wise, and late last year stopped paying on ~$23,000 worth of credit card balances, spread out over several creditors.  Most charged off within the last few months, and now the collection notices are starting to roll in. My first instinct is, of course, to go full ostrich, but my first go around on this forum was about 15 years ago for this same kind of thing, cleaning up after doing nothing, so trying a different tack seems like the better path.

 

I hate the idea to dealing with collectors, but the balances are generally high enough that they’d probably sue over them, and I definitely don’t want a judgment on my record. I am without a doubt not anywhere near out of SOL for California, as the DOFD is not even a year yet. 

 

I pulled my reports last week and no collections notations as of yet, however I expect some will appear, even if I take timely action. 

 

I’ve read WhyChat, and I’ve read PsychDoc. Still finding new pertinent things too. So far I’ve opted out and prepared (sending tomorrow) address removal letters. I’ve got a TON of old addresses listed, and have moved several times in the last few years.

 

Midland just sent a “pre-legal notification”, which is likely some level of BS, but unnerving nonetheless. I’m assuming other collections letters are going to my recently vacated addresses, as the cards in default I believe still show old addresses. I can no longer access my account information online with the defaulted cards.

 

I understand that calling collectors is generally a bad idea, and I’m terrible on the telephone anyway.  I plan to DV them after old addresses are removed, unless the general consensus is that it would trigger a lawsuit. But once the validation comes in, and I fully expect it to - in this electronic world they’d have to be right idiots to not have such fresh default data - I’d like to get the payments going so I can move though and past all this.

 

SO:  Are there any templates/directions for working with collectors via mail? And how have others in a similar position handled the negotiations?

 

I have searched and read, and can’t find much at all about working with collectors.

 

Thanks for taking the time to read this!

 

-CD-

 

 

(Edited for weird font and autocorrect issues. No substantive changes, I’m just finicky like that.)

 

Edited by CreditDeluxe

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There is no set method for dealing with collectors. However, arbitration will get rid of any junk debt buyers 98% of the time. (Midland is one) Some original creditors will arbitrate, some won't. There is no pattern to it. The startup fees for them are in the 5K range, yours is capped at 200 for AAA and 250 for JAMS. They cannot recoup those fees from you if they win, so it's a financial waste of time to arbitrate small amounts. Once you file for arbitration, they cannot sue without breaching their own contract. Do it BEFORE they sue and save yourself a lot of hassle with the court.

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3 hours ago, legaleagle2012 said:

There is no set method for dealing with collectors. However, arbitration will get rid of any junk debt buyers 98% of the time. (Midland is one) Some original creditors will arbitrate, some won't. There is no pattern to it. The startup fees for them are in the 5K range, yours is capped at 200 for AAA and 250 for JAMS. They cannot recoup those fees from you if they win, so it's a financial waste of time to arbitrate small amounts. Once you file for arbitration, they cannot sue without breaching their own contract. Do it BEFORE they sue and save yourself a lot of hassle with the court.

 

This particular alleged amount owed to Midland is ~$4500, so of course my reflexive concern as an absolute lightfoot is that I’ll fall into that wee 2% category. But I can see that researching arbitration is important for my situation, especially since discrepancies may come up through both the DV process and as collection accounts (if any) begin to report, most likely improperly. I’ll also delve deeper into who’s a CA and who’s a JDB and why that matters. 

 

Thanks Legaleagle!

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See my pinned topic on arbitration. With startup fees of $4700 and the 1st hearing at $1500 per hour, they will be in the red before they start. They won't do it. 

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Posted (edited)

Incredibly informative thread! 

 

So then I’m looking for the arbitration clause in effect at the time I signed up for the card, or in effect at the time of first default? Would you mind throwing down the link here to credit card companies’ arbitration language? 

 

ETA: Nevermind, found it. This is what you wrote to PBear in another thread I found really helpful. “The CFPB has all the agreements going back to I believe 2011, except for 2015. You need the one in force when the account went into default, because they do issue a new agreement every year, even if it is the same as the previous year.”

 

Thanks Legaleagle!

Edited by CreditDeluxe

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Just because a debt, even one that is 'charged off,' has been sold.  MANY fresh defaults are placed as contingency paper. 

 

With that in mind, you may actually have options of working with the original creditors, keeping in mind that 'charge off' is an accounting term. 

 

The language in specific notices will be the giveaway as to whether the third party owns the paper or whether it is contingency placement...

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Thank you Centex! I’m not near my letters atm, and will certainly look at them when I get home, but are there any specific terms to look for? Or will it be more along the lines of ownership verbiage, such as  “we are the sole owner of this debt...” etc.?

 

And will JDBs work on contingency like this?

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Another thing you can do is check your credit report.  If an original creditor has an account, it’s TL will show “sold” or “transferred”.  It will also show a -0- balance.

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1 hour ago, CreditDeluxe said:

Thank you Centex! I’m not near my letters atm, and will certainly look at them when I get home, but are there any specific terms to look for? Or will it be more along the lines of ownership verbiage, such as  “we are the sole owner of this debt...” etc.?

 

And will JDBs work on contingency like this?

The language makes it pretty clear who the owner of the paper is.

 

Remember that the B in JDB is BUYER.  There are some companies like Midland that fill both roles, but the paper will be held under different names under the Midland umbrella.  Typically, however, an entity that purchases paper does not fill both roles, although they will purchase and then farm out to a different entity for collection in the same manner that an original creditor will farm paper out for collection...

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On 8/20/2019 at 7:20 AM, legaleagle2012 said:

There is no set method for dealing with collectors. However, arbitration will get rid of any junk debt buyers 98% of the time. (Midland is one) Some original creditors will arbitrate, some won't. There is no pattern to it. The startup fees for them are in the 5K range, yours is capped at 200 for AAA and 250 for JAMS. They cannot recoup those fees from you if they win, so it's a financial waste of time to arbitrate small amounts. Once you file for arbitration, they cannot sue without breaching their own contract. Do it BEFORE they sue and save yourself a lot of hassle with the court.

+1,000.

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Does this sentence have a ton of relevance? “Utah law shall apply to the extent state law is relevant under the FAA.”

 

I’m in California. Any specific and common Utah

restrictions I should be aware of?

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47 minutes ago, Bluesie58 said:

Another thing you can do is check your credit report.  If an original creditor has an account, it’s TL will show “sold” or “transferred”.  It will also show a -0- balance.

“Transferred” being farmed or contingency? I’m hoping “Sold” is sold. At least one clear thing in all this...

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17 minutes ago, CreditDeluxe said:

“Transferred” being farmed or contingency? I’m hoping “Sold” is sold. At least one clear thing in all this...

If the OC reports a -0- balance, it means sold.

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13 minutes ago, Bluesie58 said:

If the OC reports a -0- balance, it means sold.

And sold is permanent, correct? They do not revert back to the OC? I know they can get passed around amongst increasingly lower level bottom feeders, but once the OC has sold it never goes back to them, am I correct? Just confirming.

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Does arbitration also serve to prevent any further debt collection activity such as reporting? Legally, anyway. (Assuming the trade line hasn’t been reported already.) I’m sure some will report anyway, but if arbitration has been filed, and reporting occurs after the filing, does that constitute a violation? 

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44 minutes ago, CreditDeluxe said:

And sold is permanent, correct? They do not revert back to the OC? I know they can get passed around amongst increasingly lower level bottom feeders, but once the OC has sold it never goes back to them, am I correct? Just confirming.

I believe that depends on the terms in the contract between the OC and debt buyer.  I don’t know how often accounts are returned back to an OC.  However, I don’t think JDBs are so picky that they would return too many accounts.  

 

 

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1 hour ago, Bluesie58 said:

If the OC reports a -0- balance, it means sold.

This is not always an accurate statement.  There are some that actually zero out the reported balance when they took their taxable event on their side of the default. 

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10 minutes ago, centex said:

This is not always an accurate statement.  There are some that actually zero out the reported balance when they took their taxable event on their side of the default. 

I stand corrected.   However, if it’s included with the words “sold” or “transferred”, the consumer can be pretty sure the OC no longer owns the account.

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On 8/20/2019 at 4:20 AM, legaleagle2012 said:

There is no set method for dealing with collectors. However, arbitration will get rid of any junk debt buyers 98% of the time. (Midland is one) Some original creditors will arbitrate, some won't. There is no pattern to it. The startup fees for them are in the 5K range, yours is capped at 200 for AAA and 250 for JAMS. They cannot recoup those fees from you if they win, so it's a financial waste of time to arbitrate small amounts. Once you file for arbitration, they cannot sue without breaching their own contract. Do it BEFORE they sue and save yourself a lot of hassle with the court.

Okay, this phrase from the Stnchrony agreement: “If you ask us to, we will pay all the fees the administrator or arbitrator charges, as long as we believe you are acting in good faith. We will always pay arbitration costs, as well as your legal fees and costs, to the extent you prevail on claims you assert against us in an arbitration proceeding which you have commenced.” (Emphasis mine) This reads as if I am on the hook for arbitration costs if I do not prevail. I would not clutch my pearls in shock if it were a deliberately misleading statement, however, how is it that they cannot recoup those fees from me if they do win as you stated above?  Not trying to be obstinate, genuinely curious. (I know, it won’t get that far, but humor me here.)

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From JAMS:

  1. With respect to the cost of the arbitration, when a consumer initiates arbitration against the company, the only fee required to be paid by the consumer is $250, which is approximately equivalent to current Court filing fees. All other costs must be borne by the company, including any remaining JAMS Case Management Fee and all professional fees for the arbitrator's services. When the company is the claiming party initiating an arbitration against the consumer, the company will be required to pay all costs associated with the arbitration.
  2. In California, the arbitration provision may not require the consumer to pay the fees and costs incurred by the opposing party if the consumer does not prevail. 

Again, emphasis mine. 

 

Okay, so does “may not” in this case mean “might not”? If so, what are the circumstances under which the consumer is required to pay the costs and fees? 

Or does “may not” mean “is not permitted to”? Or is that whole California exception clause arguable?

 

-CD-

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JAMS and AAA have their own rules, which the banks agreed to when they contracted with them as the arb forum. They can put anything they want in their contract, but none of it is binding upon the arb forum. Under extremely limited circumstances, the forum can declare a claim to be frivolous and stick the claimant with the fees. I have NEVER heard of them doing this in the last ten years in a consumer credit case.

 

You have to actually arbitrate in order to make that frivolous claim, and they never arbitrate, so don't worry about it. The CA clause is helpful to the extent that it allows you to get your fee back if they don'tr arbitrate, as I recall.

 

Utah law is in the contract because Utah has no limit on credit card interest, like Delaware and South Dakota. That's all it means.

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Okay, putting together the arbitration forms now. JAMS requires:

2 copies of the Demand for arbitration

2 copies of Proof of Service on the appropriate party 

2 copies of the arbitration clause

Admin fee

 

So I’m going to send the Demand and the clause to JAMS with the fee, and once I receive proof of service, send that to JAMS as a follow up, correct? 

 

Do I wait for proof of delivery to JAMS before sending to Midland, or simultaneously? My “deadline” to contact according to Midland is 8/26.

 

And what constitutes proof of service? Priority Mail with tracking? 

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As I recall, you submit all your documents to JAMS online. They will contact Midland. You can also send M a copy if you like. It's all explained on the JAMS site.

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