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Advice on Paypal Collections


blackinkv2
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Hi everyone, I hope this is in the right place. I was dumb during college and used the paypal credit as a way to fund other activities and I disregarded the payments (bad information, originally thought they wouldn't report to my credit). So now they have transferred it to midland credit. They have sent me letters for settlements of 5k with payment payments etc. After checking CK, the debt is currently 1 year old and has impacted my credit score. I don't have the money to pay the full amount back. What are some of my options?  

 

Thank you taking the time to read this.

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Before getting into your specific question, it's important to note that looking at Kredit Carma and getting your actual credit reports from all four bureaus are two dramatically different things. 

 

And that skore on Kredit Carma is worthless -- companies that lend money don't use it when deciding whether or not to give you new credit.

 

That was more for background/education.  Now to your question...

 

How much is the total balance?  If they're offering to settle for $5k, I'm guessing it's significantly more than that. 

 

If the debt is ~1 year old, IMO you are at risk of being sued for the entire balance, which could create more pronounced and longer-term credit and financial problems.

 

15 hours ago, blackinkv2 said:

They have sent me letters for settlements of 5k with payment payments etc.

 

Even if you are unable to come up with $5k now, can you sustain the payment plan they're offering?  

 

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10 hours ago, cv91915 said:

Before getting into your specific question, it's important to note that looking at Kredit Carma and getting your actual credit reports from all four bureaus are two dramatically different things. 

 

And that skore on Kredit Carma is worthless -- companies that lend money don't use it when deciding whether or not to give you new credit.

 

That was more for background/education.  Now to your question...

 

How much is the total balance?  If they're offering to settle for $5k, I'm guessing it's significantly more than that. 

 

If the debt is ~1 year old, IMO you are at risk of being sued for the entire balance, which could create more pronounced and longer-term credit and financial problems.

 

 

Even if you are unable to come up with $5k now, can you sustain the payment plan they're offering?  

 

I believe the total balance was 7-8k. I'm unable to sustain the payment plan. I have not yet responded to them. Do you think they would reduce the payment to around 1k and then delete it off my credit history? 

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3 hours ago, blackinkv2 said:

I believe the total balance was 7-8k. I'm unable to sustain the payment plan. I have not yet responded to them. Do you think they would reduce the payment to around 1k and then delete it off my credit history? 

 

It seems unlikely that they'd accept ~13% of face value on a debt that's so fresh / well within SOL

 

You might have luck with a more manageable payment plan, but wait for someone else with more direct experience to weigh in.  

 

 

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Personally, I love Midland. I made them a side job in 2018. I wouldn't give them a dime; put them into arbitration through the paypal agreement. That will cost them close to 6K in startup fees, (non-recoverable) and 1500 per hour thereafter.

 

Midland always refuses to arbitrate, which kills the case and the debt. Do it NOW before they sue, that way you don't have to deal with court. They have refused to arbitrate so many times AAA won't take a case involving them. After AAA closes the case, you can threaten Midland with a petition to compel arbitration in federal court. At that point they usually pay you to leave them alone.

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6 hours ago, legaleagle2012 said:

Personally, I love Midland. I made them a side job in 2018. I wouldn't give them a dime; put them into arbitration through the paypal agreement. That will cost them close to 6K in startup fees, (non-recoverable) and 1500 per hour thereafter.

 

Midland always refuses to arbitrate, which kills the case and the debt. Do it NOW before they sue, that way you don't have to deal with court. They have refused to arbitrate so many times AAA won't take a case involving them. After AAA closes the case, you can threaten Midland with a petition to compel arbitration in federal court. At that point they usually pay you to leave them alone.

How would I go about putting them into arbitration? 

 

@cv91915Thank you so much for your advice!

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  • 1 month later...
I have filed for arbitration and Midland contacted me to settle with a "mutual walk-away". Thank you for everyone's help! 
 
[mention=129306]legaleagle2012[/mention]Thank you for your advice. I owe you one!
Do you have the arbitration process that you used?

Sent from my SM-G991U using Tapatalk

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  • 3 weeks later...
On 4/23/2021 at 12:06 AM, legaleagle2012 said:

Good job. Works every time. Make sure they do not 1099 you, either, since they declined to arbitrate and prove the debt is legit, etc.

How do I ensure that?

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Posted (edited)

Send them a letter telling them that since they refuse to go to arbitration and prove the debt is theirs, they have no legal basis for a 1099, and if they send one, it's off to arbitration we go. If they refuse a second time, it's off to federal court with a petition to compel.  I did that to them; eventually they paid me to leave them alone.

Edited by legaleagle2012
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