Debt Settlement Negotiation - What is a reasonable amount on low income?
I recently agreed to a judgement through a court to an amount of $2,660 I owe to a Credit Card. I was working with a Debt Settlement Company, but I feel they hung me out to dry with regards to support and legal advice. I contacted the Collection agency and they tell me their client wants 30% and then we can make monthly payments. I don't have 30% to start, as I have paid off 2 outstanding debts already this year and my funds are depleted.
Attorney answers (2)
If you had hired an attorney in the first place, he/she never would have let you sign an Agreement for Judgment in the full amount that you owed. Unfortunately, you gave them a "win" without even making them earn it or negotiating a better deal.
Although there are some good ones, in my experience debt settlement companies are not helpful to debtors, and are sometimes completely fraudulent schemes that leave debtors in a worse financial situation. The collection agency (more appropriately, their lawyers) can take you back to court for the next 20 years now that they have a Judgment against you. They can garnish your wages and bring you to court for examination. What's worse, the Judgment continues to accrue interest at a rate of 12% per year. Your best bet is to save up money in an account and then offer them a larger lump-sum settlement of the entire debt (perhaps 40-60%). You would be well-advised to seek the advice of counsel to make sure that the Judgment is reported with the court as satisfied. 1 person marked this answer as good
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Unfortunately, when dealing with credit card companies or collection agencies the debtor is at their mercy when it comes to repayment amounts required. If a judgment holder refuses to change the payment terms, bankruptcy may be your only remaining option. In a Chapter 7 bankruptcy, the debt would be discharged once and for all and the debtor then gets a fresh start.
Whether or not bankruptcy is a good idea for you can only be determined after a careful consideration of your total debt, assets, etc. Many bankruptcy attorneys offer free phone consulations and there is a wealth of information on the internet about bankruptcy in general. Kara O'Donnell, Esq. Law Office of Kara O'Donnell Quincy, MA www.QuincyLegal.com |