Credit Card Lawsuits against consumers

[haplesshome45]

You may be surprised to find that, notwithstanding the representations made to you by the "collections attorney," you are no longer dealing with American Express. AMEX typically takes their defaulted contracts and sells them off in "bundles" to outfits such as "Peninsula Recovery Corp" that then buy these bundles for a vastly reduced sum, e.g 4 cents on the face dollar. Now the trick is for the purchasers of the debt to go collect, and whatever they recover is their little windfall.

I was once sued by AMEX claiming I owed the $5,000 that my brother ran up and defaulted on. But I was not a signatory and was not a user of that card. That suit went nowhere. Now I am being chased by a 3rd-party recovery purchaser that wants to collect some $25,000 that the same brother again ran up on a new card with AMEX. [Lovely brother]. Those AMEX guys never learn. This time around, I will simply file suit against the recovery artists, since I am not an obligor. What all this points out is that over changing times the postures of card outfits like AMEX change; they no longer keep defaulted contracts, once they age, in-house. The debt gets sold off and off the books.

Obviously, your strategy varies considerably depending on who you are dealing with. I rather suspect no card company is going to file suits when funds are flowing in. But you are probably not even dealing with the card company; you may well be dealing with some 3rd party purchaser. They may well try to maximize their returns by filing suits quickly to squeeze what they can before you file for bankruptcy liquidation, or some Ch 13 plan that protects the secured assets and wipes out the unsecureds. At this point they are unsecured.

Your previous poster indicated that it may be possible to defeat a suit from the collector on the grounds that the debt was represented to be unsecured. That is a novel argument. I have never heard of it, but it does have considerable logic. Unfortunately for you, I rather suspect the argument will get little traction before the Court as in effect it declares that the lender is making a loan with no rights of enforcement. That is not realistic. All transactions have some right of enforcement, even gifts. For example, if you make a "Pledge" to a charity or college and do not pay the pledge, you can be sued on the pledge, even though you have received nothing at all in return (e.g. "no consideration",at least in the conventional sense).

Just because an argument has inherent logic does not mean that it will be accepted by the Courts.

At some point you have to assess where you are headed; if the "collector," who is claiming to be an attorney (and remember, that may not even be true), is not interested in compromise and is making impossible demands, then simply filing bankruptcy, or informing him that you plan to do so forthwith if you cannot get a compromise, is the way to go. If it is a purchaser, then you can probably settle for 30 cents on the dollar, which is a nice discount. Whatever settlement you come to, you absolutely have to get an agreement that interest and service charges cease, preferably retroactively to the default date, or otherwise the default rate on the Card, which may be 30%, will eat you alive and make repayment of the principal impossible. You will end up being a slave to a perpetual debt.

Remember that in the final analysis it is impersonal - they are just after money. The question is: how much (of the principal), and when. that is where your bargaining skills come in.