Summons For Personal Loan Debt

[ndl46]

What is the name of your state (only U.S. law)? Virginia

My question involves collection proceedings in the State of: Virginia

First, many thanks to anyone who can provide me with some advice.

I had a revolving account with a personal loan company for a little over three years. The balance was about $8000.00 Earlier this year, I fell 3 months behind on payments, due to overwhelming medical bills. I called them in early June and explained that I would be able to bring the account up to date at the end of June, giving them a payment date and amount being paid. At that point, they said that the account had already been turned over to collections (a law firm) and that they would be proceeding with a lawsuit to win a judgement.

I asked the company if scheduling the payment to bring the account current would prevent the lawsuit from proceeding, they said nope. They then initiated a conference call with the law firm, and asked the firm if the suit had been filed yet. The firm said no. I went ahead and made the payment to bring the account current anyway, because I was trying to do the right thing. The law firm took my payment, and they asked if I could agree to a payment plan, which they proposed. I said yes, and in addition to the initial payment to bring the account current, I have made two subsequent payments in accordance with the agreement (July and August). Nevertheless, I received a summons to appear in court on Sept 1 (next Tues). Some questions:

--Did I make a mistake in making payments to the law firm without seeing any kind of assignment? The loan documents do not have an assignment clause in them, by the way. I still have not seen any proof of assignment.

--I plan on showing up in court, mostly to show the judge that I have agreed to their proposed payment plan, and have abided by it. Will the judge still grant the judgement, in spite of this?

--I asked the firm if they would consider dropping the suit since I agreed to the payment plan, and have made the payments as requested. They said they would check with the loan company, and get back to me. A couple of days later, they said the request was denied.

--I am desperate to avoid a judgement on my credit report. Should I ask the court for a continuance, to maybe give me some more time to possibly come up with a lump sum settlement amount?

Thank you in advance for your help

[dfromnyli]

Originally Posted by ndl46

--Did I make a mistake in making payments to the law firm without seeing any kind of assignment? The loan documents do not have an assignment clause in them, by the way. I still have not seen any proof of assignment.

No, the debt was not assigned or sold to the law firm. They were hired to represent the loan company. You should now only contact the attorney regarding all matters on this account because they represent the loan company in a civil matter.

Originally Posted by ndl46

--I plan on showing up in court, mostly to show the judge that I have agreed to their proposed payment plan, and have abided by it. Will the judge still grant the judgement, in spite of this?

They may be willing to accept a stipulation of settlement, you should contact the attorney to try and settle the case. If you offer a reasonable payment plan they may accept it (something like 1k a month for 8 months, $500 a month etc) This is not gauranteed though, they may want to enter the judgment.

Originally Posted by ndl46

--I asked the firm if they would consider dropping the suit since I agreed to the payment plan, and have made the payments as requested. They said they would check with the loan company, and get back to me. A couple of days later, they said the request was denied.

Again, Just because they will not drop the suit does not mean they will not accept a reasonable settlement offer.

Originally Posted by ndl46

--I am desperate to avoid a judgement on my credit report. Should I ask the court for a continuance, to maybe give me some more time to possibly come up with a lump sum settlement amount?

I would not ask for an adjournment/continuance just because they are going to ask you for a reason why. If the attorney suspects you are just trying to avoid your obligation he can bring a motion for summary judgment which you would probably lose.

[ndl46]

Thank you for your reply. A couple of follow ups:

1) I understand that they represent the creditor now, but, the payments I have been making are actually made out to the firm, and not the creditor. Absent any assignment, is this permissible? How do I know that they are properly crediting my account with the creditor?

2) I have already agreed to the repayment plan, and have been abiding by it. Will the judge still grant the judgement even though I have been honoring THEIR proposed payment plan? Can I ask the judge to dismiss based on my agreement to the plan and the history of payments under the plan?

[dfromnyli]

Originally Posted by ndl46

Thank you for your reply. A couple of follow ups:

1) I understand that they represent the creditor now, but, the payments I have been making are actually made out to the firm, and not the creditor. Absent any assignment, is this permissible? How do I know that they are properly crediting my account with the creditor?

Yes, the attorney is allowed to accept payments and all other notices/communications on behalf of his client. You know by keeping copies of all of your canceled checks.

Originally Posted by ndl46

2) I have already agreed to the repayment plan, and have been abiding by it. Will the judge still grant the judgement even though I have been honoring THEIR proposed payment plan? Can I ask the judge to dismiss based on my agreement to the plan and the history of payments under the plan?

In your contract with the loan company, you almost undoubtedly had what is called an escalator clause. This is pretty standard for basically every single loan. It's usually worded something along the lines of

"...If the payment is not made by X amount of days after the date of said note is due then at the sole option of Creditor the full amount then due will become immediately due and payable..."

So in that case, you would be in default and your payment plan means nothing unless you paid the loan in full.