What is my best option?

[nodoughbro]

What is the name of your state? California.

I have two credit card accounts that are with a collection agency. I have not made a payment on either since January 2002. I have moved several times since defaulting on the accounts and no collection agency has ever been able to contact me directly. They did however contact a former employer, who informed me they were looking for me and that they claimed I owed $26,000. I got a copy of my credit report which shows roughly $9000 which I believe is approximately the amount I owed at the time I quit making payments.

I am eager to resolve this issue and believe I could repay the amount in a reasonable amount of time if it were more in line with the closing balance of the accounts, not the interest- and penalty-inflated amounts the collectors claim.

How much can I expect to negotiate? How does SOL work? How should I go about contacting the holders of the debt? I'm reluctant to go to the collection agency and open myself up to their harrassment.

I have considered filing for bankruptcy but feel $9000 is too little an amount to do anything so drastic. That being said, if my credit card debt is now valued at $26000 it would roughly equal my annual salary. I own nothing, not a car, no real estate. Should I file for bankruptcy?

[Ladynred]

26K would be a bit extreme, even for a debt that's been in default for 3 years and in collections. You should know that the collector telling ANYONE but you anything about your debt - and how much they claim you owe - is a violation of the law - the Fair Debt Collection Practices Act (FDCPA) prohibits 3rd party disclosure !

For debts 3 years in collections, you might get lucky in negotiating for 50%, maybe less, but they'll play hardball and either say they can't settle, or can't go lower than 80%. Keep in mind, whoever holds your debts now paid pennies on the dollar for them. IF you owed $1500, its likely they paid less than 2% for it..anything more than that they can get from you is allll gravy.

The SOL in CA is 4 years, starting when you first went continuously delinquent. If you last paid all of this in Jan 2002, I'd wait until March of 06 before you negotiate -- the SOL will have expired and you won't have to worry about being sued by contacting the CA's.

[nodoughbro]

When the SOL expires, the debt is still valid but they can no longer take legal action to recover it, is that correct?

Settling up after the SOL expires would give me some leverage, I can see. But what is the motivation to settle up if they can't sue me.

[Ladynred]

When the SOL expires, the debt is still valid but they can no longer take legal action to recover it, is that correct?

Right.

Settling up after the SOL expires would give me some leverage, I can see. But what is the motivation to settle up if they can't sue me.

Take what you're offering or get NOTHING !

[nodoughbro]

And my motivation to go to them is eventually fixing my credit? Won't the defaulted accounts eventually go away?

I'm concerned that if I approach them, even after the SOL expires, I will be opening myself up to relentless harassment, which would then be their only means of pressuring me.

Mind you, I'm willing, and in fact I want to, repay the money that I borrowed but I don't want to be bullied into paying nearly three times as much.

[CO19]

[quote=nodoughbro]What is the name of your state? California.

They did however contact a former employer, who informed me they were looking for me and that they claimed I owed $26,000.

> If I were you , I would turn this around into your favor by hiring a GOOD debtors rights attorney and file suit against this collection agency for violation of the FDCPA, 805(b) Communication in connection with debt collection by disclosing your debt to a 3rd party (your former employer). Here's the entire FDCPA... study it closely, real closely, b/c chances are they have or will violate something else since they've already tt your former employer. [url]http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm#805[/url]

Good Luck!

[Ladynred]

The delinquent accounts WILL fall off your reports around December 2009.

And my motivation to go to them is eventually fixing my credit? Won't the defaulted accounts eventually go away?

Paying them isn't going to fix your credit at all, in fact, it will drop your scores. Unless they agree to a 'pay for delete', you'll just have a paid collection or a settlement as opposed to an open collection. The payment will update the 'date of last activity' and the FICO scoring model will read it almost as if its a NEW collection- and drop your scores.

I'm concerned that if I approach them, even after the SOL expires, I will be opening myself up to relentless harassment, which would then be their only means of pressuring me

That is certainly possible.

[nodoughbro]

Thanks.

I figure I should not file for bankruptcy and just sit tight until early next year. Would approaching the CA before that screw up the SOL? Is there anything other than payment that resets the SOL?

As far as, sharing my info with a third party, I thought that was illegal and I knew it was a little embarassing but trying to turn it around and take them to court seems risk. In the end, it's just he said, she said, isn't it?

Thanks again for all the info.