Legal Question??

This question is in regards to a credit card debt. One of my friends had a credit card several years ago, with like a 500 dollar limit on it. He was going through a bad time, etc...long story short, he never paid it.

Now, 5 years later and much more mature, he is trying to clean up his credit and wanted to settle the debt. He called the credit card company, who then transferred him to an external company they had apparently sold his debt to, which I did not even realize was legal?

These people told my friend that they bought out his debt and it was set at an accruing interest rate of 14.9% and he owed 981. He wanted to set up a payment plan and they refused him, telling him, %26quot;we don%26#039;t want your measly little payments, we only accept payment in full.%26quot; He can%26#039;t afford to do that, but wants to settle the debt. So does he have no choice but to stand by and let them keep charging him those fees until he can pay the entire amount, which just keeps growing, in full??

Is that legal?

Legal Question??

Like OC1999 says, what they are doing is legal.

Before to continue with trying to negotiate with these idiots...you need to understand a couple of things.

Debts can only be posted to your credit report for 7 years, beginning from the date of the first delinquency. If he can just wait it out a bit, the debt will drop off automatically.

Also, every state has what%26#039;s called a %26quot;statute of limitation%26quot; on debts. The creditor has a certain amount of time to file a lawsuit, or they abandon their right to sue. The time varies from state to state, from 4-10 years. Your debt may already be past the SOL.

Read the link I supplied below, as it discusses both of these issues. Then proceede with whatever course you choose, but at least you will have a better understanding of your rights.

Legal Question??

Yes it is legal, unfortunately.

Legal Question??

absolutely. They can take him to court if need be. He needs to abide by their credit function or they will take him to court and garnish the wages. See the problem is this: When he signed his agreement with the card company, it is binding and part of that agreement is the default or collection agreement. They can sell the debt to an outside collection company because of that agreement. He can try binding arbitration, but if I were him, and at 918 bucks, take a signature loan at a lower rate and pay off that so that he can make payments and move on with his life.

Legal Question??

Yes it is, when he signed up for the credit card he aggreed to the terms. When he went delinquint the company %26quot;Charged-Off%26quot; the account and sold it to a collection agency. This is totally legal to do.

Even though it is at a collection agency the terms still apply so it still acrues interest. Collection agencies will take payment plans but since you used the word %26quot;measly%26quot; I am wondering what the payment was. Was he offering them something like $25 a month? at that rate it would take just under 4 years to pay it off if they stopped the interest.

They usually want payment in 1 or 2 payments, but can go a few months past that if they feel you are are sincere and not just trying to hold them off. If he was to go back and offer them something like $200-$250 a month there is a good chance they would take it. The only other choice is to save up the money until he can make a bulk payment, but don%26#039;t send any money until he has an agrement in writting.

Also, you need to look at the Statute of Limitations for your state, and 5 years is in the range where it might have expired. If the Statute of Limitations has expired they can still try to collect the debt, but they can%26#039;t take any legal action such filing a suit to collect it.

Legal Question??

He can settle with them for 50 cents on the dollar. We just settled a $16,000.00 for $8,000.00. You may have to talk to them a few times but they will eventually settle. Save up 4 or 5 hundred dollars and then offer that. Do not give them electronic access to your checking account no matter what they say or want. Get everything in writing beforehand and then send them a cashiers check.

Legal Question??

What they are doing is legal, but the reality is that they bought this account for penny%26#039;s on the dollar and most likely will settle for 50%.

Get everything in writing up front before you pay them and then send them a cashiers check or money order.

Like the other poster said, do not give them access to your bank account for any reason.