Question for you guys

Got a couple questions for anyone who knows about this sort of thing

I've got a couple credit cards that I've defaulted on. One of them just charged my account off on December 31st. Now they've got some company calling me offering me a settlement. I told them what I can afford, and they're saying I need to pay twice that. Or come up with $900 in the next couple weeks.

He's told me I've got days (not weeks) to get back to him, and if I can't pay they'll take that as me "refusing to pay" and then he said they look into my assets and properties and give that information to Discover. (I took that as him basically saying they may garnish my wages or whatever, or seize my car)

However, I make peanuts. $5 an hour, and barely scrape enough to pay my rent every month. Can they take more money out of my paycheck, even if I barely make enough to live? And can they seize my car if its in both mine and my dad's name?

I'm not too worried about the bank account.. they can have the $5 I keep in there

They can garnishee your salary, up to 10 percent of your gross, but no more than that. That's the law. I doubt they'll seize your car, but you never know. You should put is solely in your Dad's name for now.

I don't think that they can touch your physical assets. Credit card debt is generally unsecured. And if they have already sold it off to collections, your credit record is already impaired-which is usually the biggest threat they have over people. Once they've done that you really don't have as much to lose any longer.

They could theoretically take you to court and attempt to get some sort of wage garnishment but again chances are that they would rather come to some sort of reasonable settlement.

But no they can't just dip into your account on their own. There's even rules over how they are to interact with people. An attorney or legal aid in your area could point you in the right direction. Collections agencies run on intimidation and ignorance of their limitations.

Bogey, Lilo is correct. Your tangible assets, like your car, is safe from unsecured creditors. It's not like a mortgage or a car loan.

I would still try to work with the guy as a sign of good faith. As Lilo indicated, look up your county bar association, and they will be able to steer you to a legal clinic that can offer advice and representation, free of charge.

Also, keep in mind that the you're not the only one in this predicament. In these times many people, especially the young, are experiencing these problems. Stay away from the companies that advertise on the radio that they can do a quick fix and get you out of debt. They're largely running a scam.

Thanks for the responses, guys. The main thing I was worried about was my car. I'm glad to hear they can't put their greedy paws on it.

Basically the guy gave me 3 options:

A) Come up with $900 (half my debt)
B) Come up with two payments of $450
C) Agree to pay $50 a month, every month

C is obviously the most attractive option, but they're saying I have to give them my bank information for a direct debit. I am not a fan of direct debits, as I don't know that I'd be able to make sure I have $50 in my account every month. I'd rather just pay them on my own, but they won't let me do that.

I make about $225 per paycheck, twice a month. Sometimes a little more, sometimes a little less. Rent is $450. Car payment/insurance is $260. I do make tips (I'm a delivery driver), but most of what I make in tips goes towards groceries and gas. I told them all of this information, but they still don't understand that i literally CANNOT guarantee that I'll be able to pay them the $50 a month.

My mom told me to look into filing for bankruptcy, but I don't know that that's really an option for me.

I don't know what state you are in, but state laws usually do not permit garnishment of wages. I know Texas doesn't.

West Virginia

Bogey, Do NOT give them your bank account number. No way, no how.

Talk to a lawyer and find out what YOUR rights are. As Klyd pointed out, there's legal aid or someone out there who will provide advice at no charge. Try your local consumer protection agency, anyone that can offer free advice and clarify your rights for you.

These collection agencies are counting on the fact that you don't know what your rights are. They try to intimidate you. Surprise them by speaking knowledgeably about what they can and cannot do.

If you don't agree to their terms, they may take you to JP or county court, get a judgement against you, and that could cloud any title you try to obtain to assets and it will surely smack around your credit rating.

It costs them more to sue you than it does for you to settle.
Keep in mind the difference between what you owe and what you pay in a settlement is taxable income in the eyes of the IRS.

Shop this to a few lawyers who specialize in collections and
spend a few bucks having the lawyer do the negtiating.
Alo DO NOT use one of these 1-800 places that have sprung up like mushrooms. For the most part they are a ripoff.

Now DT you know that companies retain lawyers just to file such suits. It's pretty routine. Plus, they may choose to sell the account. So, the cost of a suit doesn't always exceed the account's value. Companies know that most debtors won't defend their interests, so it's a cheap victory for the company that may come back to bite the debtor some day.

I know Olivant, there are foreclosure mills that churn out these suits 24/7. Most credit card companies have something in the fine print that requires all litigation to be done in a particular venue, many are in South Dakota. Accordingly you can dismiss them if they sue in any other state, and depending on the jurisdiction they would have to obtain a defult judgment and then domesticate it in the debtor's home state. The problem there is many states do not allow foreign default judgments to be domesticated (i.e. New York and New Jersey) without an evidentiary hearing on the merits. That's where it gets expensive.