HELP - Threatened to be served papers on charge off CC

Question

Hi, I got a message from a collection agency or their attorney saying that they need to get a hold of me, something about serving my papers for court. I called back and talked to a woman stating that I need to pay over $1400 in a lump sum to pay a credit card debt from HSBC that was opened on 11/04. The charge off originally started at only $287!

I told her i obviously can not afford to may that much and she said she could somehow "hold" it if i could pay atleast a $100 right now. I told her i would like to investigate this matter on my own before paying someone over the phone for something i wasnt too sure about. She replied that it might be too late to call her back cause they could serve my papers at my employment very soon and the balance would be bumped up to $2200 !!!!

Im very surprised by this sudden situation cause i didnt know i could be sued over this.

So basically, what im asking is; what is the best method in trying to resolve this situation? Do I really have to go to court over this? Should I ignore it and wait til it falls off my credit report? If I do start making payments, does it renew the debt and make it stay on my report for an additional 7 years from now?? Im moving out of state in 2 months and absolutely cannot pay this rediculous amount of $1400 (or $2200 if it ends up in court) on a credit card that was declared a charge off of only $287. I really need some good information on what to do next. Should i contact HSBC and ask if I can try to settle with them? or once again ignore it until it falls of my credit report?

I live in Los Angeles, CA. This account was opened on 11/04. My last payment was 11/05 and date of 1st delinquency is 12/05. another odd thing is that my charge off amount stated on my 04/08 EXPERIAN report was $287. But on my transunion report, also from 04/08 it shows as my charge off amount of $687!!

Answer 1

I agree with everything Slimick posted. Be sure to send them the debt validation (DV) letter within 30 days of their phone call.

If they are reporting on your credit reports, use the address they are reporting to send your DV to. If they are not reporting you might look them up on the BBB website or look up their company website to find an address. If they are not reporting and they have more than one office, you might try to get their address out of them (they often try to make it difficult for you to know their mailing address).

The collecting SOL in California is 4 years and it starts to run on the last payment or charge you made on the account before it is charged off. So, it looks like you are still within the collecting SOL.

It also looks like they have illegally padded the amount you owe in that phone call. That is one of the things the DV should do for you, force them to inform you of the "true" amount of the debt.

They have also outright lied to you about the amount of the debt if it should go to court. But, since it was a verbal "threat" there isn't much you can do about it.  

Like Slimick mentioned, read the FDCPA.

California is also one of a few states that has their own version of a FDCPA which is stronger, in many respects, than the FTC FDCPA.

You might Google it or go to a local law library and read through it.

You might also go to the last link I've listed in my profile to a free credit discussion board. Do some reading in the Newbie section and then in the Credit Forum.

You will be able to learn more about Ca. laws, your rights, find free sample letter templates for DV, payment agreements/pay for delete (PFD) and you can also freely ask any questions you may have  

Answer 2

Your first step should always be to request validation of the debt per your rights under the Fair Debt Collection Practices Act. Even if the debt is valid, request validation anyway.

Send them a letter via Certified Mail + Return Receipt stating:

Per the Fair Debt Collection Practices Act, I am requesting written validation of this alleged debt

When they call back, tell them: I have sent a certified letter to your office officially requesting  written validation of this alleged debt per my rights under the Fair Debt Collection Practices Act.  

Per this federal law they must provide written validation within 30 days and they must cease collection activity until they send you written validation. Do not let them scare you with bogus threats during this period. This will give you breathing time to explore your options.

When (or if) they send validation to you, make a settlement offer and get the terms in WRITING FIRST prior to sending them your money. NEVER give debt collectors your checking account # for payments.

Read up on the Fair Debt Collection Practices Act and understand your rights:

Answer 3

Keep in mind that in addition to requesting validation with the collection agency, you should always dispute the debt with the CRA's (Experian, Equifax, Transunion) as well.  They will spend 30 days investigating the matter.  If the collection agency neglects to provide the CRAs with substantial proof that the debt belongs to you (and many times they cannot, even when the debt is legitimate) the debt will be removed from your credit reports.  Reinsertion is illegal.

If you make negotiations to pay a collection agency make sure that you get it in WRITING first that you are only paying in exchange for a deletion of their tradeline on your credit report.  If you do not do this, you will pay the debt and guess what?  Your credit score will remain the same.  Paying a collection agency does no good at all if they do not agree to remove their tradeline.