Stubborn Creditors

Our debt settlement programs average 36 months from start to finish but we have some clients who are enrolled for a longer time.  Longer than average programs may happen for a variety of reasons.  It can occur when a client skips or reduces his regularly scheduled monthly deposits for the program (often during times of job loss, unexpected expenses, accidents, etc), when difficult litigation situations arise, or when changes occur in a credit card company’s policy.

In one particular client’s situation, he actually had 13 of his scheduled monthly deposits skipped or returned to Provanta as NSFs (non sufficient funds), which was likely the main cause of his program extending to 5 years.  In addition to his long program, Provanta was unable to settle his final account.  The reason for this has less do with the NSFs, however, and more to do with the creditor’s stubbornness.

When the client enrolled, he provided information to Provanta showing that he owed $4,600 to this creditor.   Whenever the creditor responded to our attempts to negotiate, they would make an extremely high settlement demand such as $5,900 or $6,700.  Since the creditor continued to be unreasonable, Provanta focused our efforts to settle accounts with the other creditors who were willing to work out a resolution to the account.

The other accounts settled for a gross total of 46 cents on the dollar while this creditor continued to decline our settlement offers.  We eventually referred the client to an attorney in order to investigate whether his account may have reached the statute of limitations, which would mean the creditor could be unable to pursue legal action as an option to collect the debt.

Despite this, the client asked us to continue negotiations.  He still wanted to resolve the account and pay the creditor as much as he could.  After explaining that the client may have reached the statute of limitations, the creditor still refused to settle the account for a reasonable amount, “reasonable” being an amount that contemplates the statute of limitations possibility.  Keep in mind that this creditor had not received payment on the account for 5 years and would unlikely be able to collect from this client in the future.  In the end, our client decided to officially withdraw and we ensured that the bank holding the funds he reserved to settle the last account returned those funds to him.  This money could have been used to pay the creditor, but since they insisted on taking $0 over a period of five years of offers, our client will likely use these funds elsewhere.

(Ref. 1524)

Technorati Tags: debt settlement, statute of limitations on debts, debt negotiation

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