My mother is 65, disabled, and retired. Her only income is Social Security and some light under-the-table work as a book editor. She has no pension, retirement accounts, and is not employed as a W2.
Her savings account is $2000 and her monthly income is $1900.
She ran up $12,500 CC debt with Capital One about 4 years ago after being unemployed, and was unable to make any payments. The debt has now been discharged to a third-party collections agency and they just sent a notice threatening her with possible legal action if she doesn't sign up for a monthly payment plan with them.
I used to work as a software developer at one of these collections agencies. As I understand it, they employed only one attorney, and were loathe to take people to court because the cost vs potential of recovery was never in their favor. Their legal threats were almost always idle. In my mother's case, she has no garnishable income, and her SS benefits are protected from this kind of garnishment -- at least I'm pretty sure.
I also understand that these agencies buy debt for pennies on the dollar; the average is $0.04 per $1.00 of debt. So, this agency might have acquired my mom's debt for as little as $500.
My plan is to call them up and notify the agency that I'm taking over negotiations on my mom's behalf. I will offer them a $1000 settlement in exchange for a written agreement that they will consider the debt fully recovered and notify the credit bureaus. This is an extremely lowball offer (usually collectors like to settle around 40-60% of the total debt). But as far as I can tell, their only other option is a total loss.
Am I missing anything here? How does this plan sound?
Submitted October 09, 2020 at 03:32PM by Nightmare_Tonic https://ift.tt/2SUbrLL
