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 Dear
Bankruptcy Adviser,
Back in 2005, I was going through some financial hardship and I settled all my credit card debt so that the accounts wouldn't go to collections.
Unfortunately, one credit card company did not hold up their end of the settlement agreement. They promised to send me a letter after I had met all the payment requirements. I did, and the letter never came. They ended up selling the account to a collection agency, who just served me with a summons.
I don't feel like this is right since I settled the account. Can they win a judgment against me? Is my settlement invalidated even though I met their requirements, but simply don't have the letter?
-- Valerie
 Dear
Valerie,
First of all, it sounds to me like you made a good decision to settle your credit card debt. You made a proactive, smart financial move. The only thing you didn't do is collect and maintain the records that prove your actions. Sadly, this seemingly minor omission on your part may be about to cause you some trouble.
The truth is that most collection agencies follow the law and adhere to settlements. Unfortunately, some do not. These agencies are willing to risk breaking the law because the people who they are victimizing (people like you) often do not have enough time, energy and money to stand up to them.
Valerie, you're in the right on this issue, but to protect yourself, you're going to have to go to some significant lengths. For example, we can assume that between the credit card companies that did honor your settlement and whatever other organizations or people may have been involved, there exists the record of your settlement. There probably is a piece of paper or a notation in a computer somewhere that proves your case. Unfortunately, it may be difficult for you to get this bit of information.
As well, you only have 30 days from the date of the summons
to file a response and protect your right to have
a hearing. If your response is inadequate (legally
speaking), then the collection agency will get
a default judgment. You can set aside this judgment
with a motion, which involves more legal red tape,
more paperwork, etc.
I recommend hiring an attorney to attend to all of these matters, but that might cost you more than you owe. An attorney will know the proper filing requirements, legal format, criteria for proof of service and more.
It may seem insane to have to spend money to hire an attorney when this matter should have been resolved at the time of your settlement. However, unless you feel that you can competently handle this process on your own, hiring an attorney is very likely to save you money in the long run. It is also possible that your attorney will be able to demand that attorney fees be paid by the original collection agency for deceptive practices.
Act soon, Valerie, and get on offense. Attack the collection agency that is unfairly attacking you by hiring an advocate who can navigate the labyrinth of the court system on your behalf. And, in the future, get everything in writing.
As is often said, an oral contract
isn't worth the paper it's written on.
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