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Information on Collections on Previously Settled Debt

I am trying to settle a debt with Household Bank for which there is a lien on my house. Any advice you could give me?

In 2004 I had a debt with Household Bank. They had my bill wrong and could never get it right. A lawyer which is also a collection Agency, put a lien on our house. Household Bank said they would settle for 4500.00. We could only come up with $4000.00. I sent it to the collection agency, which I thought they would accept. I did not know until several months later they would not accept that as payment, and the lien is still on our house. Household Bank is no longer on our Credit Report, but the collection agency is wanting us to pay them 3800.00 before they will take the lien off our house. I think they bought our debt and Household Bank is no longer on the Debt. Also in 2004 the WV Attorney General sued Household Finance and a lot of peoples loans were wiped out. In April thedebt will be five years old. What should I do? Any advice you could give me would be appreciated. Thank You

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Bill's Answer
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Since you did not pay the amount required in the settlement offer, the $4,000 you paid was probably applied as a payment on the full balance of the debt, leaving a substantial balance remaining on the account. It sounds like the collection agency which is now contacting you is trying to collect on this remaining balance, which has likely increased in the intervening time due to the continued accrual of interest. Since you were not able to meet the terms of the $4500 settlement offered by the original law firm, and only paid $4000 of the $4500 required, you likely have little recourse against the creditor to enforce the original settlement agreement. You did not make the required payment, so the creditor is not required to honor the settlement. However, you may want to consult with an attorney in your area to discuss the options available to you. Since you came so close to paying the full settlement amount, your attorney may be able to claim “substantial performance,” which means that the settlement should be honored because you came so close to the settlement terms as outlined by the creditor. From my experience, I personally doubt that the court would rule in your favor in a claim of substantial performance, but I suggest that you speak with an attorney to obtain his or her advice regarding this debt.

While you may not be able to enforce the original settlement offered by the previous collector, the current collector may be willing to offer a new settlement amount on the remaining $3800.00. You should contact the creditor to discuss settling this debt and to find out what the collector can accept to settle the remaining balance. For example, if you can offer the creditor $2000 in a lump sum, the collector may be willing to settle the debt. If you are able to negotiate new settlement terms with the creditor, you should obtain a written settlement offer letter from the creditor prior to making any payment. Also, you should ask the creditor to send you a “paid in full” letter once your payment clears.

Since the creditor has placed a lien on your home, I assume that the collection attorney filed a lawsuit and obtained a judgment against you in court. Generally speaking, creditors cannot place a lien on a debtor’s property unless it has first obtained a judgment against the debtor. Assuming that the creditor has a judgment against you, the age of this debt is really not a major issue. Once a creditor has obtained a judgment, it can continue to try to collect on the account for many years; West Virginia allows judgment holders to collect on their judgments for 20 years. Many states also allow creditors to renew judgments once the initial collection period has expired. To learn more about the time limits provided to judgment holders for collection of debts, you should visit http://www.cardreport.com/laws/judgement-sol.html.

Honestly, I think that the best option available to you at this point is to attempt to negotiate a new settlement with the current creditor. However, you should make sure that you obtain a written agreement from the creditor, and be careful that you meet all of the terms of the offer, including the settlement amount and the due date. If you do not meet your obligations under the settlement agreement, you may find yourself in the same position you are in now, owing more money on an account which you thought had already been resolved. If you find that the creditor will not settle with you, you may be able to establish a payment arrangement to repay the debt over a fixed period of time; again, make sure you obtain the terms of any repayment agreement in writing before tendering any payment.

In regard to the settlement Household made with the West Virginia Attorney General, if you think that your debt may have been forgiven under the terms of the settlement, I encourage you to contact the Attorney General’s office to find out if your account was included in the settlement. For more information about options available to consumer struggling with debt, I invite you to visit the Bills.com Debt Help page.

I wish you the best of luck in resolving this debt, and hope that the information I have provided helps you Find. Learn. Save.

Best,

Bill

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2 Comments

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  • BA
    Nov, 2008
    Bill
    You will not get a receipt. What you should insist from the lender is a settlement offer letter, which would also state that once paid, they will be reporting this debt as "paid in full with a zero balance".
    0 Votes

  • JW
    Nov, 2008
    juanita
    i hace been offer a settlement of 10030.00 dollarson a 19,ooo loan. mt question is how do i get a paid in full reciept releave me of this debt. thank
    0 Votes

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