Below is an email I received from a former client last week regarding an alleged debt he had with Discover. We are posting it here with permission in the event that this information will help others in a similar predicament.
Discover filed suit against me back in March 2011 for approx. $20,000. I called them prior to the suit and offered a flat $4000.00 to settle. They were BEYOND rude. Threatening all kinds of action – telling me I would lose my house and potentially my job if I didn’t pay in full. So – I said “sue me”.
I hired a local attorney who challenged the suit asking for the original signed application, proof of charges etc. Discover backed down and the judge dismissed the case with prejudice so no chance of them ever coming back on me.
While I am not proud of this – I have NO guilt because Discover had a chance to get $4K. In the end, they ended up with zero. It cost me $500.00 in attorney fees.
I know this is not a normal outcome (my lawyer said we had a 50/50 chance of prevailing) but I thought you might like to know.”
I would agree with my client’s attorney that this strategy doesn’t always work. But if you have no other options, you can always request that the creditor prove their claim with legitimate supporting documentation and hope (and pray) that they lost the paperwork.
Again, this strategy is not foolproof, but in this case it worked.
According to a new report released by the Federal Reserve Bank of New York, total consumer indebtedness was $11.5 trillion (as of March 31, 2011) — a reduction of $1.03 trillion (8.2%) from its peak level in September 2008.
However, consumer indebtedness was *up* $33 billion from just 3 months earlier in December 2010.
Some people feel that this recent increase is a sign that our economy is on the mend because people are now spending again and taking on more debt.
Other people argue just the opposite. Their contention is that a rise in consumer debt simply validates that the economy is *not* improving and people are taking on more debt because they don’t have sufficient funds to pay down their debt.
Who really knows what the data truly means? I’m just relaying the facts. You can interpret it however you wish.
Some other interesting trends and statistics from the report include:
- About $1.2 trillion of consumer debt remains delinquent, with $890 billion being at least 90 days or more past due. Compared to a year ago, the percentage of consumer debt that is delinquent has fallen 15%.
- Data for Arizona, California, Florida and Nevada continue to indicate higher than average delinquency and foreclosure rates.
- The total number of open credit cards is 24% lower than its 2008 peak. The balances on those cards are nearly 20% less than what they were at the end of 2008.
- In 2001, the percentage of consumers that had an account in collection was 8%. In 2011 that figure is up to 14%.
For additional analysis:
Consumer Debt Stops Declining After Nine Consecutive Quarters