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I’ve Already Been Sued by a Debt Buyer. Would It Make Sense to File Bankruptcy? – Joshua

“Dear Michael,

When I was in college, I couldn’t find a job in the summer of 2008. I was unable to make any of the payments on my credit cards and my auto loan. I buried my head in the sand and ignored everything.

The car got repossessed and the collection calls started with the credit cards and the repossession deficiency. I ignored all of them.

The two credit cards got sold off to debt buyers. As far as my research indicates, the auto loan deficiency is still with the original creditor, but has been through a series of collection agencies.

I was already sued by one of the debt buyers. With the help of a lawyer I was able to settle the debt outside of court and had the case dismissed with prejudice.

I still have the other two debts lingering.

After already settling one debt that I have been sued for, I have two remaining debts. They sum up to about $7.2k in total value. They’re both being pursued by debt collectors (one is with a debt buyer).

Would it make sense to file a Chapter 13 bankruptcy on this amount? I make a rather decent income for a college graduate and don’t pass the means test for Chapter 7 anymore. I have other debts such as student loans and an auto loan that are in good standing. I don’t want to put those through bankruptcy, as I can afford to pay them just fine.

I just feel like perhaps I could get better protections out of the Chapter 13 for discharging these debts, because I’ve read so many horror stories about what can happen once accounts get bought up by debt buyers and passed into collections. I want to be legally safeguarded in the future from these debts coming back on me.

Joshua”

Hi Joshua,

If you have the resources to pay or settle the remaining two accounts you can avoid bankruptcy. Filing bankruptcy over smaller amounts of debts is rarely advisable unless you are being garnished etc.

It appears you know who the current holders of the debts are. I would suggest you contact each and make an offer to settle the debts for an amount that you can fund in one payment. Start with a low offer and move up as needed in order to get to a number they will accept and that you can manage. You will need to demand that they provide you a written settlement letter that outlines all that you need to protect yourself from later collection efforts were they to occur. Get this letter in your hands prior to separating yourself from a penny.

Your attorney assisted you with the account that you were sued on. His/Her assistance on the remaining two should prove unnecessary. You can get closure through your own efforts. In fact, you can get help on this sight for free. Answer the following questions in the comment section below so that I, and perhaps others, can respond further:

Who were the original creditors?
What were the balances at the time you defaulted in payment?
Who are the remaining two accounts with?
What are the balances now?
What state do you live in?
What amount of money do you have now that can be used to fund settlements?

Ive Already Been Sued by a Debt Buyer. Would It Make Sense to File Bankruptcy?   JoshuaMichael Bovee has worked with financially challenged consumers for the past 17 years and is a recognized expert in his field. Michael founded Consumer Recovery Network (CRN) in 2006. CRN offers debt settlement services and educational resources nationwide. He has served as its president since 2006.

If you have a debt related question you’d like to ask, just use the online form.

I've Already Been Sued by a Debt Buyer. Would It Make Sense to File Bankruptcy? - Joshua by

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About Michael Bovee

Michael Bovee
  • Michael

    I am going to suggest that begin negotiations over the phone. I would encourage you to start with Midland first. They may simply refer you to the attorney they placed it with, but get on record with them.

    You should stick with a dollar amount you can fund. Do not get pressured into anything that you are not confident you will be able to pay. Getting a deal to knock this out in one payment would be great. How much money do you have on hand right now to knock this one down? Do you have as much as half the balance?

    Make an offer as though you will see if you can come up with xxx.xx amount. Do not commit to the deal in the first call. Never send a penny in payment or give account information and schedule a later payment unless you have the deal in writing. In fact, make the calls and come back to this thread and update what transpired.

    Focus on Midland Funding first. The attorney for Midland being licensed in your state suggests that they have been authorized to file suit in order to collect.

  • Joshua

    The attorney is in South Dakota, however he is registered with the bar association in my state.  All offers have been entirely written.  The initial offer was rejected, and I haven’t heard back on my second offer in some months.

    As for the collection agency on the repossession, they never responded to my offer.  I have written the original creditor to see if they’re willing to deal.

  • Michael

    Thanks Joshua. Is the attorney for Midland located in your state?

    Were your offers made over the phone or did you mail in a letter with an offer?

  • Joshua

    I apologize for the formatting on my last post.  It appears my new lines and tabs were eaten up by the commenting system.

  • Joshua

    Thanks for the response.  As for the two debts:

    Who were the original creditors?One was with Chase for a credit card.  The other was with Toyota Financial for a repossession.What were the balances at the time you defaulted in payment?The credit card was approximately $1600 at time of default.The repossession had a deficiency of $5500.Who are the remaining two accounts with?The credit card has been purchased by Midland Credit Management / Midland Funding and is currently with a lawyer, that I’ve been attempting to settle with.The repossession is in collections with Plaza Associates, but as far as I can tell is still owned by the original creditor, whom I’ve sent a letter to see if they would recall the debt and work out a settlement.What are the balances now?The credit card is reporting just over $1700 in balance.The auto repossession deficiency is still reporting at $5500 and was the amount reported in the last letter from the collection agency.What state do you live in?I live in Wyoming.What amount of money do you have now that can be used to fund settlements?I have enough to probably settle the credit card with Midland right now; however, I haven’t heard from them in a while on my settlement offers.I will most likely need to spend more time saving to properly settle the repossession defieciency.

  • Joshua

    Thanks for the response.  As for the two debts:

    Who were the original creditors? One was with Chase for a credit card.  The other was with Toyota Financial for a repossession.What were the balances at the time you defaulted in payment? The credit card was approximately $1600 at time of default. The repossession had a deficiency of $5500.Who are the remaining two accounts with? The credit card has been purchased by Midland Credit Management / Midland Funding and is currently with a lawyer, that I’ve been attempting to settle with. The repossession is in collections with Plaza Associates, but as far as I can tell is still owned by the original creditor, whom I’ve sent a letter to see if they would recall the debt and work out a settlement. What are the balances now? The credit card is reporting just over $1700 in balance. The auto repossession deficiency is still reporting at $5500 and was the amount reported in the last letter from the collection agency. What state do you live in? I live in Wyoming.What amount of money do you have now that can be used to fund settlements? I have enough to probably settle the credit card with Midland right now; however, I haven’t heard from them in a while on my settlement offers. I will most likely need to spend more time saving to properly settle the repossession defieciency.

    • Joshua

      I apologize for the formatting on my last post.  It appears my new lines and tabs were eaten up by the commenting system.

    • Michael

      Thanks Joshua. Is the attorney for Midland located in your state?

      Were your offers made over the phone or did you mail in a letter with an offer?
       

      • Joshua

        The attorney is in South Dakota, however he is registered with the bar association in my state.  All offers have been entirely written.  The initial offer was rejected, and I haven’t heard back on my second offer in some months.

        As for the collection agency on the repossession, they never responded to my offer.  I have written the original creditor to see if they’re willing to deal.

      • Michael

        I am going to suggest that begin negotiations over the phone. I would encourage you to start with Midland first. They may simply refer you to the attorney they placed it with, but get on record with them.

        You should stick with a dollar amount you can fund. Do not get pressured into anything that you are not confident you will be able to pay. Getting a deal to knock this out in one payment would be great. How much money do you have on hand right now to knock this one down? Do you have as much as half the balance?

        Make an offer as though you will see if you can come up with xxx.xx amount. Do not commit to the deal in the first call. Never send a penny in payment or give account information and schedule a later payment unless you have the deal in writing. In fact, make the calls and come back to this thread and update what transpired.

        Focus on Midland Funding first. The attorney for Midland being licensed in your state suggests that they have been authorized to file suit in order to collect.

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