I had signed a contract with bally total fitness in the state of California in 2004. I stopped going to the gym without paying the cancelation fees. So they sold my unpaid account to a collection agency. This last one sued me in 2009 and won by default because i never showed to the courthouse.
The collection agency went out of business around 2011. I recently filed a motion and had a telephonic hearing with the judge and the lawyer that was hired by the collection agency at the time. The judge denied my motion.
So now I have to pay but the lawyer wants me to pay the full amount which is ( the amount owed + attorney fees). Who gets to keep the collection agency money since they are no longer in business. If I have to, I will pay it but I don’t want the lawyer to take advantage and keep the money for himself.
I definitely don’t mind paying the lawyer fees. I tried negotiating the amount with him in the last 6 months but he refused to settle for less than the full amount. And now he is threatening me by saying that he will report this to the IRS to collect his debt by November 15, 2014. Steve Rhode, can you please help me because I asked at least a dozen of people and no one knows the answer?
The IRS is not going to collect this debt. The only IRS implication would be if the creditor reported to amount forgiven to the IRS. If you are not insolvent then you might owe income tax on the forgiven amount.
Just because the collection company that sued you went out of business, it does not mean they didn’t sell or transfer their assets. It sure wounds like the attorney is still working the case.
Once this debt went to a judgment, I think in California a judgment is good for ten years. But you know who would know how to give you legal advice on this California debt, it would be attorney Greg Fitzgerald at debtorprotectors.com. Contact Greg and get specific legal advice on this debt situation.
Please post your responses and follow-up messages to me on this in the comments section below.