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Help a Reader: Settling Old Collection Debts

Posted By Jim On 03/12/2013 @ 7:05 am In Debt | 10 Comments

Reader Shaun sent me an email about an old credit card debt from six years ago that, as a result of not paying, was drawing from his bank account. Technically, it went to court and the courts ordered a garnishment on his bank account. As it happens, since the creditor wasn’t garnishing his paychecks, though they could have, he stopped using that bank account.

In his words:

I have an old credit card debt from 6 years ago that had a judgement placed on it. They garnished money from my bank account only, not my paychecks. It has been 6 years and I have not had a bank account since. I finally have the money to clear up this issue. I have a few questions about what i can do. Can I have a lawyer send them a letter asking to settle for less than the $4000 that i owe? Can they charge me interest on top of the $4000 from 6 years ago? Is it likely that they will settle for less than judgment amount?
Any help would be greatly appreciated!

To be 100% honest, I’m not an expert on credit card debt, especially after you’ve defaulted and it goes as far as garnishment. I do know that this typically happens after the debt is sold to a debt collector and the debt collector can’t collect on it or settle. They simply turn to the court system for garnishment.

Here’s the interesting part… it’s been six years. If you declared bankruptcy six years ago, a lot of the pain, at least to your credit score, will have subsided. The bank account levy (which is the official term) is only on that bank account and I’ve read experts [3] online suggestion that you just open another checking account.

To be 100% honest, I don’t know what the answer is for you. I do know that you should talk to an expert on debt collections before you offer to settle or contact the debt collector.

Anyone have any suggestions?


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[3] experts: http://www.bankrate.com/finance/debt/bank-account-levy-is-heavy-burden-to-bear.aspx

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