Legal Question in Credit and Debt Law in California

Re: is that legal to not credit us for payments?

The Fair Debt Collection Practices Act has a long list of do's and don'ts that must be followed by any collection agency. Without seeing the paperwork, I couldn't tell you whether they failed to follow the law. The short answer is, "yes, they must credit you for payments." This, however, could be subject to modification depending upon several other variables including the creditor's right to attorney's fees, interest, etc.

Can you set aside the default? Possibly. Again, this depends on several variables, but you can't afford to wait too long after the default is entered. The courts tend to favor pro pers (people doing things without an attorney) so will often set aside the default so that the matter can be heard on the merits.

You should know that collection agencies will frequently bargain with a debtor about the amount of the debt. In other words, if the debt is for $50,000,it's not entirely unusual for the agency to accept 50 cents on the dollar. A lot depends on how likely they think they can actually collect the debt. These guys are usually fairly experienced negotiators. I'd suggest hiring an attorney to try to figure out if they violated any laws or at least try to negotiate your debt way down. It's true, lawyers are really expensive and it's not too often you'll find one that will accept payments. If, however, you're willing to secure the payments with, say, a wage garnishment or deed on your house, some lawyers will accept this.

Re: is that legal to not credit us for payments?

You case is very serious, you could lose your home if you do not get some help quick. many lawyers will take payments.