Legal Question in Credit and Debt Law in Connecticut

Re: Settlement procedures and risks.

The first thing I would do is contact you debt settlement company and give it a copy of the letter you received from the attorney. Most likely, the attorney has not bought the debt but is just collecting it for the creditor. If your company is unwilling to discuss this with you or contact the attorney on your behallf, I would suggest that you contact the attorney's office and discuss it with them and see what they or their client would be willing to accept as a settlement, if you admit the debt which may carry interest and attorney's fees in addition to the origional amount owed. The attorney can bring suit and, if you do not contest it, a judgement most likely will be entered against you. At that point, a request to attach your wages, bank accounts or a lien may be filed against your property. You should speak to your own attorney about your options in more detail, as you can negotiate a settlement, even while a suit is pending. The attorney can also advise you on the bankruptcy laws and whether bankruptcy is a good option for you. If the debt assigned to the attorney is large, I would seek an attorney's advice before taking any other action. Most will consult with you for no charge or a small fee and give you advice on how to proceed. Thanks, Tom Noonan

Re: Settlement procedures and risks.

Something Atty. Noonan's reply left out is a discussion of installment payments. Most courts are very considerate to individual debtors when it comes to making weekly/monthly payment orders. The standard order is $35/wk ($150/mo), but you can agree to a higher amount to get rid of the debt more quickly, and if you can show the court that even $35/wk is too much of a burden on you, it will consider your proposal for an even lower amount. You have to be ready, at the time you are in court, to show what your other obligations are, whether they involve medical bills, child support, or whatever. A copy of your creditor list and payment agreement with the debt resolution company is a must in this situation. So long as you are making the agreed payments (on time!) the creditor CANNOT attach your wages or your car. (It can place a lien on any real estate you own, but that's just a paper recorded at town hall; the creditor cannot foreclose, or interfere with your use of your home, so long as you make those payments. However, if there is a lien, the creditor can require the balance of the judgment to be paid if you sell the real estate or take out a mortgage on it.)

A word about the court's adding attorney's fees might be helpful to you. First, ONLY a court can add attorney's fees or other costs to your debt, and that can happen ONLY when a judgment enters. In small claims court, attorney's fees are a MAX of 15% of the amount of the debt, and in superior court (if debt, w/o interest & costs, is more than $3,500), some judges will tend to automatically use that percentage, while others will inquire of the attorney as to how much time s/he has actually put into the case. If you can show that, even BEFORE the attorney filed suit, you had made a bona fide offer to make payments, and the judgment the court is entering is very close to the proposal you made, the court might very well award the attorney much less in fees than s/he was asking for, on the ground that in light of your cooperation, the attorney did a lot of unnecessary work and should not be rewarded for refusing to cooperate with your reasonable offer.

Re: Settlement procedures and risks.

I don't usually post TWO responses to a question, but in the past hour or so I thought of something important that was not yet addressed.

It is most likely that the debt was not actually "sold" to the attorney but that s/he has been hired to collect it for the creditor. However, if it WAS actually purchased by the attorney, the odds are that it is a very, very old debt of yours, and possibly the STATUTE OF LIMITATIONS on it has expired, giving you the legal right NOT to pay it, with no penalty whatsoever.

Exactly WHICH statute of limitations applies, and WHEN it ran out on your particular debt, is a hightly technical question that cannot be answered online. You need an office consultation with an attorney. The Hartford telephone book contains the number of Lawyer Referral Service, which will arrange an appointment for you with a lawyer specializing in this area of law. A 1/2-hour conference will cost you $25.00. I believe there is a similar organization in New Haven. Telephone the New Haven County Bar Association.