Q: I had a home Foreclosed on me back in Nov. 2006 even after trying to negotiate a "Short Sale".
We had a qualified buyer w/ earnest money and requested an extension from the bank on the process, but without response they foreclosed anyway..."Robo-Foreclosure" I would think.
Anyway...The 2nd lien holder has sold the loan to a collection (?) company and after 6yrs. I was recently served with a Summons to appear, and I'm currently in negotiations with the collections agency and they are holding firm on a $10K Settlement on $40K balance.
Should I settle w/ them for that amount...what is the likelihood they would sue me and win...does the GA. Statute of Limitations help me here, and from what I have read in most cases they could only expect no more than a 12% judgement in GA., ($4,800)..is this true ?
If I settle at whatever amount can/should I request to have settled account expunged from my credit report ?
A:
If you were served with a summons then you have already been sued. You have 30 days to answer or else the creditor will get a judgment against you for $40,000. You should not be negotiating with a collection agency or even the creditor who sued you but with legal counsel.
$10,000 on a $40,000 claim is reasonable (25%). The question in mind is whether the lawsuit was timely brought. The junk debt buyer who bought the debt would have 6 years from the date of the foreclosure sale to sue you. If you have a valid statute of limitations defense, then you must file an answer raising the defense. If you don't, its waived - meaning its non-existent. So if you do not answer the creditor will get a judgment against you.
Any issues you had way back before the foreclosure are moot at this point. You would have had to raise them in the foreclosure action and that is long since over.
Correct information is never "expunged" from your credit report. If you succeed in resolving the debt by way of settlement, then contingent upon you paying will be the junk debt buyer's dismissal of the lawsuit if you pay before judgment is entered. If you pay after judgment is entered, then you get a satisfaction of judgment.
To the extent the junk debt buyer reports anything on your credit, your report should correctly reflect the status of the debt as "paid settled" or "paid collection" or "paid judgment" (if judgment was entered).
Where the heck are you getting that any judgment on a $40,000 debt will be 12%? I'd take that deal for my clients any day. I don't know what you read or where you read it but you either misread the information or whoever wrote it is smokin' some really wacky stuff. The interest rate on any judgments can vary and be the rate in the contract or 7% or 12% depending. However, there is no reduction in a claim because someone sues.
You need to go see a real estate/foreclosure defense type of attorney immediately. He/she needs to know exactly when the foreclosure sale occurred and when the instant lawsuit was filed.
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