- April 29, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Car Accident Crisis: Financial Consequences and Debt Collection
In the summer of last year, I experienced a severe car crash involving two trucks. It was a terrifying incident that left me lucky to be alive. Unfortunately, the aftermath revealed a troubling situation with my car insurance. My father, who was responsible for paying the premiums, had fallen behind on payments.
As a result of this oversight, I now face significant financial challenges. Not only am I struggling to receive compensation for my totaled car, but I also have to deal with the expenses related to the other parties involved in the accident. Recently, a collection agency has started contacting me regarding an 18k claim that I am unable to fulfill.
Given my current financial situation, with a weekly income of $350 and limited savings of just 2k, I am unsure of how to proceed. One option I considered is leveraging bankruptcy to negotiate my debt down to a more manageable 5-8k. However, I am uncertain if this is a viable or sensible solution.
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I’d tell them exactly your financial situation, which in a way is telling them to pound sand.
It’s a collection agency, not the insurance company itself. They probably bought it for pennies on the dollar and are hoping to get something.
Insurance company basically already wrote this off.
I’d ask for a debt validation to start, make them prove you even are liable. Just make their life difficult.
Tell them to take you to court. 99.9% chance they won’t, and even if they do, file bankruptcy after a judgement, not before.
You can’t really leverage bankruptcy to negotiate, bankruptcy is a legal process where the outcome is largely out of your hands. Regardless, you don’t have to pay a creditor. They can then sue you for the debt, and a court order could be made that you have to pay, but who knows if it’ll get there.
Your best bet is to tell them you have no money and see what they can negotiate it down to. Get it in writing before any payments are made, that’s crucial.
I think you’re taking a lot of responsibility for something that is legally your father’s responsibility (most states you have to insure all drivers in the household not on another policy). It’s a hard lesson learned about your father’s responsibility, but not your fault. 18k won’t ruin your life, no need to start off with a bankruptcy.
When I was 19 I sold my car and signed the title away before I moved away from school. My dad never mailed the pink slip paperwork in though and the current owner left it somewhere where it got towed and never picked it up. I had a collections agency coming at me for over $5000 but I made 0 money and basically told them so. Nothing happened at all and 7 years later the debt got wiped from my credit report. Basically it just messes up your credit for 7 years
Nonono dont file bankruptcy over 18k. Look into other ways that you can handle this
The only thing that they are going to do is harm your credit. If it’s in collections, it’s already harmed.
I would tell them exactly what you’ve told us. You’ve only make $1400 a month, and you have to live out of that.
I would tell them that you have talked to some family and are able to get together about $1000. You will give it to them if they will take that as paid in full.
Get the offer in writing from them.
If they take it, be honest, and send them the money . I would do it with a cashiers check from the bank, and not give them any account information whatsoever.
If I don’t take it, that’s all right. Again, they’re not going to sue you over this amount.
If they do, at that point they have to get a judgment. Then, they have to follow up with garnishing of your wages.with your low income, if they garnish, then at that point you may be forced to file bankruptcy on them, but not before.
At least, that’s my advice.
You’re legally an adult. You should ensure your car insurance is paid, maybe even pay it yourself if necessary. Filing bankruptcy will affect your credit, not paying the debt will also mess your your credit. Go to court and express that you don’t have money, worst case scenario pay on a payment plan or let them garnish your wages.
If you end up bankrupting it will kill your credit score for a number of years. The first thing you should do is to be sure you have a couple of credit cards before you do anything negative concerning the insurance claim. If you already have a credit card, get a second one from a different bank. If you don’t have any then you should apply. Perhaps starting with a secured card if you need to.
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Dude, your dad bought and paid for your car. You were the one driving, he made a mistake just like you did when you got in an accident. He didn’t do it intentionally, now get off Reddit and instead talk to your dad to help you figure things out.
Ask if the collection agency will take x amount and work from there (I would suggest the lowest to settle is 50% of what was owed). They will most likely settle. My mom had to do this when we paid/settled her debts. We thought it would ruin her credit (which it kind of did) but 3 years later her credit is now 800+ to our surprise.
If you file bankruptcy it will follow you for 7 years. So that might not be a good option.
No no no. you are not even CLOSE to needing to file.
Read this carefullly… Contact a bankruptcy attorney. Tell them you do NOT want to declare it, you just want help. They are excellent at handling debt and credit cards and medical bills. They will want some money up front, but they can send letters and negotiate for you.
Imagine if you are the bank/creditor. You get a call that says, “Hi, I am Bob from Smith and Smyth Bankruptcy attorneys. My client has retained my service and I am calling to negotiate. What is the best you can do?”
Essentially, the attorney has the collector do an internal risk calculation of “Debtor owes use a lot of money, and lots of other people too. Ours is unsecured, so we are at the bottom of the list. We may get nothing if they declare, so we will accept 5 or 10 cents on the dollar.”
You can be your own attorney, and attempt to offer them $1,000 to close and remove the collection from your report. Make sure to demand a draft 1099-C and tell them they better fill in box 3 properly.
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Dude youre basically judgement proof. Tell the creditor your situation and try to work something out. Highly unlikely they’ll take this to court considering you dont have many assets. Wouldn’t file bankruptcy over 18k, should look for other options before that.
Most drivers have a “non-insured motorist” rider on their policy in case the person who is at fault does not have insurance. My guess is the insurance company is trying to recover a portion of their cost through the collection agency. Basically, you tell them you don’t have the funds and to stop bothering you. Hopefully they give up, but if not, you negotiate for a fraction of the damages. If you have any friends who are in the insurance or legal profession, now’s the time to ask a favor.
I went thru this same thing. I tried making payments and never could get a head. Ended up filing bankruptcy after two years and didn’t regret it.
Bankruptcy isn’t worth a 20k debt (which you’re right that you could negotiate down.
People file for bankruptcy when they’re hundreds of thousands of dollars in debt. This is something you can easily have paid off in a couple years, or even months once you finally get a real job
Bankruptcy affects you for 7+ years. Not worth it
If this is a collection agency that’s trying to collect, treat it like any other collection agency.
Read the FDCPA. Twice, or until you understand it.
If it’s on your credit already, dispute it with the agency. They always come back verified, so expect that, but it’s a necessary step one.
After it comes back verified, send out your VALUATION letter to the collection agency. Get examples of this and put anything in the first letter that applies under the FDCPA they need to comply with under the law. They need to provide a complete answer to all the requirements you demand in the letter that are required by law. If they don’t, they need to remove it from your reports. Failure to do so causes them a statutory liability you can sue them for in small claims.
Don’t think of this as a “but I do owe the money” situation. This is a legal process they must adhere to as a collection agency and after you read the FDCPA you should understand this.
If they can validate the debt and provide all that’s required by fdcpa you demanded in the letter, you can then begin negotiating with them, but not before.
I’ve tried posting resources directly but there been removed in the past. Google for debt validation workflow.
Contact the National Foundation for Credit Counseling to get good advice on how to deal with this. They can help you navigate.
Also, it’s probably too late…but falling behind on payments does not necessarily remove your insurance. The insurance company will send an explicit cancellation notice. It will be something like: “your policy is cancelled on this future date unless you pay $X.”
Collections sit on your credit for 7 years. Don’t pay it, don’t acknowledge it from here on out. Your credit will be fukked but it Beats a bankruptcy
I would honestly ask a financial advisor if I were you. Better safe than sorry. Everyone has their own opinion.
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