First of all, be wary of debt consolidation places, even non profit ones. I’ve seen many clients who have come in after going to a debt consolidation company. Likely, her credit reports will be “flagged” and hit with a bit more negativeness (I know, that’s not a word). If she has the time, or if you have the time, she/you can negotiate her own settlements through the cards. It’s the same thing the company does, it just takes time. As for the pending case, I would call Capital One directly (debt settlement department, or hardship, or whatever “department” handles those things), acting on her behalf as her lawyer. Ask what settlement they will take in order to drop the case. Most credit card companies will be willing to get some money over no money. If her debt situation is bad enough, you can always try to get some protection with the automatic stay (bankruptcy); worse case scenario. The problem with Capital One is that, unlike a debt buyer, they probably can prove the validity of the debt. That said, I’d bet dollars they didn’t, so be sure that her answer points that out. After evidentiary defects, you might try to defeat the late fees, etc, that accrued after the account
should have been closed. Her best bet is probably to have you make an appearance and let Capital One know, with some professional subtlety, that it is going to cost them more than $1200 in fees to win this battle. They may just drop it. Or at least settle for the original $600. That said, I just read a case where Capital One won a default judgment–defendant never answered–and they actually appealed it, arguing that the court didn’t award high enough interest. So… Capital One doesn’t
mess around. (They lost the appeal though–turns out that courts can, sua sponte, require evidence.) Capital One is a tough bank to deal with. But at the end of the day, they are willing to make a good business decision. The underlying principal is about $600. They should be willing to settle for that amount. Beware of the tax consequences. See if Chapter 7 bankruptcy makes sense for them. If there are no assets, a plausible threat of a Chapter 7 would really get the ball moving. They can take the $600, or she can use that towards the bankruptcy fee.
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