Negotiating with a Collection Company in 3rd position? Any recommendation?

[NeverFear]

We have a 3rd Trust Deed (California property) that was originally with WAMU. They later sold this loan to a collection company, called GC Servicing. WAMU was actually willing to accept the settlement for about 5% of the balance, but by the time the 1st and 2nd lenders gave their approvals, WAMU sold the loan to this collection company. Well, these guys are sharks and they want about 50% of the loan balance and don't want to budge. There is no way, I can pay this amount, and the 1st and 2nd lenders do not agree to such high pay off to the THIRD LENDER!

What do I do? I've heard that these collection companies are really notorious for forcing people into foreclosures and bankruptcies, and they really don't care. Any ideas on how to get them to be reasonable? Being the third lender, they are getting a hole from the donut if the property ends up in a trustee sale. We are running out of time, please help!

[Enough Already]

Hi NeverFear,

I'm sure it's upsetting and a bit intimidating to have this debt collection company breathing down your neck, but try not to let them get to you. Let them make threats. Don't engage in conversation unless they are willing to be reasonable, and don't be fooled by their scare tactics. Let them stew a while. They are just bullies, and they're trying to see what they can get away with. Threaten them with bankruptcy.

If you're really concerned about it contact an attorney who specializes in debt collectioin. But, most likely they purchased the debt for MUCH less than the actual amount owed, and in the end they should be willing to settle for pennies on the dollar.

Good luck!
EA

[rbolski_in_NV]

I'm dealing with BofA in a 3rd position. I just sent all the banks a letter stating what they are getting or their alternative (bk). I am waiting to hear back late this week or early next on how all that goes (fingers crossed).

My situation is different as my 3rd is still with the bank. However, I did get some coaching from the other banks. 1) 3rd position knows they are getting a low percentage of what they are owed - no matter how tough they act. You were lucky with the 5%, as I was told 10% is a good target. 2) If the bank sells to collection, the numbers vary, but usually are sold in the 5% - 15% range. They then try and double their money. 3) Cash speaks. Offer 20% and leave it at that.

If they won't budge, file for a bk to play chicken with them. You have 21-days from the filing date and can have it dismissed. Worst case is dismissed with prejudice which means you can't file for 6-months. Do that and play the game.

To me, the ch.7 is a real alternative. I'd hate to do it, but it is an option on the table.

Keep us posted. Best of luck.