About to get served papers
Posted by SpicyGorditaCrunch@reddit | studentloandefaulters | View on Reddit | 23 comments
Hello fellow defaulters,
Long time lurker but first time poster here.
It appears my time has come as apparently there is a person currently lingering around my house looking to serve me papers for my loan default. I (28M) defaulted on my SoFi loans back in mid-late 2023. Total balance due was \~41.5K at the time of default and I’ve received settlement offers in the mail over the past year for as low as 45% of the total balance. The SoFi loans were consolidated/refinanced loans from the original lender SalliMae. I currently have the means to pay that offered amount in full however that would wipe me out besides my retirement/investment accounts.
I live at home with my parents in NY where I make $500/week after taxes. I am a civil servant so I don’t know if that counts for anything. I have about 23K in my savings/checking account as of this very moment.
The last letter I received in the mail indicated that Velocity Investments LLC was now the owner of my debt. I believe Cohen & Cohen Law LLC is the firm they will use to sue me.
It’s my understanding that there’s little I can do to avoid being served as not identifying myself isn’t sufficient and they’ll just drop the papers at my feet anyway. I can’t pack up all my stuff and hide somewhere else as my job requires me to be in the office 5 days a week.
My questions are what should I expect once I’m served? Will they be looking for the full amount since I ignored their previous offers? How long does the court process take? How much should I expect to pay for a decent lawyer?
Thank you all for your input!
morbie5@reddit
It isn't like in the movies where they absolutely have to hand it to you in person. Each jurisdiction is different but sometimes just sending it to your last known address via certified mail is enough to get served.
I don't mean to be a jerk but if they were offering 45% settlement and you had the money you should have took it, it was crazy not too imo. That offer may still be on the table but since now they are already trying to serve you they might be less generous. The only way to know is to call them and find out.
Does this loan have a cosigner?
SpicyGorditaCrunch@reddit (OP)
Yeah I read that somewhere so I’ll wait and see how I get served lol.
A fair point so what I’ll say is that although I had the means to pay them off that was the first and only offer that was made so I was hoping they’d reach out again at a lower amount like 30% or something but it seems not. I was also hoping to just wait out the SOL as I was almost at the halfway point until I was in the clear. I’ll wait until I get got to call them and see what they’ll do. Worst case scenario is they don’t budge from the original 45%.
No this loan is solely in my name. I refinanced it myself to get my parents name off it in case something like this happened.
I appreciate your input.
morbie5@reddit
For anyone lurking, the worse case would that the 45% deal is off the table since they are now taking legal action.
Have you contacted them to see if they are still willing to deal?
If you do come to an agreement with them do everything via USPS. Send them a physical check in the mail, don't pay by phone or online
SpicyGorditaCrunch@reddit (OP)
They served today me by leaving papers in the mailbox. I called the law firm representing the debt collectors and the person I spoke to said she was only authorized to accept as low as 79% of the total amount. I countered with a lump sum payment of $18,500 and she said I’ll have to call back tomorrow.
This sucks. If they don’t budge I’d have to liquidate my IRA or go on a payment plan. I’m not sure what to do at this point.
Solid-Fill6348@reddit
Velocity will definitely settle but they have leverage if you don't respond and esp if they get a judgment
dannydelco@reddit
For that dollar amount, why not get a lawyer of your own to help defend or settle the lawsuit or both?
HunterSpecial1549@reddit
Genuine question - is it safe to keep $23k in the bank when you have creditors coming after you? Shouldn't you be putting that in a 401k or something that can't be raided?
beckulator@reddit
put it in bitcoin
SpicyGorditaCrunch@reddit (OP)
A fair point and something I probably should’ve done in hindsight however I didn’t want to lock up that money for several decades until retirement but maybe it’s a good idea to start moving money into untouchable accounts. My job doesn’t offer a 401K as we get a pension instead so that’s already untouchable. The server didn’t catch me today so could I get away with moving money out of my account and not have that come back to bite me?
HunterSpecial1549@reddit
I don't know but I would be moving it to somewhere unraidable now. I heard 401ks can't be touched but I don't know about other types of accounts. Maybe a very trusted relative?
SpicyGorditaCrunch@reddit (OP)
A quick google search told me that IRAs are generally untouchable under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). It seems like they’re covered up to $1 million. (Please correct me if I’m wrong) What I’m concerned about now is being found guilty of a fraudulent transfer to purposely hide assets from my creditors. This seems like a gray area as although I wasn’t served today there was an attempt made to serve me so could anything I do with my money as of today be questioned if they get a hold of my bank statements/account balances?
HunterSpecial1549@reddit
I am not a lawyer but I'd put that money in the IRA or some other untouchable spot very quickly.
If the court reverses it, well that sucks, but you'd be losing it either way in that case and it doesn't sound like there would be criminal penalties.
runanteldat@reddit
Just happened to me. Make sure you submit an Answer to buy yourself sometime with the settlement process
SpicyGorditaCrunch@reddit (OP)
Sorry they got you. I’ll start preparing for when I get served.
magicandfire@reddit
You can still make an offer to settle with them after you're served. I would see if they'd take a lower amount than 45% but they can always counter.
SpicyGorditaCrunch@reddit (OP)
I’m hoping they’ll negotiate to around 30% but I’ll wait until I’m served to find out. Hoping they don’t want more than the original 45% offer now that they’re escalating things.
Equivalent-Watch9744@reddit
Not sure how much debt you’re in, but there’s always the bankruptcy route. All the collections stopped
SpicyGorditaCrunch@reddit (OP)
The amount I defaulted on is $41.5K. I wouldn’t be opposed to the bankruptcy route however I’m weary of the long term implications of having that on my credit report has. I’m trying to move out of my parents house and having that scarlet letter would make things exponentially harder.
morbie5@reddit
Bankruptcy for student loans is possible but not easy. Also since you ave cash in a bank account you'd probably lose that in the bankruptcy
morbie5@reddit
Bankruptcy for student loans is possible but not easy
hlaiie@reddit
They’ll probably ask for the full amount but they’ll most likely settle. If you settle or reach an agreement with them before court the court date, you won’t have to go to court. I did it this way and didn’t have to pay for a lawyer because I just settled on my own.
SpicyGorditaCrunch@reddit (OP)
Thank you for your reply. Once I get served I assume it’s safe to reach out to them and attempt to negotiate an amount? What % of your original loan did you end up settling for?
hlaiie@reddit
Yes that is what I did but you’ll only be given so many days so you gotta stay on top of it until it is resolved.
This was for my CC but I’m doing the same thing for my student loans. For my CC debit, I owed $15,000 and paid $9,000. For my student loans I owed $63,000 and I settled for $42,000.