I am going to mediation for a credit card lawsuit, what are the chances they will settle for 1500?

The alleged debt is over 10,000, to file bankrutpcy all my fees would be about 1,500. Would it be advisable to say the following in mediation "If I file bankruptcy it will cost be 1,500 and you will get nothing since I have no...

Nathan’s Answer

Whenever one is confronted with a debt lawsuit, they should probably ensure that the debt collection attempts have all complied with the law. If not, this would provide ammunition for an individual in mediation to argue that because the creditor did not properly file suit, or file suit in a timely manner, the debtor would be happy to go to court, if the other side did not accept their offer, since the debtor is confident they would not have to pay anything at all. This assumes one had competent representation, or at the very least, was familiar with what defects, if any, existed in the complaint and already prepared that in the answer, or sought leave to amend their answer.

Now if the creditor did not accept the money offered by the debtor, and wanted more, and if the debtor stuck to their position so that the creditor insisted on trial, which they may to seek a conviction, which would go a long way in being able to indeed collect their alleged debt by various mechanisms, pulling the bankruptcy card sounds like it could be appropriate - but one would want to be prepared to follow with that bankruptcy as a creditor would possibly keep at it until they got what they sought. Be aware that the creditors may sense that a debtor is bluffing in this instance, so if one really couldn't pay more than $1,500, the debtor would probably want to focus most of their energies on being very straightforward and curt in the negotiation - One could imagine an exchange where the debtor repeatedly stated "this is all I have, the only other way is bankruptcy" over and over, so that the creditor realized they had no room to negotiate.

Thus the burden of deciding whether to move forward to trial would be on them, and if the creditor is risk-averse, or happy to receive the $1,500, the case will be done. In order to maximize one's chances of "winning" in mediation, one may want to start at a lower price point than $1,500 to test the waters, before finally stopping their negotiation at $1,500. Then again, it could also be wise to just hit the point. To indicate a debtor's savvy, a debtor may want to ask the creditor how much they would sell the debt to someone else for, if the debt collected ended up being zero due to imminent bankruptcy.

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