Negotiating about money when the other side doesn’t need money
If you are trying to negotiate your own settlement with a creditor, this piece is meant to enlighten you about a few things and maybe relieve a little of your frustration.
A lot of my clients lament that big companies (and I mean big) suing them don’t care about anything but money. And those clients are right! Bank of America, Chase Bank, Capital One, and the like are in the money business. They loan people money, and they want it to be paid back.
Of course, these mega-corporations aren’t stupid. They realize that if the person they are suing doesn’t have thousands of dollars sitting around to pay off the debt, then it makes sense to negotiate a settlement. But these mega-corporations are different from the usual plaintiff trying to settle a case. Yes, they care about money. The only thing they think about is money. For them, it is money, money, money! The problem is they don’t need money.
Let me explain.
Companies like Bank of America or Chase Bank have billions of dollars on the street. They know, from years of experience and number-crunching, that a certain percentage of those loans are going to go bad. It’s just part of the business model.
So they dump all their bad loans into a process (collections, litigation, settlement/judgment, and finally enforcement). Their experiences and number-crunching from thousands of cases have taught them that they will collect a certain percentage of the amount of bad debt — as long as they follow the process*.
As you might be experiencing right now, the process involves putting pressure on the debtor (such as you) and demanding that you come up with as much money as possible, whether by a lump-sum payment or a payment plan. But if you can’t meet the demand, the creditor doesn’t really care.
Recommended Read: “Do debt collectors prefer lump sums or payment installments? ~ How age factors into the creditor's decision to go to trial”
Companies like Chase Bank or Cavalry have millions of dollars working for them. The amount you owe them may seem huge to you, but it is a tiny speck to them. They don’t really care whether you pay it back, so long as the process continues uninterrupted.
This is very different from how the average plaintiff/creditor thinks. If somebody owed you $10,000 and offered you $5,000 to settle the case, you have a lot of incentive to seriously consider that offer. Read: Bills! Even if you’ve caught up on your bills, you could certainly use $5,000 today, couldn’t you? Of course.
But do you really think your case makes a difference to Capital One? It is suing you for what it views as a microscopic amount of money. Does Bank of America really care whether it settles your case, you declare bankruptcy or just disappear off the face of the earth? Of course not.
Capital One, Cavalry SPV I and the like are only interested in applying the formula so that their numbers come out as expected. Don’t be confused if it feels like you are banging your head against the wall trying to negotiate with one of these companies. You ARE banging your head against the wall. Realizing that fact may not settle the case, but at least understanding what’s going on may reduce the stress of dealing with it.
Are you interested in reading more Defense by Davis posts like this one? Subscribe to my Substack account today! For immediate needs, click here to contact me directly.