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  1. #1

    Default Judgment Being Sought on Reopened Account

    My question involves judgment recovery in the State of: Virgina

    A Virginia consumer residing in Prince William County defaulted on a credit union loan and the account was subsequently closed and forwarded to its agency for collections. After making payments to the collector for nearly a year, the consumer discontinued doing so because of financial problems resulting from numerous medical illnesses and hospitalizations. Following the diagnoses of cancer, along with ongoing treatment, the consumer returned to full time employment, and immediately approached the credit union with an offer to satisfy the loan balance with direct payments to credit union instead. The credit union agreed to do so. The credit union followed this by reopening the previously closed account, completed all necessary internal steps to allow for ongoing electronic transfer of funds, which has permitted the consumer to make twice-monthly payments for the past 10 months, without interruption to date.

    However, 6 months following initiation of this “new” agreement, the collection agency petitioned the court for judgment against the consumer, naming the credit union as the plaintiff. The consumer explained to the collector the details of the new agreement, however, a credit union rep, who replaced the previous person, claimed to have no knowledge of the new arrangement (the representative who reopened the account has since retired). Even though the consumer has verified the active status and payment history to the account, the credit union account representative (according to the collector) has urged the collector to move forward with judgment proceedings anyway. Please advise whether the credit union, by reopening the account, has essentially removed any grounds to seek a judgment, as well as having effectively removed the matter from the collector's domain?

    My apologies for the lack of brevity.

  2. #2
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    Default Re: Judgment Being Sought on Reopened Account

    Are we to assume that you have nothing in writing to document the claimed agreement? Have you made any effort to locate the former employee or obtain a statement from that employee about the agreement?

  3. #3

    Default Re: Judgment Being Sought on Reopened Account

    Correct, there is no written agreement. Upon request, the account was simply reopened and internal (credit union) steps insitutued to permit bi-monthly transfer of funds from an existing account at the same institution. These transfers are intiated by the account holder, but accounted for as "payments" to/on the reopened account by the credit union on monthly statements. Additionally, it is my understanding that Virginia consumer law, in matters of consumer debt paid to a collector, has the option of re-engaging the lender to resolve the debt in question by paying directly to the lender instead. Based on this understanding, the consumer did so. Given the completion of these steps the efforts now (not sure who is more adamant - collector or credit union) to seek judgment seems perplexing.

    In answer to your second question, no effort has been made to contact the former credit union representative. However, since you've raised the question, it is a likely option to seriously pursue.

    I'll keep you posted on this status of this effort. Thanks.

  4. #4

    Default Re: Judgment Being Sought on Reopened Account

    Efforts to locate the former representative resulted in an address (presumably home) and a non-working phone number, so at least mailing a written request for a letter is certainly possible and probable. However, assuming the possibility that the former rep declines or is otherwise unavailable (unreachable), the consumer is back at square one? Should that be the case, can you offer whether the court would generally consider the creditor as having "renegotiated" with the lender when they reopened the account and permitted payments to it to resume, even if no written (second) agreement exist?

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