You may have just received a letter from PO Box 4115 Concord CA or you may have received a call from 6302568591 (aka 630-256-8591) and are wondering who is reaching out to you. The answer is Portfolio Recovery.
Many individuals are confused when they are sued by a company that they have never heard of such as Portfolio Recovery also known as Portfolio Recovery Associates (PRA). This is because it is one of one of the largest debt buyers in the United States. That means that Portfolio Recovery will purchase debt from a large creditor such as Synchrony Bank, Capital One or Citibank. It often sues you to recover the money, so it’s actually highly likely that this is the first time you’ve heard of Portfolio Recovery. In each situation, it’s vitally important to know your rights as an individual.
If you have not yet been sued by Portfolio Recovery Associates, you may consider reading our hypothesis on how creditors determine whether to sue.
If you have been sued, you may want to research how to settle credit card debt when lawsuit has been filed because you often have options to settle the debt before going to court.
We review many lawsuit cases each year where Portfolio Recovery Associates will sue an individual for unpaid debt. Based on our internal data, this debt buyer is one of the most litigious of the creditors. That is the reason we are writing this article to provide insights as to who Portfolio Recovery Associates is and provide insight if you have been sued or if you just received a letter that it is now handling your debt.
Many creditors will set a limit as to how much they will sue for. Portfolio Recovery does not seem to set a high limit for when it will sue. In fact, we have seen Portfolio Recovery sue for only a few hundred dollars. As such, it’s important to understand how this firm works, so that you can be prepared.
Who is Portfolio Recovery?
As stated above, you may have received a collection letter and are asking yourself, “Who is Portfolio Recovery?” Portfolio Recovery Associates LLC is one of the largest debt recovery companies in the United States.
Portfolio Recovery (PRA Group) is a publicly traded acquirer for non performing debt. According to an FTC report, PRA was among the top five debt buyers in the United States. Portfolio is somewhat unique in their approach as they do also purchase student loan and medical debt.
As such, if Portfolio Recovery believes you have the means to pay but are holding back, the company may not settle with you for sometime. There may be an exception to this rule, especially if the debt close to the statute of limitations in your state.
Unlike other larger debt buyers, Portfolio Recovery appears to have its own collection unit in house. That means that it may purchase and services the debt. The company is in the habit of settling debt for less than owed, but Portfolio does appear to use more sophisticated techniques to determine at what percentage the company will settle for. If you would like to speak with a representative at Portfolio Recovery, you can contact them directly at 800-772-1413.
What can Portfolio Recovery do to you?
There is a lot of information in this article, but we wanted to build the calculator below to first show you the statutes in your state and the garnishment laws that Portfolio is required to abide by. Next, we would like to help you determine what is best based on YOUR specific situation and our experience with Portfolio Recovery. We also like seeing things rather than reading things, so hopefully this helps.
Why does Portfolio Recovery litigate?
Why does some Portfolio Recovery litigate for some debt while attempts to service others? Our hypothesis is that Portfolio Recovery has a multi pronged strategy when deciding whether to sue:
- Are you in a state that allows wage garnishment, liens and levies (i.e. are they going to be able to enforce a judgement against you if they win a judgement)?
- Are you able to make a payment to Portfolio Recovery, but are unwilling to do so (i.e. there are payment propensity scoring systems that will state that person x has a higher percentage to pay than percentage y)?
- What is the cost / benefit analysis of the lawsuit (i.e likelihood of a win (do they have good data to validate the debt), how much debt is owed, unrecoverable court costs if they lose)
- Is it near the statute of limitation? How old is the debt?
We also can use this information to navigate our own negotiation strategy, so feel free to comment below or write me to speak with me (Ben) directly if you have questions.
I’ve been sued by Portfolio Recovery. What do I do?
The first thing I tell folks when they’ve been sued by Portfolio Recovery or by any creditor is that this happens often and that we will get through this together. As Portfolio Recovery is one of the more litigious creditors that we come across, we also know that they will work with you, especially if you’ve experience extreme hardship.
A debt collection lawsuit generally begins when the creditor or law firm representing the creditor files a complaint with the state civil court and lists you as the defendant. The complaint provides the reason why the creditor is suing you and what the creditors want to obtain in payment. Oftentimes this includes the money you owe plus interest, potentially late fees, the attorney fees and any court costs.
The attorney representing the creditor or the creditor themselves will often notify you of the lawsuit by serving you papers. This means that a copy of the complaint and court summons is delivered to you.
What does it mean for Portfolio Recovery to have a judgement against me?
If you do not respond, the creditor or law firm will request a default judgement. With a default judgment, the creditor may do the following based on the state that you live:
- Attempt to freeze money in your bank account
- Put a lien on your property that you own
- Garnish your wages
This is why it’s important to respond to the summons. Many creditors (including Portfolio Recovery) will work with debt settlement firms and consumers when suits have been filed.
When this happens you will want to gather as much information on the debt as possible. Oftentimes, as with Portfolio Recovery, the entity suing you is not the original creditor as we stated earlier.
Review your own records and determine:
- Whether you received a validation letter.
- The amount Portfolio Recovery states you owe is accurate and whether you owe the debt
- Whether the debt is past the statute of limitation for your state. Don’t know your state’s statute of limitations? Feel free to reach out to me or search for that using your search engine.
There are other options you can do when Portfolio Recovery sues you, in addition to responding to the lawsuit.
Handling the Portfolio Recovery lawsuit:
The first thing to do when you get sued by Portfolio Recovery is to determine whether you owe the debt. I know this sounds trivial, but it may take some time to do so, especially if the debt is old.
If you owe the debt:
When you owe the debt, there are four main avenues that you can take, and we can use our calculator to help you distinguish which options are most relevant. So, let’s look at your options one by one:
1. Pay the Debt in Full
This option is often much easier said than done. Most people do not have thousands of dollars available to easily pay the debt in full, so this tends to not be viable option for most folks. In addition, there many be much damage already done to the credit score and credit report at this point.
If your debt is small, you have the cash, and this is one of the only debts you have, you may be able to pay in full, but this is often not realistic for most people.
2. Settle the debt before judgement
Settling the debt before judgement is one of the most common things to do in a situation where you have been sued. There are three options that you can consider and each has its own pros and cons.
You will want to take a look at your entire debt picture before settling your account. If you have a lot of outstanding unpaid debt, will another creditor follow suit if you settle this debt? For this, I would advise to speak with expert to review your credit report to see whether there are other litigious creditors to be concerned about. We offer this service for free, but many other players should be able to offer this as well if you already have someone in mind. Now, let’s go into your options:
Settle the debt on your own:
- Pros: This can be the least expensive because you would not have to pay the fees of a debt settlement or a bankruptcy attorney.
- Cons: You may get a higher rate to the creditor than another provider would get as they generally have worked with these providers before and understand how low they can go. This con can also go for the term of the settlement as some creditors may provide longer terms to pay the debt and having previous data helps in those negotiations. You will also be able to sit on the sidelines instead of negotiations which some people do not like doing.
Settle the debt with a debt settlement provider:
- Pros: Debt settlement companies often track the settlement data religiously, so they often know how low a creditor may go. A debt settlement provider should also know whether the creditor will not settle, and they should not charge unless they settle the debt, so there’s really low risk. Another pro is that it means that you can be on the sideline instead of having to negotiate with an opposing attorney.
- Cons: There is also a feee for this service. Yes, you may get a significant discount, but it’s unclear whether you would not be able to get the same discount yourself, especially if you are a great negotiator and don’t mind the conflict.
Settle the debt with a bankruptcy attorney / debt defense lawyer
- Pros: A lawyer is now working the case and attempting to negotiate for you. A lawyer can also take the case to trial. This can be especially useful if the debt does not belong to you and the debt is fraudulent. Another pro is that you are now on the sidelines and don’t have to do the negotiations with an attorney, which many people do not like doing.
- Cons: There is a fee for this service. Yes, you may get a significant discount, but it’s unclear whether you would not be able to get the same discount yourself, especially if you are a great negotiator and don’t mind the conflict.
If you go with either of the two bottom options, it’s important to know the fees. The best fees are either a percentage of debt saved (incentivizes them to get the lowest amount) or
You are also almost always going to get a better deal with a lump sum settlement. The difference can be significant. We have seen with another creditor that a lump sum of 25% of charges was offered vs. 45% of charges in 24 months.
3. Research whether bankruptcy is a good option
Bankruptcy may also be a valid option when you are sued. This option may be more realistic if you are unable to come up with funds to pay the debt and you have a lot of other outstanding debt, meaning that more creditor law suits are likely to happen.
For this route, you must consider whether you have other assets, income and liabilities that would make this option either too expensive or not good for your situation. We built a Chapter 7 Calculator to help determine whether you qualify and a Chapter 13 Calculator to help determine your plan payment if a Chapter 7 does not work for you.
4. Do nothing and allow for a potential default judgement to be taken,
It is good to speak with Portfolio Recovery if you do not and cannot have money to pay the debt. I can help with that conversation. If you need to buy time to get the money together to attempt to settle, you can also file the reply to the case. Rest assured that we have had a great success in this area or we can point you in the right direction if we are unable to help.
If you don’t owe the debt:
- If you have adequate information showing that this is not your debt, you may want to fight it. This is essentially telling the creditor to, “Prove that I owe the debt”. The burden of proof lies on Portfolio Recovery. If you do not owe the debt, then this may not be a difficult case.
- The contract that you signed was illegal or that you signed it based on false information. This may be rate, and you may want to see outside assistance to determine if this your case.
In this case, you may want to have a free consult to speak with a reputable debt collection attorney. If you do not know a reputable debt collection attorney, you cannot afford one, or if you want to represent yourself, please write me directly as there may be alternative options.
A couple things to note:
- If you are able to negotiate a settlement with the debt collection lawyer, get everything in writing. Many creditors will have you sign something that states that if you do not follow through with the payments that a judgement will be forthcoming.
- Once the debt has started to go through the process a lawsuit has been filed, so there is an outstanding case against you. The discount will generally be lower than attempting to settle the debt before the case has been filed. It will be unlikely to get a higher discount.
Portfolio Recovery Common Questions:
I have been sued by Portfolio Recovery. I may be able to afford to settle. Should I settle my debt?
You may be expecting a resounding, “yes”, but this is another situation where it depends on the situation. For example, let’s say someone has $50,000 in unsecured debt, and creditor 1 sues for $5000 of unpaid debt. Let’s say you are able to settle for 75% of charges. Are you able to settle for 75% of charges if creditors 2-5 end up following suit and suing you.
How do you mitigate this potential problem? My advise is to find someone who can review your credit report and give specific advise on a strategy including how litigious your creditor mix is. Others do this service as they have creditor lawsuit data, and we do as well, so we are happy to do so.
Also, I advise you to not pay for a credit report. The government allows you to get credit report from the 3 bureaus once per year. Here’s the FTC government website that will point you to the AnnualCreditReport.com. They key to reviewing a credit report is to look at specific trade lines and balances related to those trade lines. Experian has a great article titled, “Understanding Your Experian Credit Report“.
If Portfolio Recovery is able to obtain a judgment, will they be able to garnish my wages?
This is situational from state to state. We wrote an article specifically highlighting information on garnishment and state statutes when debt collectors sue.
Portfolio Recovery already received a judgment against me. What can I do?
There are many times where Portfolio Recovery will be able to obtain a judgment without your knowledge. Say for example that you were not able to receive the court summons. The creditor in this case may ask the judge to have a judgment passed to them regardless of whether you received the summons or not.
In this case, it may be more difficult to negotiate with Portfolio Recovery, but that is dependent on such things as whether your state allows wage garnishment or whether there are opportunities for levies or liens against an asset. It may also depend on how likely Portfolio believes it can collect money from you.
What can I do to resolve debt with Portfolio Recovery if I haven’t been sued?
Portfolio Recovery is in the habit of settling debt via a payment plan or a lump sum payment prior to lawsuit. You may be thinking that it’s not possible to come up with a lump sum payment to settle that debt. That’s completely understandable.
We work with Portfolio Recovery to negotiate flexible payment arrangements that work for both the consumer’s finances and for Portfolio Recovery. You should be able to do the same. You also may be able to avoid a future lawsuit if you are able to get a structured settlement plan in place with them today. Feel free to contact us directly with any questions for how this may work your your budget.
I do not believe I can do this on my own. Can you help?
Absolutely, we are experts here to help. Ascend is in the business of helping people resolve his/her debts through payment plans and one-time payments. Our conversations and emails are always free. We will never move forward to offer our services unless we believe it is best for your situation. Feel free to comment below with your questions.
I have absolutely no way to resolve any of my debt. What can I do?
There’s a few things you can do when there’s absolutely no way that you can resolve any of your debt. First, I would recommend to speak with them and be completely open with your financial situation. You can provide bank statements and/or pay stubs along with an overview of your income and expenses.
There are numerous alternatives, but the most common when there’s absolutely no way to resolve your debt is bankruptcy. We built a Bankruptcy Calculator to help compare your options and your costs. There is also a DIY option Chapter 7 Bankruptcy, so let me know if you’d like more information.
Portfolio Recovery refuses to give me anything in writing. Is this normal?
We do not know why, but Portfolio Recovery is notorious for not wishing to provide settlement documentation in writing. This is a common practice amongst most creditors, so we do not know it has taken this stance. There are three common ways to deal with this:
- Attempt to find the collector’s email information, and send information via email
- Record the calls that you have with Portfolio Recovery. Please note that you must state that the call is recorded.
- Send the information via physical mail.
I have not personally seen Portfolio Recovery not follow through on the settlement, but I am not sure everyone can say that.
Will Portfolio Recovery delete paid debts from my credit report?
Until recently (potentially the last 3-6 months), Portfolio Recovery has not been in the habit of doing what we refer to as a “Pay to Delete”. That said, we have seen that this has changed and has even been added to Portfolio Recovery’s Frequently Asked Questions. Here’s the summary of the change:
- Once an account is considered paid in full for less than full balance or paid in full, Portfolio Recovery will request the reporting agencies to delete the tradeline related to your account within 30 days of your final payment.
- It appears that there may be a time delay given the different credit reporting periods.
We definitely appreciate Portfolio Recovery’s recent more pro-consumer stance on credit reporting, and we hope you appreciate it as well. Drop me a note if you have any questions.
What should you do?
I’d love to hear from you in the comment section below. Each situation is completely different, so feel free to comment below or write me with all of your questions, and I will address them one by one. Thanks!