HSBC renegs on settlement agreements — ALWAYS get it in writing or RECORD the call!

It rarely happens that creditors and collectors are SUED for refusing to honor settlements, but it happens all the time.

You MUST either get the agreement in writing or RECORD the call and ensure the terms are clearly audible.  Restate in your own words what you think you are agreeing to.

And as much as I’m aware of the bankers’ fraud and deception, I’m still shocked to see this class action against Household.  Whenever I’ve had a problem with a creditor or collector reneging on a settlement it was related to credit reporting and usually they complied quickly once they found out that I had the recordings with their promises.

So what is HCBC thinking?

Class Action Accuses HSBC of Reneging On Credit-Card Payback Arrangements

Charles Toutant, New Jersey Law Journal, On Friday January 28, 2011, 3:02 am EST

A nationwide class action in federal court in Trenton alleges that credit card issuer HSBC didn’t honor its agreements to let delinquent debtors settle their accounts by making installment payments towards a reduced debt total.

The suit, Bradley v. HSBC Card Services, Inc., 11-cv-00447, alleges that the company breached its contracts and committed common-law fraud by offering delinquent cardholders an installment plan to pay off their debts at less than the full amount due; abiding by the plan until the last payment is made; and then declaring the agreement void.

The suit was filed on Jan. 21 on behalf of all U.S. consumers who entered into settlement agreements that HSBC, of Schaumburg, Ill., did not honor.

The lead plaintiff, Chastity Bradley of Somerville, reached such an agreement last January that called for HSBC to discharge Bradley’s debt if she paid $81 in February 2010, followed by $80 a month from March to July. Court documents do not disclose the amount of Bradley’s original debt, but say the company agreed to reduce it to $481.

According to the suit, HSBC promised Bradley the account would be settled and closed if she made the payments as directed. Bradley made all the payments on a timely basis, but when she submitted the final one in July, HSBC returned it and insisted on the balance in full.

Bradley negotiated the payment plan with representation from Persels & Associates, a consumer-rights law firm in Towson, Md. That firm negotiated installment agreements with HSBC on behalf of a number of debtors but the agreements were dishonored when the final payment came due, according to an Aug. 23 letter to HSBC from an attorney at the firm, Lisa Perillo.

HSBC “lured in plaintiff and all those similarly situated with a discounted settlement amount, only to accept all but the final payment and proceed to declare the settlement void, says her complaint.

Just when I thought I’d seen it all.  I really shouldn’t be surprised, but it is shocking to see that HSBC wouldn’t honor the agreement even though a LAW FIRM negotiated the settlement.

And I’d sure like to know what they charged for settling those debts.

6 Responses to “HSBC renegs on settlement agreements — ALWAYS get it in writing or RECORD the call!”

  1. HSBC is very unfair, not honoring their agreements, not allowing or working with you at all to settle your debt, and the insane interest rate that is always applied to your debt can get too much.

  2. We r in the same boat with HSBC agreed to settle for 3 payments of 286.33 (We have the letter from themstating this) all paid by due date and thru automatic check initiated by HSBC and pulled from our Bank as a electronic check. Four months later now they send a letter saying “settlement is cancelled” and there customer service gave us another # to call that they no longer have our account.
    Is this fraud?
    Please help.

  3. File a complaint with your state attorney general, the federal agencies regulating HSBC and try to get some media attention.

    And of course contact some consumer lawyers:

    Please post what happens!

  4. HSBC offered me a settlement agreement. I would pay set amount for 6 months thru automatic withdrawal. On the fifth month HSBC did not request the automatic withdrawal. I got a letter saying the agreement had been voided because they did not receive the payment on time. Even though they were the ones that had not taken the withdrawal as they had done every month before that. I called them and was told if I would pay the final two installments with automatic withdrawal they would honor it. I did that the same day. Next month I got another bill stating I still owed the remaining amount. I called again and they said there was nothing they could do. They told me the US regulatory commission had passed a law that took effect on the 27th of November that would not allow them to honor the agreement. Sounds very strange to me so I am contacting our state’s attorney general office and filing a complaint. Please let me know of anything you have heard where their is a law that even exists.

  5. I know nothing about such a law and it would make no sense to have such a law.

    I sure hope you have the initial agreement in writing and it goes to show why you should always RECORD business calls.

    But even without the recording you can prove that they were taking the payments out of your account. I sure hope your complaints get the regulators’ attention.

  6. I have a client who settled his HSBC chargeoff with their collector Mercantile and all payments were made as per the agreement.

    Last year he got sued by Canvasback Financial and they received a default judgment. Fortunately he found the statements from Mercantile and they provided him with a letter stating that the account was settled and has a $0 balance.

    The letter didn’t contain the HSBC Orchard account number and he had two Orchard accounts, so it took quite an effort to finally get the letter WITH the account number.

    With lots of luck, the Canvasback attorneys will vacate the judgment on time for closing on his first house.

    If I hadn’t personally seen all the documents, I would find it hard to belief that any bank licensed to do business in America would dare to SELL settled accounts to debt buyer.

    What a country …

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