Collection Agency Questions

Factual Questions
1

All right folks…I never thought that I’d be in this position but I need some answers from your collective intellect and experience.

About a year ago, Mrs. Gaffer had some medical work done which resulted in a bill (after insurance) of about $3200. I did not have that kind of cash laying around so I proposed that I pay $100 a month. Our medical provider did not like that but eventually came around and I paid every month (in fact, I actually made two payments back in June when I had some extra money).

Fast forward to December. We had quite the difficult holiday season - my sister-in-law was diagnosed with ovarian cancer, my sister’s SO left her and she had to move in with us, all the while we were hosting Christmas for both sides of our family. I’m not looking for sympathy, just pointing out that things were kind of hectic. In any case, I missed my December payment. I realized my mistake and send a payment around January 15th (which they happily cashed). At about the same time I received a notice from a collection agency that they were now the proud owners of my debt and this morning I received my first threatening phone call from a lovely woman named Carol.

So, I have been sent to a Collection Agency (Hooray for me! Now I can scratch off #34 on my life list). After voicing my incredulity at actually being in this situation I offered to continue to pay the $100 per month to the agency instead. Carol was quite adamant that I needed to settle this “right now” and that since I had plenty of available credit I should give her my credit card number. Well, I was a little irritated at Carol’s tone, I mean it isn’t like I’m a habitual debtor. It is my first one fer fucksake. Hell, I probably would have just given her the number if she hadn’t of been such a bitch (but I guess the telemarketing school drop-outs have to do something for a living). So the long and short of it is that the agency wants me for $1900 which I’m entirely willing to pay, just not on their terms.

So what I would like to know is this…

First, are the collection agencies not allowed to accept payment plans? I thought that this was a fairly common way of settling debt but I may be mistaken.

Second, what is the difference between having an “open” (i.e. still being collected) collection acount on my credit report and one that is “closed” (i.e. a debt that was sent to collections but has been paid). I mean, they will both still show up right?

Finally, I had assumed that since the agency bought the debt that they would have an interest in getting back their money so I’m not sure why it isn’t an option. Is there something I’m missing? Can they sue me? Garnish my wages? I had thought that those were only for cases where the debtor refused to pay. I have fully aknowledged my debt and I’m offering to pay!!!

Anyways, thanks everyone in advance. The ususal caveats regarding legal advice are hereby given.

2

I am not a lawyer. However, when I had a collection agency after me (mistakenly, as it turned out), I insisted that they contact me only by US post. I was more than willing to call them (on their tollfree line), but I was not interested in having them call me. Also, by having them put down in writing what they want from you, they won’t be able to claim that they never said such a thing.

Anyway, if I were in your shoes, I’d certainly ask the medical provider why they forwarded your account to collections so quickly. Also, I’d start hitting Google about debtor rights in California. The collection agency almost certainly has some room to bargain with you, but there’s no way in hell that I’d allow them access to my financial info.

3

Credit agencies buy the debt cheaply. Many debtors don’t ever pay so that is a cost of doing business for them. I suppose they can do whatever they want to negotiate although I don’t know how successful you would be. Debt collection is an abusive, thankless job and only certain people can it it for the long hall. You have to realize that a lot of it is an act that they put on. They make the same call saying the same things to lots of people every day and they tend to hone in on the right amount of intimidation and helpfulness for best success. They often play the “good cop, bad cop” gambit so be aware of that.

Yours isn’t especially large or egregious so keep in mind that it is truly nothing personal and your credit score is the biggest thing they have over you. They do want your money or the whole thing is pointless to them so you have some power as well. Try to negotiate You have nothing to lose. Just realize they are professionals playing a game but you are still holding your money. Credit scoring models are complicated but it is favorable to have a closed collection agency account although a lot of the damage has already been done. One of those won’t ruin you however. A surprising number of people (including me once) have had things end up at a collection agency and it doesn’t instantly trash your credit the first time.

4

They can, and most will.

Yes. The open might hurt your credit score a tiny bit more, though.

They’re thinking bird-in-hand. They want it now because they don’t trust you (they don’t trust anyone).
I am unclear here on whether the collection agency is saying they own the whole debt or just the one payment you missed. I’m assuming the former. What you need to do is IMMEDIATELY get in touch with the original creditor (the doctor’s office) and beg, plead and whine that you want to pay THEM, and NOT the collection agency.

Any collections account, even one paid on time every single month, hurts your credit. What you want to do is do business with the people you actually owe the money to, not the CA.

There are some credit forums on the internet with people who can give excellent advice specific to your situation.

5

Some general observations:

  1. If the collection agency actually “bought” the debt, then they aren’t really acting as a collection agency, as the term is generally used. Some companies do buy debts and collect them. Some falsely claim they own the debt in order to avoid laws that limit collection agency activities. Tell us more about this “notice.” One of the first things that I would do is ask for proof that they actually own the debt. You certainly don’t have to take their word for it. If they bought it, they’ll have documentation. If they lied–they may owe you money.

  2. Again, if they own the debt, I’m unaware of any law prohibiting a creditor from accepting a payment plan.

  3. Sadly, in most jurisdictions a creditor is also not required to accept less than full payment. They can probably sue you for the full amount of the debt, and maybe even get attorneys’ fees and costs. If they sue you and get a judgment, they can garnish your wages in most jurisdictions.

  4. Credit reports don’t show collection accounts as “open” or “closed.” They show how much you owe and when you paid, or didn’t. The consequences of payment on a collection on any given date for your credit score are difficult to predict. If it is a recent collection account and you pay it, it might raise your score a tad, or it might not. It probably won’t reduce your score, although payments on older debts sometimes can.

6

This is the federal law governing what collection agencies can and cannot do. Read it, then read it again.

Fair Debt Collection Practices Act

7

Sure, of course they’re allowed to accept a payment plan. But they’re not obligated to. You owe them the money, and they’d like it ASAP.

Yes, they certainly do have an interest in getting back their money. That’s why they’re trying to get you to pay it.

The philosophy here is similar to “Justice delayed is justice denied.” That is, “Payment withheld is payment unpaid.” Offering to pay $100 now and $1800 later, is a refusal to pay $1800 now. They certainly can sue you if they want to.

8

I may be mistaken, but my understanding is that “the people you actually owe the money to” is the collection agency, and not the doctor’s office. The debt was sold, and the agency is the new owner. If the doctor’s office receives any payment, they have to turn it over to the rightful owner - the collection agency.

9

I’m thinking the collection agency didn’t literally call themselves the “proud new owners” of the debt, so there may be some ambiguity there as to their status. (If they did, please bear with me.)

Where I am, there are different procedures and rights depending on whether the agency buys the account and collects it in its own name, or if it acts as a “collection agency” for the creditor (usually a doctor :wink: ). Unless I had to know this for work, I never would have imagined this fine distinction.

If it’s just a collector, the agency has to get permission from the creditor to settle less than face amount (i.e. not including interest).

But in either case, everyone is generally happy to work with someone who is willing and able to pay.

And the front-end bluster you get from the agency is just that, absolutely true information, but designed to intimidate and delivered by people who hear blatant lies over and over again all day long.

Move up one or two levels in management, and you should find someone happy to accept your checks

10

Someone who asks for your credit card number after she called you has given you probable cause to conclude that she’s a scam artist. Contact your state bunko agency and tell them about this supposed “collection agency” that tried to pull a credit card fraud on you.

11

I posted a thread about a sort-of similar situation recently. There is some useful information in there:
Question about debt collector who purchased my credit card debt

12

Thanks everyone. I appreciate all of the help. I’m not sure yet how I’m going to proceed but information is power and now I have a little.