Credit Collections, Debts, and Payments

Great Debates
1

Over the past year or so I’d let a credit card of mine slip to being past due for a few months. Recently, I set up a plan where I would be able to pay back the debt at about $50 per month. I’m a full time college student with a part-time job that’s barely sufficing as it is.

My question… American Express (to whom I owe $2200) has apparently referred my account to a debt collection agency, who’ve called me a few times informing me that they expect that I pay the entire balance immediately. I honestly have no way to pay $2200 right now, nor do I know of anyone who would be willing to front me the money.

A couple people I’ve talked to have told me that as long as I’m making some effort to pay the debt (like I said, I’m making on-time monthly payments of $50), there’s little that the collection agency can do. They’ve told me that most of the time, debt collection agencies try to use scare tactics to get people to pay the entire balance due; but, like I said, that’s impossible for me right now. There is absolutely no way that I can pay the entire balance due.

I’m having trouble finding my legal rights in the situation, and I’m trying to avoid asking a lawyer or anyone who will charge for consultation… so I’m turning here for advice.

I’m paying them back; slowly, but surely. I have documented proof that each month, $50 is being sent to AmEx. For anyone who knows, what are my (general) legal rights in this situation?

Thanks in advance…

2

The post I referred to was here: http://boards.straightdope.com/sdmb/showthread.php?threadid=189810, made by Shayna.

Another question-- I’m sending this payment directly to American Express; not the collector – the collector only called me about a week ago, but I began paying AmEx last month. Does sending the payment to AmEx qualify as paying them something?

3

First, methinks this might be in the wrong forum.

Second, a 1 second Google search coughed this up:Lawdog site. Click on Debt Collection. For your sake, I hope the information therein is wrong or outdated or something.

Third: You’d best call Amex and find out if they’re getting/applying your payments properly. Hiding out, avoiding calls or otherwise being combative/uncommunicative will not help your situation. These behaviours scream “deadbeat” to creditors.

Missing a few payments is a big deal. Your credit rating is pretty much screwed already, but it’s in your own best interest to pick up the phone and find out exactly what is going on with your Amex account. If you have actually set up these payments with a company rep, as opposed to sending them money and just hoping for the best, then in fairness they should call off the collection hounds. I don’t know if they have to legally or not. You’d better find out though.

Sorry I couldn’t be more helpful than that. Good luck.

4

I used to work collections.

The contract you signed with the creditor most likely did have a clause on it that they could request the debt be paid in full (PIF) whenever they like.

However, the law also states that if you send a payment of any amount, it must be applied to your account. I would verify with AmEx that the payments are being applied to your account. (Right account # on the check, etc). You can pay AmEx or the collection agency, doesn’t really matter. Although, of course, if you talk to the agency they will insist that you pay them.

You don’t have to talk to collectors if you don’t want to. Too many people hide behind caller ID and such. If you don’t want them calling you just tell them not to. The laws on this vary. Different rules for different states, and home vs work phone numbers. However, as a general rule, the agency doesn’t want to get in trouble. If you get their information (address and phone number) and then put them on notice that you don’t want to recieve any more phone calls from them, they will obey it.

One thing that’s worth keeping in mind: Because the account has been sent to an agency it has already been “charged off” most likely. This is a very bad thing for your credit. Since this has already happened, much of the damage is done. If you are concerned about your credit, it may serve you better to make sure that you don’t have another account charged off, even at the expense of not paying off this one so quickly.

If you’ve got lots of other debt, consider a bankrupcy. If you already have multiple accounts that have been closed due to non-payment, it won’t matter too much to your credit anyway. An atty for $500 or so can clear all of the debt.

5

Thanks so far, guys. I’d read various things… such as unsecured debt is basically a loss for them at this point, etc.

What’s the worst that could happen if I tell the collectors to quit calling, and keep sending AmEx the same payment every month?

6

Triss I may be of some help to you.

First of all you need to acquaint yourself with the Fair Debt Collection Practices Act 15 USCA § 1692. I have posted the relevant sections that may be of some interest to you. They outlilne what the collection action can and cannot do and what they can and cannot say and what they can and cannot threaten to do. Hope this was of some help.

§ 1692f. Unfair practices
A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.

(2) The acceptance by a debt collector from any person of a check or other payment instrument postdated by more than five days unless such person is notified in writing of the debt collector’s intent to deposit such check or instrument not more than ten nor less than three business days prior to such deposit.

(3) The solicitation by a debt collector of any postdated check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecution.

(4) Depositing or threatening to deposit any postdated check or other postdated payment instrument prior to the date on such check or instrument.

(5) Causing charges to be made to any person for communications by concealment of the true purpose of the communication. Such charges include, but are not limited to, collect telephone calls and telegram fees.

(6) Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if–

(A) there is no present right to possession of the property claimed as collateral through an enforceable security interest;

(B) there is no present intention to take possession of the property; or

© the property is exempt by law from such dispossession or disablement.

(7) Communicating with a consumer regarding a debt by post card.

(8) Using any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.
A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The use or threat of use of violence or other criminal means to harm the physical person, reputation, or property of any person.

(2) The use of obscene or profane language or language the natural consequence of which is to abuse the hearer or reader.

(3) The publication of a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency or to persons meeting the requirements of section 1681a(f) or 1681b(3) of this title.

(4) The advertisement for sale of any debt to coerce payment of the debt.

(5) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.

(6) Except as provided in section 1692b of this title, the placement of telephone calls without meaningful disclosure of the caller’s identity.

§ 1692e. False or misleading representations

A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The false representation or implication that the debt collector is vouched for, bonded by, or affiliated with the United States or any State, including the use of any badge, uniform, or facsimile thereof.

(2) The false representation of–

(A) the character, amount, or legal status of any debt; or

(B) any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt.

(3) The false representation or implication that any individual is an attorney or that any communication is from an attorney.

(4) The representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action.

(5) The threat to take any action that cannot legally be taken or that is not intended to be taken.

(6) The false representation or implication that a sale, referral, or other transfer of any interest in a debt shall cause the consumer to–

(A) lose any claim or defense to payment of the debt; or

(B) become subject to any practice prohibited by this subchapter.

(7) The false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer.

(8) Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.

(9) The use or distribution of any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States or any State, or which creates a false impression as to its source, authorization, or approval.

(10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.

(11) The failure to disclose in the initial written communication with the consumer and, in addition, if the initial communication with the consumer is oral, in that initial oral communication, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent communications that the communication is from a debt collector, except that this paragraph shall not apply to a formal pleading made in connection with a legal action.

(12) The false representation or implication that accounts have been turned over to innocent purchasers for value.

(13) The false representation or implication that documents are legal process.

(14) The use of any business, company, or organization name other than the true name of the debt collector’s business, company, or organization.

(15) The false representation or implication that documents are not legal process forms or do not require action by the consumer.

(16) The false representation or implication that a debt collector operates or is employed by a consumer reporting agency as defined by section 1681a(f) of this title.

7

Hm. Well there ya go, Civil Defense.

Jimmy1 has given you what appears to me to be everything you could ever want to know about what the collection agency can or cannot do to you. He has mistakenly addressed his post to me, but it’s all good anyway.

I think the worst has already happened, your credit rating has taken a dive. As Debaser noted, once your account has been placed for collections, it goes on your credit rating and stays there for some years. This can usually only be removed if you can prove it was an error of some kind.

I can only say again that, being that it’s your debt, and even if Amex has somehow misapplied your payments, it’s still in your best interest to call them and make sure that you are all on the same page. Most creditors are glad to take whatever form of payment that they can get. The idea is that something is better than nothing. If you do declare bankruptcy, they get nothing.

By setting up a payment schedule and taking the responsibilty of making sure Amex knows & agrees, you’ll help somewhat to retrieve your credit rating situation but usually only after a number of years have passed. The more time that passes after any derogatories are placed on your credit rating, the better it is for future creditors.

But if you do declare bankruptcy, your credit rating goes into the proverbial black hole for some number of years. I think it’s seven years in Ontario where I live, but you may want to find what it is for your area and make your best judgement according to that.

Bankruptcy is sort of looked at as the equivalent of credit hari-kari by most creditors. Late payments are bad, bankruptcy is worse. It’s usually only an option to consider in the direst of situations and only a short term rather desperate solution to getting out of debt.

8

I forgot to mentions settlements in full (SIF’s). If you can come up with 50% or so of the Balance in Full (BIF) then offer it to them. The clients of the agencies (AmEx, in this case) set amounts with them for what they can settle for. It might be 75%, 50% or lower. This would be reflected on your credit as SIF and would be better than having it still hanging there.

However, as I said earlier, because it’s been charged off already much of the damage has been done, credit wise.

9

Well it can be reported to the credit agency as an R9, which is a settlement amount but the R9 indicates the full balance was not received, which reflects negatively credit wise.