Let’s say you have a $100 charge from somewhere you forgot to pay off, and 5 years down the line you get a letter from a debt collection agency claiming if you pay them $40 the debt is settled and you no longer have to worry about it.
Now I’ve heard multiple claims about this, about how the debt collection agencies legally can’t do anything to you except mail or call you to bug you about the money, about how even if you pay the debt collection agency can still try to get more money out of you because they know you have the money to pay back, how even if you paid it all back they could just then send that debt to someone else and have them bother you to try to collect.
So basically, if a debt collection agency offers you a deal like that, should you take it or is it basically kind of useless to pay at that point?
I would only pay money to the people who actually provided the service to you. Never to a debt collection scumbag.
Call the original company you forgot to pay, and make arrangements with them. (Often, they will agree to settle for less if you offer to pay them immediately.)
The debt collection companies will probably keep calling you, but they do that anyway, even if you don’t owe anything. Just keep ignoring them and hanging up on their calls.
Paying anything at all is usually considered in court as proof that the debt was real. The debt collector may actually have no evidence against you at all.
Deny, and make them take you to court so they can present, and you can refute their evidence.
These bottom feeders frequently make rookie mistakes. Catch them at it, and you are off Scott free.
Do not pay without a written and signed contract in hand. Go to the notary together.
Usually the debt collectors are doing their best to trick you.
Check the statute of limitations on debt in your state. They’ll often try to get you in the last year, or the year after that limit.
Do you actually remember owing the money?
Yeah. There are basically two types of debt collectors:
Those who are working on behalf of the owner of the debt to try to collect.
Those who purchase debts from the previous owners and now own the debts and are trying to collect for themselves.
It won’t do any good to contact the original creditor if you are dealing with the second kind.
Absolutely I can. No company has ever refused to accept payment, even on a very old debt. It’s happened to me twice, after I moved. The original clinic was glad to accept my money, years later, and I was glad to see that the people who helped me got paid, even if delayed.
You are making a mistake if you are in any way ‘dealing’ with this kind of debt collection bottom-feeder.
There’s a difference between a written-off/charged off debt and one sent to collections.
A written off debt is complete loss of a debt they don’t expect to be able to collect. It remains on the books as a loss. Since it’s still on the books, the company accept payment put it towards the loss.This is probably what happened in the above situation. Most medical bills are written off and not sold to a debt collection agency.
When a company sells (this is the key word) their debt to a collection agency for pennies on the dollar, they’ve absolved themselves of any claim to the debt even though they write off the remaining balance.
Debt collectors get paid a commission on the money they recover and some will outright lie to you to get money from you / extend the collection process. Yes, there’s fines for lying to you, but it’s worth it for some to take the risk because of their high commissions. What is especially critical is that any payment is considered acknowledgement of the debt* and restarts the clock for how long the collectors can chase after you.
*If your outstanding balance was $100 five years ago, it guaranteed to be much, much higher than that due to interest and late fees.
When I went to a debt consolidation agency years ago, they advised me to ignore any collection calls or letters from the debt collections companies as it may take a few months for the debt to be marked as paid on their side. Or they could be outright lying to me.
Also, just as there’s always some ‘thing’ feeding on the leftovers of the lowest level scavengers, your debt could be sold off to other debt collection companies (for pennies on the dollar) multiple times. The more times the debt is sold, the nastier the collections can become.
Oh, BTW, just because your $100 debt was bought for $10, doesn’t mean the collectors will give up once they receive $10 or $20. They’ll keep going for the full $100!
If you haven’t already done so, pull your FICO credit report, you can get it free once a year. Check to see if your debt is there. As I recall, it only shows the amount owed 120 days, not how much is currently owed. If you just have one or two accounts over 120 days past due, they’ve already dinged your credit score as much as it ever well. Note that while most negative items on our report will fall off after seven years (including credit cards), the debts are still owed.
To correct my statement above about the clock restarting, your delinquent CC debt will drop off after seven years regardless of what you do, but by responding to call or letter, or paying any amount confirms to the collector that they have a live bite and will keep tugging on the line.
Here’s some links that explain the credit reporting process and what collectors can and can’t do. Also, while the collectors may threaten to sue you, the court costs for anything less than thousands of dollars is likely to keep them for pursuing you.
It is a blast walking behind them on the way out to hear them yell on their cell-phone about how they drove 150 miles just to get their butt handed to them by some guy who isn’t even a lawyer. Their day is ruined, and their shakedown business one day closer to bankruptcy.
That’s $15,000 you’ll never see this side of a federal court room, and the Feds will actually give you punitive damages if the debt collector does not follow the rules to the letter.
The internet makes it easy to bone up on relevant state laws, and the judges like it when you put up a fight.
There’s lots of people who will happily take your money, the key is what can they do as a consequence after they take/don’t take your money and that is almost entirely related to what they report to the major Credit Reporting Agencies (Equifax, Experian, Transunion). Apart from the moral aspect of whether you believe you should pay money that you owe and all that, the way you should evaluate this is how do I make the changes in my credit score I want for the lowest resources expended.
As such, it’s worthwhile being aware of the laws regulating how these things work and how you can play the game to your advantage. this post contains a succinct summary of what the laws regulating the US are and exactly what’s demanded by each party.
I don’t know if it’s true or not, but I’ve been told that the accounting software used by banks and credit card companies will automatically submit 30-60-90-120 day delinquent accounts automatically. The good news is that it will drop off 30 days later once it’s paid.
I own a small business. Very few people owe me money because I no longer accept checks and I do no billing.
I’ve used a collection agency that would attempt collection and then send me a percentage of what they collected, keeping the rest. My percentage dropped with the age of the debt, so for a bounced check I’d give the debtor 72 hours to pay; if they didn’t, I’d send their debt for collection.
If the debtor then came to me wanting to pay, I’d turn them away. If I accepted payment I’d have to forward it to the collection company then wait for them to do the math and send me what I was due. Why should I do any extra work?
I had an experience a few years back when one of those collectors called me. They said I owed ~$200 for an unpaid cable bill. I refused to pay and said I have to check my receipts first. The I called my old cable company who I swear told me I was clear when I handed in my box before I moved. They checked and I checked and lo and behold I did owe them the money. I paid “them” on the spot. The next day the collector called me. I told him a mistake must have been made because “I called the cable company and that debt was cleared”. I never heard from them again.
This would be my guess too. Say I’m a debt collector, I just bought $100,000 of your deadbeat customers’ debts and paid you maybe 10 cents on the dollar for that, figuring I could get back maybe 20 once I turn your name over to my boiler room full of shakedown artists. But wait, when they start calling around a few weeks or even months later when the leads go out, the customers are telling them to f off because they went into your office last Friday and paid off their bill, they have a receipt for it with your signature on it and everything, and you didn’t tell anybody. You’re getting sued. That debt is exactly like a piece of merchandise you sell, and you’ve just sold it to two people and kept all the money, and there’s no way you didn’t sign a contract with some sort of clause like that in it.
It’s exactly like a garbage/recycle haul contract, if you’re a fabricator filling on average, one bin a week with some high-value metal scrap, the expected value of that metal is built into the contract. If some guy comes along with a truck and offers to haul away the 2000 pounds of steel and copper tubing and aircraft grade aluminum that week for nothing, or pay you $100 to let him, you can’t. Well, you can, sure, but then the recycler will come along and say, “I see all your garbage, but where’s MY steel?”
If a debt has been outstanding long enough that the statute of limitations has expired so that the creditor can no longer sue you making a payment on that debt may start the clock ticking again and put you at risk of a lawsuit. Make sure a debt is collectable before making any payments to anyone.
Around here some cities farm out old water, etc. debt collection to agencies. And they are given a lot of power to add on interest and fees plus the bonus of having legal remedies like putting liens on houses which sometimes results in people losing their homes.
Ignoring these kinds of debts just because they went to a collection agency is not a good idea.
If the debt has been sold to Bottom-Feeder Collections, they step into your original creditor’s shoes and have the same rights and abilities to collect. Assuming it’s a valid debt and still within the statute of limitations, they can obtain a judgment against you and use your state’s collection methods (garnishing your wages, seizing your car, putting a lien on your property, raiding your bank account, or whatever else your state’s laws permit). Failing to deal with them will just increase the costs associated with the debt as they add on fees and/or interest.
If you have been notified that the debt has been sold to Bottom-Feeder Collections, and Original Creditor mistakenly accepts payment from you anyway, as far as the court is concerned you still owe the full sum to Bottom-Feeder Collections, and it’s on you to attempt to collect your overpayment from Original Creditor.
In the two instances you cite, most likely the debt had never been sold in the first place, so you are describing a completely different situation.