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ShakingMyHead

Question about a collection agency

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After a horrible year of one financial disaster after another, I am finally able to try and pay on a credit card that went to a collection agency. My credit report says it is a charge-off. I asked if they could send verification in the mail about the terms of repayment before i send first payment. I was going to pay a lump sum down and then small payments per month until it is paid off. They said they won't and this isn't a settlement but a payment plan. They also said I couldn't send money via money order because it can't be tracked and they wouldn't know if my first payment was being sent. I said I would not do debit transaction or personal check. Then she suggested moneygram payment. She also said they were given permission to keep adding interest on the account??????????? Any thoughts? Thanks

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First, what you are proposing is NOT a good idea. Payment plans are made on the full balance and interest may continue to be assessed.

But first things first. Charge-off does not mean that you do not owe the debt. Its just an accounting term - it means the original creditor has given up getting money and the account has moved to the bad debt side of the ledger.

Second, you do not "ask" anyone for verification. You request it IN WRITING. The Fair Debt Collection Practices Act requires this to be in writing.

Third, your idea of paying by money order would be sound, but you do not dictate the terms. As I said, payment plans are never a good option and I cannot see a good reason why a debtor would ever do them unless the debtor has a lot of assets that would be at risk if judgment were entered and/or does not want his/her wages garnished.

What you need to do really is sit down with an attorney and find out your options. How much is owed? How much is "small" for a down payment? Would it be possible to settle in a lump sum for a smaller amount now? If you do not have the funds, how long would it take to get them? What are the ramifications of not paying today? Do you know what the effects of a judgment in your state would be? This is why you need to consult with a lawyer.

All collection agencies have an address. I have never heard of a collection agency refusing money before for properly negotiated accounts. You first begin by requesting a letter outlining the proposed payment terms - as in "I will pay x $ down followed by 12 monthly payments of y $ until the settlement amount is paid." The letter then describes where payment is sent and by what dates the payments are to be received. Usually there is a reference number for the file which you write on your check or money order so I do not understand how a collection agency cannot track a payment if you reference a file number on the memo line.

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As I said, payment plans are never a good option and I cannot see a good reason why a debtor would ever do them unless the debtor has a lot of assets that would be at risk if judgment were entered and/or does not want his/her wages garnished.

I disagree that payment plans are “never a good option.” Payment plans are certainly a good option in some cases — you yourself mention two of them. But those two circumstances are not the only ones in which is makes sense to do it. A lot depends on the nature of the debt, the debtor's situation, what repayment terms the creditor is willing to accept, and the applicable state law.

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