Legal Question in Credit and Debt Law in California
Collection Agency Honesty
My wife and I have one blotch on our credit rating, which we discovered when we applied for a car loan through our credit union. The original debt--$200--was incurred via a credit card.
The debt, apparently, has been bought by a major collection agency, which upped the debt, plus interest to $800.
I talked to a representative who said he would accept $400 as payment, and then he wanted me to pay by check over the phone--giving him the routing number, check number, etc., of my credit union. I said I'd prefer to send the check. I said this because I had no assurance that this collection agency, which seems to have many unhappy customers, might just cash the check and not agree that the debt had been fully paid. (I didn't tell him that I had this concern.)
Sorry to ramble, but my question is this: If I send the collection agency $400 is there any guarantee that this company will agree my debt has been fulfilled and notify the necessary credit reporting bureaus?
2 Answers from Attorneys
Re: Collection Agency Honesty
If you are agreeing to pay the collection agency's $400 settlement offer to compromise, then you should make sure that you have such an agreement in writing dictating the terms: 1) settlement in full as agreed and 2) creditor must report and/or remove the negative marks associated with the alleged debt. These essential items will protect you and you should have these provisions in a WRITTEN agreement signed by a principal or officer of the agency at issue BEFORE making your payment. Then save this agreement for your records in case they or another third party collector tries to come after you again on the same debt. You may want to retain a Law Firm, like ours, to affordably draft and submit such a legal written agreement fully protecting your rights before making payment.
Re: Collection Agency Honesty
You are doing the right thing by mailing a check and by doubting the integrity of some random collector, particularly where it appears you have already researched them and found some unsettling news.
I would think it would be reasonable to insist on a statement in writing saying that the judgment will be considered paid in full upon receipt of the $400.
How old is this debt? Is it over 4 years old? Also, you may be able to negotiate further. Often the number a collector originally quotes (the $800) is made up, then they can generously settle for the full price that is actually owed.
There is also ZERO guarantee the credit bureaus will be notified. Once you have the debt satisfied, get copies of all reports. Then for each that shows the debt as owing, write a letter requesting an investigation and explain the debt has been paid. IF they do not change the report, they may be liable for penalties under the Federal Fair Credit Reporting Act as well as similar state statutes.
Best of luck to you and I wish you a speedy exit from the wonderful world of collections.
-- Amy Kleinpeter
http://www.amykleinpeter.com
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