Legal Question in Credit and Debt Law in Missouri

Re: collection agency question

There are companies that "speculate" on bad debts by buying the contracts of creditors. Essentially the creditor "assigns" the right to collect the balance from the you to another company. If the debt is, let's say, $500, in most cases the other company paid about $50 for it. They then use strong-arm tactics to collect.

You have the right to demand a copy of the original signed contract, a copy of the assignment that purports to give this collection agency the right to collect the debt, and something bearing your signature that establishes an amount.

You need to send them a certified letter to this effect, and you need to tell them not to contact you in person or by telephone. Tell them you will evaluate their claim and respond in due course. You should then consider whether to pay the debt. If you do not, it will be on your credit report for seven years.

In most cases if you refuse to pay the debt and the amount is somewhat small, the collection company will not sue; it is a matter of diminishing return. They don't want to have to spend $125 to sue you on a $500 debt, although they sometimes will. Thus if you do feel you owe something, but not the full amount, you can send them another letter telling them you wish to engage in an "accord and satisfaction" of the "disputed debt." Send something less than the full amount they claim you owe (e.g., $275 of $500 amount)and on the check write "negotiation of this instrument is in full satisfaction of extinguishes all liability for any debt alleged to be owed by [your name]."

The company may tell you that they have applied your payment as a "partial payment" and that you owe the remainder. However, since the amount is disputed, and since they have not documented the full amount, in most cases courts will uphold your accord and satisfication if you spell out the terms of it in the letter you send to them.

Good luck.