Legal Question in Credit and Debt Law in Virginia
Basis for Collection activity
I own a small grocery store. I purchased kerosene from a local Company for resale and also to heat my store. This is the 3rd year I've done business with them. Last year I made a purchase similar to this year. I made several payments over nearly a years time until the bill was paid. At one point, a 3 month period went by between payments. Other than the normal bills that were stamped 'past due', no calls or requests were made by the company to make payments. This year, after my order, I made a $200.00 payment initially. One and one-half months passed and I was about to send a second payment when I was notified by their collection agency that it had been turned over to them. The balance was approx. $1800. and they had added their own fees which brought the amount due to around $2800. I don't feel this bill should have ever gone to collections since; one: At one point the previous year, I had gone twice as long between payments and nothing was said...and 2: No notice that the bill was going to collections was ever given to me. I paid the first payment of $150.00 because I agreed to pay that on the phone with the agency, however, I informed them that I was not agreeing to pay the high fees and that I'd be seeking legal advice.
2 Answers from Attorneys
Re: Basis for Collection activity
First, there are no requirements about when a creditor can send an account to collection (unless your contract specifically says something about this). As long as the money is overdue, they can send it to collection any time they want.
However, some collection agencies like to tack on various fees. Sometimes your contract will specifically authorize collection fees. This is rare, however. Many contracts will authorize attorneys fees if a case goes to court, and if they win of course. Some contracts use much broader langague and talk about "the costs of collection" or something similar.
However, most of the time collection agencies simply tack on unuathorized fees and expect you to pay them. Unless you specifically agreed to this in the contract, there is absolutely no basis for this in the law. Sometimes collection agencies will hide these fees inside the outstanding balance and it will be difficult for you to figure out that they are inflating the balance due by unauthorized collection fees.
My advice would be to pay what you believe is legitimately due, but not a penny more. If they take you to court and you have already paid what you owe, they will LOSE in court.
In addition, you should send a WRITTEN letter demanding a complete accounting. If they go to court, you must demand a "Bill of Particulars" for the same purpose.
If your business is a corporation, however, you will need an attorney to represent me. If it comes to that, give me a call. My rates are very low because I have made a strategic choice to reach small business by not maintaining the expense of an office, so that I can afford to help small business at affordable rates.
Re: Basis for Collection activity
In regard to your point #2, no notice to the debtor is required if the creditor decides to put the matter with collection agents.
With respect to your first point, without knowing what kind of contract(if any)or verbal agreement/understanding which you may have had with the kerosene vendor which was intended to govern the terms of the sale of his product to you, chances are that once you were more than 30 days delinquent, the vendor was within his rights to adjudge you delinquent in your payment obligations and to refer the matter for collection.
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