Should I settle with a bill collector?
May 1, 2013 5:38 PM Subscribe
A bill collector is willing to settle a disputed outstanding bill I have. They are offering a reduced settlement. Is there a way to insure that they will call this bill settled and not try to charge me more than the agreed upon amount and keep the experience off my credit history? Does anyone in the hive have any similar experiences with this sort of settlement?
You might also demand to see proof of the debt.
posted by seanmpuckett at 5:46 PM on May 1, 2013 [1 favorite]
posted by seanmpuckett at 5:46 PM on May 1, 2013 [1 favorite]
You might also demand to see proof of the debt.
posted by seanmpuckett at 8:46 PM on May 1
THIS. Absolutely do NOT settle ANY bill until you've seen proof of the debt claim. Tell them you absolutely MUST see:
*What the money they say you owe is for;
*An explanation to you of how they calculated what they say you owe;
*Copies of any papers that show you agreed to pay what they say you owe;
*A verification or copy of any judgment if applicable;
*Identification the original creditor;
*Proof that the Statute of Limitations has not expired on this account
*Proof that they are licensed to collect in your state
*Their license numbers and Registered Agent
Get all that, or no dice.
(And for future reference, you might keep on hand this letter that I send to any collection agency that contacts me about a debt they claim I owe).
posted by magstheaxe at 6:04 PM on May 1, 2013 [17 favorites]
posted by seanmpuckett at 8:46 PM on May 1
THIS. Absolutely do NOT settle ANY bill until you've seen proof of the debt claim. Tell them you absolutely MUST see:
*What the money they say you owe is for;
*An explanation to you of how they calculated what they say you owe;
*Copies of any papers that show you agreed to pay what they say you owe;
*A verification or copy of any judgment if applicable;
*Identification the original creditor;
*Proof that the Statute of Limitations has not expired on this account
*Proof that they are licensed to collect in your state
*Their license numbers and Registered Agent
Get all that, or no dice.
(And for future reference, you might keep on hand this letter that I send to any collection agency that contacts me about a debt they claim I owe).
posted by magstheaxe at 6:04 PM on May 1, 2013 [17 favorites]
In addition to magstheaxe's excellent advice, perhaps you should look at the Fair Debt Collection Act, and maybe do some other searches related to that.
Your original debt was most likely sold and bought by this current creditor. If it's disputed, why are you considering settling? Are these people even in your state? Do they have a license to collect in your state? How old is the debt? There is a statute of limitations on debt (but only if you don't pay on it or agree to pay on it, which might reset the statute, so be wary before you contact them). These are questions you should look up and answer for yourself.
Before you do anything, educate yourself -- before you contact this creditor, and if it's a large amount, see out the advice of an attorney.
posted by Marie Mon Dieu at 6:39 PM on May 1, 2013 [3 favorites]
Your original debt was most likely sold and bought by this current creditor. If it's disputed, why are you considering settling? Are these people even in your state? Do they have a license to collect in your state? How old is the debt? There is a statute of limitations on debt (but only if you don't pay on it or agree to pay on it, which might reset the statute, so be wary before you contact them). These are questions you should look up and answer for yourself.
Before you do anything, educate yourself -- before you contact this creditor, and if it's a large amount, see out the advice of an attorney.
posted by Marie Mon Dieu at 6:39 PM on May 1, 2013 [3 favorites]
Is there a way to insure that they will call this bill settled and not try to charge me more than the agreed upon amount and keep the experience off my credit history?
IAAL, IANYL, TINLA. I have a creditor's rights practice and have dealt with these issues many times, including class actions and at the appellate level.
If you have agreed to a settlement of a debt with a debt collector, they will generally send you a letter confirming the settlement with the coupon attached that you send in with your payment. Since you are settling the debt for less than its amount, it is very important that you have written confirmation of this. Once the debt is paid, you should also make sure that you get a release or other written receipt of payment. (you will at least have your cancelled check) Save these documents in case someone tries to collect this debt again.
I think magstheaxe's heart is in the right place but both of those letters are overly aggressive to the extent that they demand information far beyond what is required by the FDCPA. There is no requirement that a debt collector identify their registered agent or give information about the statute of limitations, for example. What is required that they provide you is here. It is a pretty short list. I do not recommend claiming that you "must" see information that the collector has no legal obligation to provide you.
A major point: any demand that "all collection activity must cease and desist" does not stop a creditor from suing you because litigation is not "collection activity" under the FDCPA. I have won FDCPA lawsuits filed against my clients on these grounds. To repeat: you cannot use the FDCPA to stop someone from suing you. Also beware of the creditor's counterclaim. I have plaintiffs sue my client on their $1,000 debt collection claims and then I countersue them for the +$150k home equity line of credit. Then they decide maybe the lawsuit wasn't such a good idea.
Again, to answer your question, have them put the settlement agreement in writing and then retain proof of payment such as your cancelled check.
posted by Tanizaki at 7:07 PM on May 1, 2013 [6 favorites]
IAAL, IANYL, TINLA. I have a creditor's rights practice and have dealt with these issues many times, including class actions and at the appellate level.
If you have agreed to a settlement of a debt with a debt collector, they will generally send you a letter confirming the settlement with the coupon attached that you send in with your payment. Since you are settling the debt for less than its amount, it is very important that you have written confirmation of this. Once the debt is paid, you should also make sure that you get a release or other written receipt of payment. (you will at least have your cancelled check) Save these documents in case someone tries to collect this debt again.
I think magstheaxe's heart is in the right place but both of those letters are overly aggressive to the extent that they demand information far beyond what is required by the FDCPA. There is no requirement that a debt collector identify their registered agent or give information about the statute of limitations, for example. What is required that they provide you is here. It is a pretty short list. I do not recommend claiming that you "must" see information that the collector has no legal obligation to provide you.
A major point: any demand that "all collection activity must cease and desist" does not stop a creditor from suing you because litigation is not "collection activity" under the FDCPA. I have won FDCPA lawsuits filed against my clients on these grounds. To repeat: you cannot use the FDCPA to stop someone from suing you. Also beware of the creditor's counterclaim. I have plaintiffs sue my client on their $1,000 debt collection claims and then I countersue them for the +$150k home equity line of credit. Then they decide maybe the lawsuit wasn't such a good idea.
Again, to answer your question, have them put the settlement agreement in writing and then retain proof of payment such as your cancelled check.
posted by Tanizaki at 7:07 PM on May 1, 2013 [6 favorites]
Tanizaki's post makes no mention of rights you may have under state law. The information you are entitled to when verifying the debt may actually be greater under state law than under the FDCPA (i.e. the link to the ftc.gov website).
Depending on the amount of money involved, how much you care about your credit history, and the amount of money you have available, etc. you might consider consulting a local attorney experienced in debt collection defense.
posted by mattbcoset at 8:54 PM on May 1, 2013 [1 favorite]
Depending on the amount of money involved, how much you care about your credit history, and the amount of money you have available, etc. you might consider consulting a local attorney experienced in debt collection defense.
posted by mattbcoset at 8:54 PM on May 1, 2013 [1 favorite]
Tanizaki's post makes no mention of rights you may have under state law.
There are three reasons for this:
1. The question is "help me ensure this bill is settled" not "help me tee up a consumer collections claim."
2. I do not know the OP's state of residence and am only familiar with my state's consumer collections law.
3. The state consumer collection practices acts generally do not have provisions that mirror the FDCPA's debt validation provisions. Rather, these state acts are concerned with harassment, false and misleading representations, and communications regarding the debt with the debtor and third-parties.
My SOP when practicing law is to understate matters. This helps credibility. If a debtor sends a letter overstating their rights such as "I don't have to pay you until you tell me your registered agent", that sends the message that the debtor is not acting in good faith and the creditor and collector will proceed accordingly. I recommend that debtors send a conservative letter that tracks the FDCPA and their state's consumer collections law, if one exists.
A general word about debtor defense attorneys: since they know their clients have trouble paying their bills, they like retainers and flat fees. Big ones.
posted by Tanizaki at 7:04 AM on May 2, 2013 [1 favorite]
There are three reasons for this:
1. The question is "help me ensure this bill is settled" not "help me tee up a consumer collections claim."
2. I do not know the OP's state of residence and am only familiar with my state's consumer collections law.
3. The state consumer collection practices acts generally do not have provisions that mirror the FDCPA's debt validation provisions. Rather, these state acts are concerned with harassment, false and misleading representations, and communications regarding the debt with the debtor and third-parties.
My SOP when practicing law is to understate matters. This helps credibility. If a debtor sends a letter overstating their rights such as "I don't have to pay you until you tell me your registered agent", that sends the message that the debtor is not acting in good faith and the creditor and collector will proceed accordingly. I recommend that debtors send a conservative letter that tracks the FDCPA and their state's consumer collections law, if one exists.
A general word about debtor defense attorneys: since they know their clients have trouble paying their bills, they like retainers and flat fees. Big ones.
posted by Tanizaki at 7:04 AM on May 2, 2013 [1 favorite]
IAAL, IANYL, TINLA. Tanizaki's advice is on point as far as settling the debt goes if that is what OP wants. However, OP would be wise to consult with a good debtor's lawyer first.
I respectfully disagree with Tanizaki's position with respect to debtor's counsel. The type of fee, and the amount, both depend on the nature of the case, the amount of work necessary to attain OP's goals and the difficulty of the work required. We don't know what the relevant state law is, and whether there are facts that would give rise to claims or defenses on OP's part, so this is impossible to assess.
If you have claims, one might take a case on contingency, or a blend of up-front fees and a contingency. I recently did exactly that for a long-standing client, and going after the creditor was like hitting a cash piñata with a baseball bat. The client recouped his investment, and then some. And by "some," I mean "a lot." The creditor had broken so many more state and federal laws than the FDCPA, and had so little evidence to support their own claims that our fee structure was a no-brainer.
If this is more than a minor nuisance matter, it might be worth paying a few bucks to a good lawyer to evaluate OP's position.
posted by Hylas at 11:12 AM on May 2, 2013 [3 favorites]
I respectfully disagree with Tanizaki's position with respect to debtor's counsel. The type of fee, and the amount, both depend on the nature of the case, the amount of work necessary to attain OP's goals and the difficulty of the work required. We don't know what the relevant state law is, and whether there are facts that would give rise to claims or defenses on OP's part, so this is impossible to assess.
If you have claims, one might take a case on contingency, or a blend of up-front fees and a contingency. I recently did exactly that for a long-standing client, and going after the creditor was like hitting a cash piñata with a baseball bat. The client recouped his investment, and then some. And by "some," I mean "a lot." The creditor had broken so many more state and federal laws than the FDCPA, and had so little evidence to support their own claims that our fee structure was a no-brainer.
If this is more than a minor nuisance matter, it might be worth paying a few bucks to a good lawyer to evaluate OP's position.
posted by Hylas at 11:12 AM on May 2, 2013 [3 favorites]
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posted by JohnnyGunn at 5:44 PM on May 1, 2013