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Dealing with debt collection agency
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I have an unpaid credit card that went to a debt collection agency. The agency sent me a letter stating that i could settle in full all at once for 40% off the full amount, with 6 payments for a total of 25% off, or 12 payments for a total of 10% off.
They want me to decide how I am going to do it by July 07. I am going to be moving into a place where my rent will be considerably cheaper, I also filled out and sent the forms so that taxes will stop being withheld from my checks in order to have greater liquidity now. One of my student loans will also be paid off within 3-4 months from now, so that will free up funds.
If everything goes ok I should be able to afford the 25% off plan. However, my car is not in the greatest shape and if I need to fix it within the first couple months of moving this would be disastrous, since I will now be commuting from my new home. After that I will have gotten enough ahead to be able to deal with everything.
How important is it that I decide and begin paying by the 7th? Is there any room to negotiate on the amount paid, and the timeframe in which it is paid? Will they withdraw the offers and make me pay the full amount if I don't pay by the 7th.
I am trying to get my finances and my life on track and will appreciate any insight that can be offered, as I have never dealt with anything like this before.
Thank you.
They want me to decide how I am going to do it by July 07. I am going to be moving into a place where my rent will be considerably cheaper, I also filled out and sent the forms so that taxes will stop being withheld from my checks in order to have greater liquidity now. One of my student loans will also be paid off within 3-4 months from now, so that will free up funds.
If everything goes ok I should be able to afford the 25% off plan. However, my car is not in the greatest shape and if I need to fix it within the first couple months of moving this would be disastrous, since I will now be commuting from my new home. After that I will have gotten enough ahead to be able to deal with everything.
How important is it that I decide and begin paying by the 7th? Is there any room to negotiate on the amount paid, and the timeframe in which it is paid? Will they withdraw the offers and make me pay the full amount if I don't pay by the 7th.
I am trying to get my finances and my life on track and will appreciate any insight that can be offered, as I have never dealt with anything like this before.
Thank you.
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Basically, what has happened is that the agency bought your debt, and their goal now is to collect enough of it to make money while spending as little time mucking around with you as possible (which is why they will eat 40% of it if you pay right now.) If you call the agency and explain your situation and that you want to settle the debt as soon as possible, they will probably work with you on a payment plan that works for your finances.
that's why we call it the struggle, you're supposed to sweat
I am not sure what the type of things that I can ask for and expect to get are. Is a time extension possible in these circumstances? Can I pay what I can now and make smaller payments over the months for some amount between the 40 and 25%? He did not seem willing to discuss anything of the sort.
http://en.wikipedia.org/wiki/Fair_Debt_Collection_Practices_Act
Also, no matter what shit they talk, you have the right to negotiate. You can't pay what you don't have. They take a hard line on folks because they don't trust you any further than they can throw you (rightly so in many cases).
The real downside to this is your credit rating - it's going to take a heckuva hit on this.
Tell them you have 40% of the amount owed right now, and you could give it to them, or you could always just bring it down to the racetrack and maybe you'll have good news for them tomorrow. Seem like a deadbeat. Do NOT tell them you're trying to get your finances in order.
If the debt is small enough, they have very little leverage except your credit rating. Make them think that doesn't matter to you. (If the debt's big enough, then it might be worth it to them to go after your paycheck.)
Note that paying this off probably won't help your credit score, BUT if you're thinking of getting any big loans soon, you'll probably have to pay it at some point.
I read somewhere that you should try to negotiate at the end of the month because they go off of commission and are more likely to deal then. Anyone know of this? If this is true then if i call at the end of June I'll have a better idea of what my move is going to cost me and how much money I will have available, and then negotiate.
I will also read about the Fair Debt Collection Practices Act, thank you for the link.
Anyway, you should definitely negotiate. Dude on the phone was just being a hardass, but you have to make it seem like what you can pay right now (say $800, 29%) is all you'll ever be able to pay. They may well have paid only 5,10,20% for this account. Even if they paid 30%, they're still better off taking 29% than nothing. Your job is to convince them those are the only choices.
What the above posters are saying is true. They're being hard because they think they can scare you. At this point, you've already defaulted on the credit card - your credit rating is already fucked. So at this point, they shouldn't be able to threaten you with more credit damage as the damage has already been done. Just stick to your guns, they'll negotiate.
the "no true scotch man" fallacy.
First, they may not be able to legally go after you for the money - different states have different statutes - in Washington state where I live - you have 3 years to start collection, or they can't go after you for it, i.e. sue you, or garnish your paycheck - so check your state statutes before you do ANYTHING.
Next if you want to buy yourself some time past their "deadline" then send them a letter disputing the charges - they have to prove that you legally owe the debt, AND that they are legally able to pursue you for it.
Here is a sample of a letter that I use.
Your Address
Their name and addressed
Date:
CRRR #
Re: Acct #
To Whom It May Concern:
Please be advised that this letter is not only a formal dispute, but a request that you cease and desist any and all phone calls to me, my relatives, my employer, my friends, and my neighbors.
If you need to contact me, I am hereby requesting that you do so only through the mail at:
Your Address Here
This letter is being sent to you in response to your attached letter.
This is not a refusal to pay, but a notice that your claim is disputed.
Under the Fair Debt Collections Practices Act (FDCPA), I have the right to request validation of the debt you say I owe you. I am requesting proof that I am indeed the party you are asking to pay this debt, and there is some contractual obligation which is binding on me to pay this debt.
Your legal staff will agree that compliance with this request is required under the laws of Washington state and Federal Statutes.
In addition to the questionnaire below, please attach copies of:
Agreement with your client that grants you the authority to collect on this alleged debt, or proof of acquisition by purchase or assignment.
Agreement that bears the signature of the alleged debtor wherein he or she agreed to pay the creditor.
I require compliance with the terms and conditions of this letter within 30 days or a complete withdrawal, in writing, of any claim.
In the event of noncompliance, I reserve the right to file charges and/or complaints with appropriate County, State & Federal authorities ,the BBB and State Bar associations for violations of the FDCPA, FCRA, and Federal and State statutes on fraudulent extortion .
I also hereby reserve my right to take private civil action against you to recover damages.
Sincerely,
Your Name Here (sign above)
Questionnaire to be returned :
Account #: ____________________
Original Creditor's Name:______________________________
Name of Debtor:___________________________
Address of Debtor:________________________
Balance of Account:____________________________
Date you acquired this debt:_____________________________
This Debt was: assigned ___purchased___
Please indicated any credit bureaus to which
you have reported on this account:
Experian ______
Equifax ______
TransUnion _____
Next - don't negotiate with them over the phone - the guys on the phone are paid to get as much money from you as fast as possible, and their job sucks and they don't care about you or your situation. If you send them the above letters and they respond and you want to get this taken care of - send them a wrtitten counter offer and you can offer your own terms, such as taking the 40% off, but taking the payment plan of the 10% off. They will generally work with you as long as you are going to pay them. And finally, remember that these guys bought your debt for pennies on the dollar, so chances are, even with the 40% off, they are obviously making money off you, so I would even counter with paying half of what you owe. Get the terms in writing and make sure that it concludes the debt, so that they can't just sell off the unpaid portion!!
Good luck.
Yeah, isn't that some sneaky shit.
I was going to post something similar to this myself.
is not a great idea. You are still going to owe taxes, but now that they're not getting withheld, you'll be paying a large chunk sometime next year. And unlike consumer debt which is just a civil case, not paying state and federal taxes can have nasty consequences. Unless you're really, really good at saving money to cover your taxes or you're absolutely, totally 100% sure you're going to get enough credits and rebates to not have to pay any taxes, I'd reconsider lowering your withholdings.
With regards to the tax withholdings, I've already paid 6 months worth of taxes. If I need to pay any more I'll have it by tax time next year. I don't spend my money frivolously, the unpaid debt was charged up by my mother, and by the time I realized what had happened, I had no money and it went to collections shortly after. The debt is still my responsibility and I intend to pay something, I just need to know what my options are.
This will have an even greater impact in 2011 when tax rates go back to pre bush levels.
Okay...First, it would be a better idea to follow Reverend_Chase's advice and negotiate by mail, that is, in writing.
Collection agents will not feel themselves bound to honor mere verbal agreements.
Second, if you do negotiate payment for less than what you owe do not pay them with a personal check or via electronic transfer. Heck, don't do this no matter what you negotiate.
Pay them with a cashiers check or money order. If you give them access to your account routing information, they will take every penny you owe, regardless of the payment agreement you've made with them.
The important thing to understand, as revealed by the fact that they are allowing you already to take 40% off the top, is that they are still making money with 40% off the top. Maybe not immediately, but what they do is they say "well, if we had 60% of 3000 now, we could invest it and make 3000 in the time it will take this dude to actually pay us 3000".
The second important thing to understand is that debt collection agencies JUST. WANT. ANYTHING. they can get their hands on.
If you called them tomorrow and said "I have the checkbook in my hands right now, I am prepared to write you a check today for 50% off to close the account, if you can't do that, then I'll have to alter my budget and go with monthly installments of [insert some low amount here] over [some big number] of months.", I guarantee you they will at least consider it.
Debt collectors talk a big game, but the reality is that if you have any sort of real money to leverage in negotiation you have them by the balls, and not the other way around.
Also, when they say that you have to decide by July 7th, what they mean is the offer they have made is only valid until the 7th, at which point it will be recalculated and the exact amounts will change slightly (read: get higher) to compensate for the delay in actually getting any return.
If you want my advice, if you can't actually go with the big money payoff, what I would do is just give them something piddly, like 50 or 100 bucks a month, and take all the money you would have been paying them in the 12 or 6 month plan, put in a savings account, and in 12 months when it has accrued to a real sum, then ask for the big payoff. That way you can still take a big chunk off of the principal in the final payoff without crippling yourself short term. The catch is you have to be disciplined and not dip into it for other reasons.
we also talk about other random shit and clown upon each other
I forgot to mention that. Limed for TRUTH.
Seriously, don't negotiate over the phone. Those are the guys that they pay to strong arm you. They are legalized mafia arm-breakers. Seriously, write your terms down and mail them to them.
That SA thread is 12 kinds of informative. You're not in the position the OP was in, obviously, but the first page confirms some of the things people have said already, and adds other things.
If it's the latter they most likely won't and can't negotiate further as they are bound to settlement terms determined by the company who you owe the debt to. I worked for a company that did collections for other companies and each company had a percentage you couldn't settle below without the company's approval, and that rarely happened.
It's also highly illegal and, if you wrote a check and they took out anything more than the cleared check, they can be into a large amount of legal trouble. Like, enough that you never have to worry about debt again.
It's actually not. It's shady as hell, but not illegal (yet, at least)
You give them your bank account info, and they run through some big long winded fast spoken terms of service agreement over the phone and get you to say okay, while recording it obviously. They'll play ball as long as the money is there, but if they ever try to withdraw the amount they were allowed and it's not there, they can withdraw the entire amount, late fees, whatever they want really. It's all in the terms of service you were read over the phone. Gyms do this all the time.
edit: To the OP: Is this the only debt you currently have against you, or is this just the one card that's gotten this far? Are there others trailing behind it?
If this is the only card, just find out what you can pay them, and make that offer. They're going to be more likely to take whatever you offer if it's a one time payment. When you start offering them scheduled payments they stop caring, because you've already told them once you can't do that.
I have heard this a lot from people, and I know that Clark Howard says this all the time, but I'm not sure it's true. When I first graduated from college, I worked as a trainer for a debt collection place (which was not the most reputable place in the world) and this was 100% not something that anyone was allowed to do/told to do. In fact, to make sure it didn't happen, supervisors had to get on the phone to confirm the amount and date of payment on every transaction.
Also, most collection agencies do not actually buy the debt from the companies. They service a number of accounts and then once they hit a certain age with no payments -- say 6 to 9 months -- the company sends that account to another agency. That's why you can dispute with one company and another one will start calling you a few months later. If a company has purchased the debt, they become the first party collector, and they are way more hardcore than any third party agency. For example, third parties can only call you once per day but first party can call over and over again if they want.
If you have a way to record the calls, call them again. If they lie to you/threaten you, then they have broken the law and you have the right to sue them. In fact, you can collect twice since you can sue the agency and the individual.
fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
that's right we're on a fucked up cruise / God is dead but at least we have booze
bad things happen, no one knows why / the sun burns out and everyone dies
Also, really solid advice in this thread. The 'communicate only in writing' one is especially helpful.
Sometimes there's a wide gulf between what is illegal, and what you can get an ADA to give a shit about.
To the person asking if this is my only debt, I have a student loan for about 3k, and one with about 400 left that I am about to pay off.
So if I am correct, the plan is to dispute the debt in writing in order to buy more time, then figure out what lump sum I can pay in a month or two once things have settled down, then write a letter stating that this is what I can pay, but with an undertone that if they don't accept it I'm not sure that I will be able to pay at all?
Will the fact that I called an inquired about the payment plans count as proof to them that i accept the debt, thus making the debt dispute plan impossible?
Also thank you for the something awful forum post, seems like a gold mine.
I am going to make total maybe 22k-23k this year. I have already paid taxes thus far- almost into July. I am single. I really shouldnt have to worry about underwithholding right? And how the fuck can they add a penalty for under withholding if you pay your taxes at the end of the year. I am not interested in giving the government my money at no interest all year, especially when I am in such a low income bracket.
I see your edit now, how do you manually set your withholdings? It seems that you are saying you can adjust what they take out. I thought it was an all or nothing thing.
I got on a "credit rehabilitation program" where I'd pay $100 a month for a certain amount of time. They agreed to contact me a month before to renegotiate the terms and get me on a regular payment plan. What they did instead was drop me from the program at the end of the term and only contacted me when the account was 30 days past due. By mail. 15 days after it was actually past due.
I'm also having another problem with another creditor, but that's because every single person I talk to has been giving me different answers. I got in the Army and paid off a fuckton of debt, but both of my student loan companies are being highly damn unreasonable, and at this point its almost like I just can't work anything out with them.