How much money can a collection agency demand for payment monthly?

Question

I owe about $1,500 dollars to a collection agency. Due to circumstances, I can't afford a huge payment. Is it right for them to demand more than I can afford? I offered to pay $40 a month but they said that's not enough. He got me to commit to $100 a month, $25 a week. I have been served w/papers starting a legal action against me. The agency has me paranoid that if I don't pay the $100 a month, the court will find in favor of them and garish my wages (he told me about $150 + a month). I'm supposed to start making payments next week. Thanks for the help.

Answer 1

You got a few good answers and a few bad.

First thing you "need" to do is contact your county court clerk and see if there is an actual case filed against you.

If there is, you "NEED" to answer the summons in the time allowed or they will get an automatic default judgment against you. If the statute of limitations has run for your state you should include affirmative defense of SOL in your answer. If they have any violations listed on your credit reports, or in their letters to you, file counterclaims against them.

If there is a suit filed and you lose, they can only take what your state allows. You would have to look up your states exemption statutes.

If there is no suit filed, pull your credit reports and take those, plus the 'so-called' summons and any other paperwork you have from them and speak to a lawyer. It is illegal to claim a case is filed when it is not. Another reason to take all of the paperwork with you to the lawyer, is so the lawyer can find any other violations that the collection agency has committed - I'm sure that there are some, there usually is.

You can go to Legal Aid if you can't afford an attorney, but they will probably only help you with the court paperwork and not be there with you in court.

You can go to www.naca.net and look for an attorney who specializes in FDCPA. If you have quite a few violations on the collection agency, the lawyer may take the case on contingency and be paid by the collection agency if you win.

Also, one thing you need to be aware of is the statute of limitations for collecting in your state. If you are past that period, they cannot legally sue. They may try, but it is illegal.

You might also check out the site I've listed. Start in the newbie forum and then do some reading in the credit forum. Since you didn't say what state you are in, I cannot tell you the statute of limitations. But, you can find that and your exemptions on that site or the links to find them.

Answer 2

Sorry, but you got another batch of simply crappy answers!

GypsyTips it the worst. Totally wrong.

For starters, go back and read Echo's response again. That will get you started. VERY IMPORTANT info.

Note that creditors are NOT required to take any payment plan. If you do not offer a "reasonable" payment schedule, they will not accept it. A "reasonable" plan involves total payment within a couple of years. Your $40/month payment would take at least 3 1/2 years, assuming that nice creditor agrees to wave future interest/late fees (not likely).

At $100 a month, the bill will be paid in about 1 1/2 years.

In many states, the judge has the discretion of ordering an installment payment plan, whereby the creditor is forced to accept what the judge orders. If you can demonstrate to the judge (with a detailed budget and income/expense statements) that you can't afford more then $40 a month, he may accept it. But I'm betting he will side with the creditor on this one.

Note that if they go for garnishment, they can take only 25% of the net income (money left after taxes taken out).

I don't know what your income is or your personal spending...but if 25% of your net is over $100 you really need to consider settling with this guy and avoid a judgement being placed on your credit.

Did he send you this offer in writing, or was it over the phone? I'm curious why they went with the court case?

Answer 3

Start with a Credit Counseling service.

The collection agency is trying to get you to pay the bill. They are going to ask for as much as they think you can afford, and that are going to push it. They are also famous for giving out threats. All they want is your money and they will do whatever they think they can get away with to get it. They are fighting for their recovery fee, usually %20 of the debt owed. If you pay, then they get 20% of each payment. It’s a good deal to the company since they don't think you are going to pay them without someone sending the dogs after you.

What they threaten, and what they can actually do are not the same. If you have been served with papers then legal action against you has already started. You have let this go on too long and you are in serious trouble.

Okay, enough with the brow beating you are getting enough of that already. What you need is some help. Contact a Credit Counseling Group to help you.
Start here for a list of reliable credit counselors: http://www.nfcc.org/
Check out:
http://www.moneymanagement.org/financialfreedom/debtmanagement.asp?RCTAG=TTCO&CMP=KNC-gaw&src=MMIPD_google
http://www.careonecredit.com/Landings/Landing.aspx
http://www.incharge.org/Credit_Counseling/GettingStarted/Default.aspx?vdn=4288&kw=credit%20counseling&gclid=CPmRyazEjYcCFQE7GAodLiBEsA&bhcp=1

Credit Counselors are on your side. They still want you to pay the debt, but they are going to try and do it at a more reasonable rate. They can talk with the companies that you owe money to from a position of strength and try to make a deal with them. Usually then can get a reduced payment. They can also consolidate several payments into one. The important thing is that by working through a Credit Counselor you are showing an intent to pay. That is a good faith measure and will mean a lot to the companies you owe money to, to your credit rating, and to the judge if the case gets that far. Credit Counselors may even get you a loan or another way to get out of the interest. If you owe all this to a credit card company then that interest is continuing, and it is going to kill you.

Credit Counselors are cheaper than lawyers. I went through a bankruptcy several years ago and had to pay a lot to the lawyer, but I owed a whole lot more so it was a good deal. Bankruptcy laws are tougher now days; too many Americans have gone bankrupt. However, Chapter 11 is still possible. A Chapter 11 is a mini-bankruptcy where you still pay off part of your debt. Going to a lawyer is the last resort, and the most expensive; to expensive for your mild debt problem.

Answer 4

#1: you are the dumb@ss that did not pay your bills.
#2: collectors are the scum of the earth. They will use any tactic to scare you into paying them money. They have served you papers......oooooooooo! Did a Sherriff serve you papers? I thought not. Trust me, no judge in the world will make you pay more than you can afford. Go to court if you have to...big deal. At least the judge won't call you names and ring your phone off the hook 50 times a day. If you go to court and the judge finds out you are driving a Corvette, belong to a health club, make $75,000.00 per year and play golf on weekends then he will wig-out. If you are just a normal person that did stupid with a capital 'S' and is struggling to make ends meet (and can show where you really are willing to pay this debt) it will be OK. Believe me, the collector NEVER wants to go to court for fear the judge will dismiss some of the debt. This bozo is just using a tactic to scare you into paying (and it worked, huh?).
Don't misunderstand -- you made this mess, you need to pay your bill, collector @ss-hole or not. Try your very best to pay it off ASAP. This is the best cure for this ache.
PS -- do NOT take the advice of 'GypsyTips'. The only way to pay a bill is to PAY it. They do NOT have to accept any amount you throw at them -- though they will 99 times out of 100. Last note: ONLY a judge can order garnished wages. A collector cannot.

Answer 5

Actually you should of told them if they do not accept the 40 dollors a month then the bill is paid ... legally by law any company collection agency or not, have got to take what you offer even if it is a dollar a month, if they do not accept it then the bill is paid. you need to get them to write down that they will not accept the payment of whatever you offer, and then tell them that the bill is paid most companies pray you do not know this as they will push their limits don't offer anymore then you can afford, and if they say they will not accept it tell them you want a written statment of their refusal of payment... then when they take you to court you can show the judge,,, and the judge will say dept paid this is for all states in the USA.I know my brother is an accountant and he deals everyday in this crap......

Answer 6

Try negociating with the actual creditor, and not the collection agency. The creditor gives the collection agency 50% or more, so they usually will only get $750 out of it.
Tell the collect agency that you are in preps for filing for bankruptcy. That sometimes makes them stop bothering you.

Answer 7

I don't know what it's like in America, but I very much doubt a court would take more then you can afford to pay in any civilised country. if what the other people are saying is true, then like England, they have to accept what you offer, they will continue to try to bully you, you must stand up to them, in England we have a thing called Citizens Advice Bureaux. I'm sure there must be an equivilent there, I believe there are legal adivice centres, find out where your nearest is and book yourself an appointment.

Answer 8

Check out the Consumer Credit Protection Act

Answer 9

They can't demand anything.You can send them whatever you want,although sometimes it doesn't help your balance because not sending enough may just take care of the interest.It would be wise to check the interest rate and find out houw much interest and when it accrues.Then make payments a bit more than the interest.

Answer 10

Pay the $40 a month, they are trying to bully u in to paying more.I don't be-leave they can do anything as long as your paying. send the 40 every month, it will cost then to much to take u to court, don't be leave they'll do it.