Is it legal for a company to send a debt to a collection agency without exerting an effort to tell you to pay?

Question

My wife enrolled in Ballys fitness club about 3 years ago. She called them and cancelled, but no one told her that she had to pay a $50 cancellation fee. After 3 years, we get a letter from a collection agency saying that she owes $1,100.

Ballys never called my wife to tell her that she owed a $50 cancellation fee. They simply waited three years and sold the debt to a collection agency. Is this legal? or should the company exert an effort to collect the debt first before sending it to a collection agency? Any feedback would be appreciated!

Answer 1

I would report them to the court house maybe and ask News Paper and TV News for help of advise.

Answer 2

First of all, yes any one has the right to sell a debt.
More importantly, you need totake steps to insure this is not reflected in your credit report.
Begin by telling the collection agency in writing, registered letter, that they may only contact you in writing. Tell them failure to abide by yourright to demand only written communication will result in a complaint to the AG office. Next, request all paperwork on the debt from them. Included should be the original contract she signed. There is something wrong here however. There is no possible way for a $50 debt to balloon to $1100 in 3 years. I suspect they are billing you for the entire length of the contract. If you can not prove that your wife cancelled the contract, then legally you are liable. The next phase would involve telling Bally's that if they persist in attempting to collect this debt, you will file a formal complaint with both the Atty General, and the BBB. May get them to walk away.

Answer 3

Companies sell debt to collection agencies all the time. It's a common practice. If you read the fine print on your contract with the fitness company, somewhere buried in it you will undoubtedly find the stipulation that notifies you about the $50 cancellation fee and subsequent charges if payment is not received by a certain time. Unfortunately, it is not the obligation of Bally's to call you and remind you about anything, let alone a debt. They make money off your debt. The fact that they waited so long is of no consequence to them.

Answer 4

Yes. The cancellation fee was most likely in the contract she signed at the beginning of the service. They do not have to inform you because when you sign, there is usually a statement saying that you have read the entire contract and agree to the terms. Some companies do not have the means to try and collect, or they can make more money from a collection agency than they would from the in debt consumer. The amount of $1,000 to me seems disputable, unless your contract stated that charges would increase over time. Sorry, but they aren't doing anything illegal.

Answer 5

Not sure what the legality is, but I Had A*L (large ISP Co.) do the same to me after a year and a half. However, it was only 75$. they never made any attempt to contact me, no bills, or correspondence of any type. I canceled my *OL service, and they stopped my auto debit, but said the charge of 75$ was for the prorated usage fees, and a late fee. Apparently I had canceled in between billing cycles roughly 10 days after. I never received one single bill, or anything except offers to return to AO* for free or discounted rates.
I had no recourse with the Collections Company, so I called t A*L and got transferred to New Delhi about 300 times, and had a big giant fit and they forgave the balance.
Sorry about your luck. I think the best thing for you to do is work through the gym VS. the collections agency. In my case they had no account records anyway, only the notation that I owed them 75$. Good Luck!

Answer 6

First, Contact Bally's to ensure there hasn't been a screw up. Then check your states statute of limitations. If it has been 3 yrs a lot of states it is too late to collect via court system. So the most the collection agency can do is submit on credit and go through typically agency trash talk. Contact the company first, DO NOT VALIDATE OR ADMIT TO ANYTHING. Find out exactly what the extra charges are for etc....write down everything they say to you. Some states even allow taping of 3rd party collection agencies. If it is allowed in your state DEFINITELY DO THIS. Then tell them you want a detailed statement sent to you verifying this debt (they will probably tell you to put it in writing to waste time), also tell them to send a copy of their dispute procedures. Tell them upon receiving this statement you will verify any and all charges and contact them regarding payment or disputes. That as of this time you are unaware of any charges incurred and will peruse the document and go from there. Tell them they ARE NOT allowed to contact you further via any means.
Once you recieve this info from them, you send them a detailed letter (mail certified etc... to ensure they get the letter, wink wink). Tell them you agree to pay the $50 and why you believe that is all you owe. Then you expect the account to be closed, and removed from your credit record. Contact the FTC if they fail to follow the basic rules of credit collections. Also, contact the FTC regarding the Business and collection practices of Bally's fitness.
The company should attempt to collect on their own but it isn't necessarily required.
Then pull up your credit reports from all 3 major agencies. Find this on the report and dispute this claim.
Basically 3rd party collections are a bunch of bologna, they will huff and puff, but eventually they will pass it off to somebody else so on and so on. Worst case scenario they send it to attorneys and they try through the court. The Judge is going to see the statue of limitations, and the initial bill is $50 and the agency is trying to force another 1000 out of you. Then you counter sue ec...Good luck

Answer 7

Yes, that is legal. I like to refer to any type of contracts as "Pay Or Else" agreements. Either the person pays as agreed (detailed in the terms of the contract), or else the company reserves the right to handle the outstanding debt in whatever way they see fit. They are not obligated to remind consumers that monies are owed. I think the company's argument would be that when the consumer signs, they are aware of the terms of the contract (though they know good and well we don't read all of that fine print). They could say that when your wife signed, she was signing that she not only agreed to the terms but understood them as well. The $50 cancellation fee was probably buried in the contract! :-(

Answer 8

They can do whatever they want with any debt you owe them by contract. In this case, they simply sold it to the collection agency for pennies on the dollar.

However. There are VERY strict rules having to do with debt, contracts, late fees, and most importantly, reporting those on your credit report. Likely, most of that thousand or so dollars they claim you owe is illegal. Likely, they have made illegal reports on your credit. You could sue them for this. Your best bet is contact a lawyer and explain the situation. Nothing tells a collection agency to back off like a lawsuit they cannot win.

Answer 9

Yes. If you don't pay something that is due, the company has no legal obligation to give you extra time, or to follow up on it themselves. They can simply sell the debt to a debt collection agency. They obviously don't get the full amount this way, but it improves their cash flow.

Answer 10

Your roommate was notified and presumably they tried to notify you also, but maybe did not have your forwarding address. Nevertheless, if both of you were on the lease, notifying one is sufficient. Surely your ex-roommate mentioned it to you? Anyway no doubt you were aware that you owed money to this apartment complex. If you walk away from an obligation without paying for it, expect to have your credit affected. That's the way it works.

Answer 11

Yep, it's legal. She signed a contract and is obligated to fulfill the life of the contract by paying the full amount. You cannot call and cancel verbally. Failure to pay will show negatively on your credit report.