We ran into tremendous financial difficulty a couple years ago. Some of our accounts went into collections and, over the last year, we have worked hard to either pay accounts in full and are continuing to make monthly payments on others.
I recently worked out a settlement agreement with one collection agency. (This is the only account that we asked for such consideration.) While the agency has verbally agreed to accept a certain amount as payment in full, they refuse to send any written statements indicating this agreement until AFTER the payment is made.
I am concerned that if I remit payment without a written statement beforehand that the agency may turn around and say no such agreement exists. Am I right to be concerned? Should I say "no thanks" to the settlement without such written proof beforehand and just try to make other arrangements to handle the bill?
2007-03-05 06:35:35 · 9 answers · asked by WhyAskWhy 5 in Business & Finance ➔ Credit
With regards to the original creditor, I did contact them and explained our situation. I asked for a monthly payment plan but, the only "response" I received was in the form of the letter from the collection agnecy six weeks later.
2007-03-05 06:57:59 · update #1
Wow, VT...I wasn't aware there were tax implications to all this, too. Thanks for the heads up!
2007-03-05 06:59:53 · update #2
You are correct in this assumption. Ask them to provide a payoff statement and have them note that the account with be Paid in Full/Settled as Agreed on the payoff statement. The statement will give you a deadline in which the payoff amount will be valid-- it will almost always be a percentage of the amount owed and you are given up to a date for that amount to be valid. Ask for this to be faxed/mailed to you. If they do not do this- DO NOT PAY A PENNY UNTIL THE TERMS ARE AGREED UPON IN WRITING! I do not like writing in caps, but it necessary to get this point across.
2007-03-05 06:43:08 · answer #1 · answered by happybostonian 2 · 1⤊ 0⤋
Yes: Pay AFTER you get a written agreement. One other point on settlements: If you and the CA agree (in writing) on less than the full amount, then the amount that you save is taxable as income. You'll need to pay estimated taxes on the savings. Example: the bill was $1,000. You and the CA settle for $700 and you pay it. You owe state and Federal income tax on the $300 you saved. My friend got a nice settlement from a CA, paid it, but didn't know that the savings was taxable until the IRS garnished his wages 3 years later for the taxes, penalty and interest.
Did this help?
2007-03-05 14:55:56 · answer #2 · answered by VT 5 · 1⤊ 0⤋
It seems a bit odd to me that they don't want to give you what you agreed to in writing. What proof do you have that they agreed to it and how do you know they aren't going to just come after you for the rest of the money after they cash your check?
If you can't at least get an agreement in writing, I would somehow attach a statement on your check or money order that this is "payment in full for account # 12345"
2007-03-05 14:58:49 · answer #3 · answered by Faye H 6 · 0⤊ 0⤋
I suggest you to join a debt settlement company who will work with collection agencies too. They will negotiate with collection agencies on your behalf and bring down your principal amount by around 40%.
You can make minimum monthly payments and be debt free within 36 months. Once you are in their debt settlement program your collection agencies will no longer contact you directly for payments. All communication will be directed to the debt settlement company which is working for you.
Check this company. They helped me out of this unsecured debt problem
http://www.debtfreeafterall.com
Good Luck
2007-03-06 15:45:47 · answer #4 · answered by Hima K 2 · 0⤊ 1⤋
I, too, would prefer to work this out with the original creditor if at all possible.
Either way, it is my understanding that if you notate on the check "payment in full" (I'd put it both on the memo line AND just above where they endorse), then they can not cash your check unless they are indeed willing to accept the check as payment in full. And they can not then come back to you for more money on this account.
2007-03-05 14:52:31 · answer #5 · answered by Tom K 7 · 0⤊ 1⤋
I am in a similar situation. I asked for my payments and the agreement in writing. If they do not provide that, they are not up to code according to the Fair Credit Reporting Act. That is your right to receive the agreement in writing. Without it, you have no proof. If they are a good organization, they should not have a problem with that. I would suggest you SEND THEM A LETTER (CERTIFIED FROM POST OFFICE) REQUESTING THE AGREEMENT IN WRITING AND SAVE THAT AS PROOF IF THERE IS A PROBLEM MOVING FORWARD. Good luck!
2007-03-05 15:26:45 · answer #6 · answered by Mochasistah 2 · 0⤊ 1⤋
First of all you should never pay the collection agency anyway, they will remain on your credit report as a PAID COLLECTION and it still hurts your credit scores. Aside from that you should always get everything in writing. Collection agencies are the devil incarnate and you do not have to bow to their threats. 90% of all collection agencies are doing something illegal in their collection practices. If they will not give it to you in writing, go over their heads to the original creditor and work out a deal with them and cut out the middle man completely.
2007-03-05 14:44:17 · answer #7 · answered by Anonymous · 0⤊ 1⤋
MAKE SURE IT IS IN WRITING
They could just book the payment as a well a partial payment in the full debt.
2007-03-05 14:39:12 · answer #8 · answered by Anonymous · 1⤊ 0⤋
You need a written statement!!
2007-03-05 14:43:26 · answer #9 · answered by shorty21 5 · 1⤊ 0⤋