Advice on paying debt collection?
Asked by
robmandu (
21331
)
September 6th, 2011
I’ve been counseling a friend not to pay an outstanding debt that dates back over 12 years ago.
It was originally a missed final payment of $114 to a phone company. She wasn’t aware she’d missed that payment until years later when the debt was sold to a collection agency. In the many years since, with interest, fees, and other charges, the amount due has ballooned to over $2,700.
Now, the collection agency calls her regularly as well as sends letters demanding payment of the outstanding debt. They also offer an opportunity to settle the debt for less than the total amount. The offer is usually for several hundreds of dollars… but today she received an offer to settle for only $99. That’s less than what she originally owed in the first place. (And I gotta think it’s less than what the collections folks have spent themselves in mail and phone calls over the years.)
I still counsel her to not make the payment. It won’t help her credit nor does her credit even need help. But she sees two benefits:
– hopefully stopping the collection letters and calls
– paying something towards what she originally owed as a matter of personal honor.
I’m pessimistic that the collection attempts would stop. I expect them to redouble their efforts if they actually collect money from her.
Nor do I think her personal honor would truly be satisfied since the phone company she owed money to won’t be receiving the payback.
What do you think?
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23 Answers
If it happened to me, no I would absolutely never pay a collection agency. If she wants to pay the actual phone company, she should call and discuss it with the billing department.
Even then, I wouldn’t pay it unless an agreement was reached with the actual compnay that they would send a receipt for the payment and would cancel the debt collection.
Collection agencies are a racket. Obviously the one that has bought her bill is persistent. If it were me, I’d report their tactics to as many local elected officials as I could to get some assistance in getting them to leave me alone.
She owes nothing after 12 years unless she makes a payment, then they can ding her for the whole thing.
In fact if they don’t stop calling after she tells them to stop, they will owe her if she wants to take them to court.
She should report them to her phone company as well if they continue to call her. They will tell her which law enforcement agency to report it to in her state, if that is the next step needed.
No! dont pay this debt! tell her to send a ceast and desist letter to the collection agency, via certified mail. And if they continue to call, take a picture of their call on her caller I.D. and hire a FDCPA lawyer and sue! go to Bud Hibbs website, he has all kinds of info on there
Tell them to produce the contract between her and the phone company that shows she owes the money. Chances are they don’t have it, and therefore no evidence she has a relationship with the phone company.
Comsumerist.com might also have good info.
I like what @XD said! She can also ask them in addition, that if they cannot, they she requests that “they remove her name from their calling list, and reframe from contacting her in the future”!
I’d also highly suggest that she contact Clark Howard (a consumer advocate).
@marinelife Don’t if you are ever in that situation. They will claim you made a payment, and legally if you do make a payment the statute of limitations starts over, so they then can take you to court to collect from you.
Right now the collection agency has no legal recourse and they are just trying to intimidate or trick her into making that first payment.
I just went through this with a collection agency with my brother’s estate. Finally met their agent to take them to my brothers ‘new’ address. Took him to the grave and handed him a shovel.
If it’s not on her credit report, then don’t pay a dime. Once she pays something they can put it back on her credit report.
With these debt collection agencies, any contact with the debter is considered positive.
If you write a letter to them, and explain that you are not the person that owes the money, they will consider it positive contact with the debtor, and continue pursuing the money.
Since it has been 12 years, it should not be on your credit record any more.
Do NOT give them the $99. It will bite you in the ass.
Companies will sell outstanding debt that is past its limitation to collections agencies for pennies on the dollar. The collections agencies buy the debt based on the simple fact that some portion of the population is immediately frightened into paying a bargain payoff rate of just X dollars when they are confronted with scary letters from a “collections agency.”
More often than not they have zero legal grounds to recuperate their money. If they did they wouldn’t keep calling you, they would file suit in a court of law (not threaten to file suit, but file suit).
Your friend likely has no obligation to repay this debt, and as has been stated, if she tells them to stop calling and they continue she can file charges against them.
I recently got a “last chance” letter from a collection agency on a 25 year old debt from my deceased first husband. I laughed and trashed it.
Are you kidding me? She’s in the rut because of your advice. If we don’t pay our debts, they accumulate. She needs to contact them, and agree to only a very very minimum payment plan with an agreed fixed interest. Debt won’t magically disappear unless they file for… dun dun dun. Bankruptcy.
@dreamwolf ; The statute of limitations is up. They have no legal remedy to collect. She is not in a rut, she is being harrassed.
Not true @dreamwolf while she may have a moral obligation to pay the phone company. She has no legal obligation to pay anybody anything on this debt. There is a statute of limitations ranging from 2–7 years depending on the state. And the debt is beyond that time limit.
If the phone company had gotten a judgement against her prior to the expiration of the statute of limitations, it would be a different story.
Response moderated (Off-Topic)
From a practical standpoint, I agree with you. It’s past the statute of limitations and she doesn’t stand to gain (credit-wise) from this.
But from a personal standpoint, I would pay it. $99 isn’t much for settling some kind of personal honor. It’s not paying the phone company directly. But assuming they sold her debt to the agency, it’s the next best thing.
I would research the agency and see if they’re legit. I don’t think a legit agency would continue to harass her if they come to some agreement. Be sure to get it in writing—signed and dated.
Let her weigh what matters more to her…personal honor or credit rating. Or in this economy, it may just come down to whether or not she has an extra $99 to spare in the name of personal honor?
@Nimis The second she pays it they have legal grounds to try and recoup the entire balance, which could be in the thousands.
do not pay them a penny
So far, thanks to all of your excellent responses, I feel justified in my advice to date.
I’ve shared your feedback and have a little update:
To be clear, she wasn’t aware she owed anything until the first letter from the collection agency almost 6 years after closing the account… requesting over $1,000. I still question the legitimacy of this debt in the first place… why didn’t the phone company attempt to collect on the debt during that time? She claims she never got a bill from them. She says she would’ve paid it had she known she owed it before it all got out of hand.
Also, her credit is fine… for now. But I caution her that any activity – such as paying the debt – will then show up as a new negative hit on her credit report.
The collection agency is Asset Collection Corporation. It sounds like they send a letter every month or so with some new settlement amount. And they call her a couple of times a week… but she screens calls with callerid so that’s not really any bother.
Mostly I get the gist from her that it’s just this persistent nagging feeling that she should do something to fix this. But I don’t think – and it sounds like Fluther doesn’t either – that it can be fixed by paying money. Instead she needs to send cease-and-desist notifications.
@robmandu If she feels the need to pay anything she should pay the phone company directly, not the collection agency, and just the original amount due. Then she can send the collection agency a copy of the receipt and the matter will be closed.
@WestRiverrat, my understanding is that there’s no way the phone company will accept a check from her. First, they likely don’t have the records from that far back anymore and the account is closed. Second, they already wrote off the debt. Third, they sold the legal ownership of the debt to a collection agency for “pennies on the dollar” (or at least, Asset Collection Corporation wants us to think so).
That ship, as they say, has sailed.
@robmandu She does have options of what she can do! She needs to look into the information about Fair Debt Collecting (such as what’s found here). The next time she receives a call from them, if she answers, she should request a validation notice of the debt. Once she requests that, they have to send it to her (if they have one) within a set time frame. If they don’t have the proof of the debt, they have to stop contacting her. If they don’t, she could speak with a consumer’s rights attorney and sue them for violating the Fair Debt Collection Act. Each violation (meaning each phone call she can prove or each letter after a cease/desist or after requesting a validation letter and them not being able to provide one) are counted as a finable offense.
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