Dear Debt Adviser,
I have an account that has been charged off to a collector. Of course, the size of the monthly payments they are offering is way above what I can pay. If I send them as much as I can every month, can they still pursue legal actions against me, or will they just deal with it and accept the money?
Slow down, Brandon. I think you are missing a step here and an important opportunity. How did you come to have a debt you couldn't pay and after six months (the usual time it takes a debt to charge off), why haven't you been able to get on top of this situation? Until you can answer these questions, I am concerned that you will keep going in deepening circles of debt and collection.
No one likes to get calls from unhappy complaining people, especially complaining people who want more money from you than you think you can afford. Still, you have a debt and it's not going to go away on its own. So what's the best way to deal with it? Here are some suggestions.
I want you to take charge of the collection process. That means you initiate contact from now on. Begin by asking for proof of the debt in writing. If this debt is old, check your state statute of limitations to be sure it is enforceable. When you do call the collection agency, get the name of the collector and have a short explanation ready about how you got so far behind on the debt. Make a monthly payment offer you can afford. If the collector accepts, document it in writing and don't miss a payment or be late. One broken promise and you may end up in court.
If your offer is unacceptable, ask to speak to a collection agency supervisor or manager and be nice when you do it. Often a manager will have more latitude in making concessions than a line collector. If this doesn't work and you have nothing new to say, don't answer the phone. This will avoid frustration on everyone's part.
I also want you to call your original creditor and ask for the opportunity to make payments directly to that company. The creditor may be willing to work with you because if you come across as organized, sincere and believable, they may save a collection fee and agree to your request. After all, what they really want is for you to pay the bill, no matter how.
If all your efforts fail, the chances are you will eventually end up in court. If this happens, make sure you show up for the court date. Bring a lawyer with you if at all possible. If you do not show up to represent your side, the court will likely grant the creditor a judgment in the amount of money owed plus fees and eventually an order to attach up to 25 percent of your wages. Most people I know would be in an immediate financial pickle if 25 percent of their disposable earnings vaporized.
The collection agency may decide that what you owe is not worth the trip to court. Instead, it may accept your payments or sell your debt to another agency. If you keep sending in less than they ask for and do not receive any additional communication from the company, keep making the payments and keep good records. If you are contacted by a different collection agency, start over with them, calmly letting them know you are willing to pay the debt and suggesting an amount that you can afford to pay each month.
I hope you can use the angst caused by this situation as a springboard to understand how you got in trouble and to begin saving for your next emergency. If you can put the negative energy and worry generated by the collection experience to work for you to develop a positive solution going forward, you will never have to go through this again.
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The Debt Adviser, Steve Bucci, is the president of Money Management International Financial Education Foundation and the author of "Credit Repair Kit for Dummies." To ask a question of the Debt Adviser go to the "Ask the Experts" page.