Paying a collector for debt charge-off

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Dear Debt Adviser,
I have a charge-off with a major bank. I called them to ask if I could work something out to pay off my debt, and they informed me that it had been sent out to a collection agency. I then called the collection agency and spoke to a representative to see if there was something I can do to work something out, and they said pay the whole amount in full or go to court. I then explained to the representative that I didn’t make that amount of money in one month, but that I was able to pay it in three payments. Is there a way to work something out or do I have to go to court?
— Freddy

Dear Freddy,
Your guilt is showing! I can tell that you are a standup guy who wants to make amends for his charge-off. You know what you can afford, and you want to pay your debt. The problem here is that you are seeing yourself as the guilty party and that puts you at a disadvantage. Try this on for size. People make mistakes all the time. Banks make loans that don’t work out as planned every day. That’s life. And that’s business.

The representative you spoke to at the collection agency was likely just testing the waters to see if you would fold and agree to pay the full amount you owe by saying the company would take you to court. The fact that you contacted the agency first before it contacted you says to them that you are conscientious and a good candidate to pay the debt you owe. So, they tried to get it all now. You can’t blame them for trying!

I recommend you contact the collection agency again and ask to speak to a supervisor. The company will have started a file on you and the supervisor will know that you contacted them first trying to work out a payment. As a supervisor, he or she will be in a better position to accept your offer to make three payments to satisfy the debt.

Try this approach when you call: Tell the supervisor that you have one-third of the money you owe. Tell him or her that you will have an additional one-third each month for the next two months. Ask where the collection agency wants you to send the one-third you have available. Now the ball is in their court. You have made a good business proposition and they will most likely not want to refuse to accept your substantial payment. If the repayment plan is accepted, be sure to get it in writing from the collection agency and then pay what you owe on time. Keep records of your payments just in case the debt resurfaces sometime in the future.

Should you have no luck convincing the collection agency to accept payments, I suggest that you ask for proof that you owe the debt. The Fair Debt Collection Practices Act mandates that the collector must stop collection activity and send verification of the debt if the consumer requests it. The verification process can take 30 days or so. So by then you will have two months’ worth of payments in hand. This will make it even more likely that they will accept your offer of two-thirds now and the last third in a month. The more time that the collector has the account and it goes unpaid, the more likely the agency will be to see that a bird in the hand is worth two or three in the bush.

I don’t believe it is likely the collector will sue you in court if you are making sizable payments, but should you receive a summons, make sure you appear. Keep records of all your communications with the collection agency, who you spoke with and take them with you to court. Because the collector will have an experienced lawyer, I suggest that you consider bringing an attorney if you can manage it.

Good luck!

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