Dear Debt Adviser,
My problem concerns retailers’ credit cards. If I owe money on a store credit card and the store transfers the debt to a collection agency, can the collection agency pursue collection by filing suit? Or is the original credit grantor the only party that can file suit?
— SJ

Dear SJ,
The owner of the debt is typically entitled to sue in court to collect. So, if the original creditor sold the debt to an outside collector, the collector would be within its right to sue to collect. Your case, however, may be different because you owe the debt to a retailer.

Here’s why: Retailers are famous for wanting to hold on to customers, much more so than banks. They see themselves less as lenders and more as merchants who want you to come to their store (virtual or otherwise) and buy their stuff. So often, they will pursue an old debt using their own collection staff or farm the debt out to an outside collector while retaining ownership of the debt. Unless your debt is really old, it may not have been sold to a third party. And you may still have a shot at making a deal with the store.

Here’s what I recommend. Take a close look at your monthly spending and determine how much you can afford to pay each month toward this debt. Then, contact the store and request to speak with a billing or collection supervisor. Politely and firmly explain to the supervisor that you have been a good customer, love their stuff and have had a financial setback. Explain that you have done a thorough examination of your finances and then say how much you are willing to pay each month. If the supervisor agrees, request the agreement be put in writing and sent to you.

Then, make sure you stick to the agreement.

The supervisor may reject your offer and demand payment in full or a monthly amount that you cannot afford. Don’t agree to more than you can manage just to get an agreement. Suggest a six-month temporary arrangement at the rate you can afford, after which you and the store can review matters. Who knows? You may get a raise, pay off another bill or the supervisor may be impressed with your on-time payments and agree to extend them.

If you just can’t come to terms, thank them and then contact a nonprofit credit counseling agency for help. You’ll be assigned a certified, experienced counselor, who will work up a budget showing what you can afford, then present that amount to the creditor. If it meets the lender’s guidelines for credit counseling programs, you’ll be approved automatically. Typically, in addition to a lower monthly payment, you may get a substantial interest rate reduction.

From there, you’ll send a payment to the counseling agency and they’ll make sure it gets to the right place on time, every time. The Association of Independent Consumer Credit Agencies or the National Foundation for Credit Counseling can help you find a reputable agency. Expect a small administrative fee for handling your payments.

If you just can’t pay, consider asking a friend or family member to lend you the money. If you do this, for your sanity and theirs, put in writing how the loan will be repaid and keep to the payment schedule. If you owe a large amount, you might contact an attorney to explore your options.

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