ADVERTISEMENT

The ugly side of debt collection

What to do when collectors won't accept monthly payments

By Todd Ossenfort

The Credit Guy
'The Credit Guy,' columnist Todd Ossenfort
The Credit Guy, Todd Ossenfort, is a credit expert and answers readers' questions about credit, counseling and debt issues.

Ask a question

'The Credit Guy' archives

Question for the CreditCards.com expert

Dear Credit Guy,
I received two court judgments against me. These judgments are about 5 years old. I could get no information from my creditor. I received a phone number for their collection agency. The collection agency refused to allow me to make payments in order to pay off the outstanding accounts. The two outstanding accounts amount to about $4,000.00. I offered $200 per month in payments. I don't understand their all-or-nothing decision. I am on Social Security, and there is no way they are going to get a better deal than I offered. If I could contact a decision maker with my creditor and explain my case, would I get a positive response on this matter?  -- Fred

Answer for the CreditCards.com expert

Dear Fred,
Congratulations on trying to do the right thing and pay what you owe. It is unfortunate that the collection agency is unwilling to work with you to accept monthly payments. This is an exception rather than the norm. If your only income is your Social Security, it sounds as if you are correct in believing they will not get a better deal than what you have offered to pay monthly.

The fact that the judgments are 5 years old tells me that it is very likely the collection agency already knows that you have no assets to make good on the $4,000 that you owe. If you did, the collection agency would have used the judgment(s) to secure a wage garnishment or to place a lien on your personal property.

If you do own a home or other property I'd check with your city and county tax assessor's office or other county records departments to learn whether there is a lien against your property. State and local laws vary across the country, so a lien could have been placed without prior notification to you of the action. Should a lien have been placed on your property, it will be more difficult to sell or refinance the property without satisfying the lien first. The lienholder cannot, however, force a sale of your property.

The reason the collection agency wants you to pay what is owed upfront and not in monthly payments is that they have very little invested in the debt -- typically pennies on the dollar -- and do not want the hassle of monthly collection. They would much rather settle for less than the full amount and get it all at once, than receive a small amount each month.

You could attempt to contact your original creditor, but once the amount owed has been sent to collections, the creditor does not keep the records and is not usually interested in collecting the debt. In most cases, the debt has been sold to an outside collector and the original creditor has charged off the balance on its ledgers and taken the loss, thereby removing your account and the debt from its radar screen.

My advice is to send a written response to the collector by return receipt mail that you are willing to settle the debt by paying $200 per month until the debt is paid and if that is not acceptable, you no longer wish to be contacted regarding the debt. The past due accounts and judgments will come off your credit report after seven years, and you can sleep well at night knowing you did your best to pay what you owe.

Take care of your credit!

See related: Take these steps to avoid wage garnishment, Know your rights: Debt Collections Practices Act, Debt collection sample letters, TEXT

Meet CreditCards.com's reader Q&A experts

Does a personal finance problem have you worried? Monday through Saturday, CreditCards.com's Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.

Published: May 25, 2009


Join the discussion
We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.




Follow Us


Updated: 09-25-2016


Weekly newsletter
Get the latest news, advice, articles and tips delivered to your inbox. It's FREE.


ADVERTISEMENT