Can Collection Agency Refuse Payment?

[Reecie]

I live in Tennessee and had a debt for $1000 turned over to a collection agency. When I received the notice from the agency I called to see about setting up payments. They informed me that they couldn't do that and they needed the full amount. My question is: If I offer to make a payment on this debt can they legally refuse it? I have heard that if a creditor refuses any type of payment on a debt that it was automatically considered paid in full. Is this true?
I appreciate any help you can give me.
Reecie

 

[JETX]

Q1) "If I offer to make a payment on this debt can they legally refuse it?"
Yes. They are under NO obligation to accept anything less than the original agreed amount. Simply, this means that you originally had a payment plan and breached it. They do not have to accept any other offered plan (or payments).

Q2) "I have heard that if a creditor refuses any type of payment on a debt that it was automatically considered paid in full. Is this true?"
NO!! NO!! NO!!
That is an old 'wives tail' that probably derived from the requirement that payments must be in 'legal tender' and if refused, the debt MIGHT be found as waived. For example, you can pay this debt (in full) in pennies, nickles, dimes, dollars, etc. If the creditor refuses these legal tenders, the debt MIGHT be found to be waived. However, the creditor is NOT obligated to accept less than the full amount, nor in non-legal tender (horses, hogs, chickens, etc.).

 

[Ladynred]

I'm not as knowedgeable as Halket obviously is in these matters, but I'm in a very sticky situation myself with collection agencies. I've been doing a LOT of reading on what consumers can do where creditors and collection agencies are concerned.

First, collection agencies will use any tactics they think they can get away with, including some that are illegal, to get you to pay the full amount. One thing to note is that in many cases, the original creditor has sold your debt to the collection agency, usually for MUCH less than the original debt. I understand it can be as little as 10 cents on the dollar ! I don't know what happens if they get the full amount out of you when they only paid 10% for it, probably a big pay-day for them !

In any case, there are letters that you can write that will get results, forget calling them, you have no paper trail and no proof of anything (CYA !) Send all correspondence RRR too.

Two books that have been very helpful for me, you should be able to find them in your local library:

1 - "Debtors' Rights" by Gudrun Maria Nickel, Attorney at Law
2 - "The Complete Idiot's Guide to Beating Debt" by Steven Strauss and Azriela Jaffe.

My fiance wrote a letter from book #2 to a collection agency on a $7000 debt, offering a settlement. The agency accepted his settlement for LESS than 5% of that amount !! It does work, but if you offer a settlement, you have to have the cash amount to send them within 10 days of their acceptance. The collection agency never quibbled.. they just signed and returned his letter as he requested, siginifying their acceptance !

 

[JETX]

Just to correct a possible misunderstanding... most debt collectors are working as an agent of the original creditor. They collect whatever they can (often using tactics that are clearly a violation of the FDCPA) and then keep their percentage and forward the remainder to the creditor. In most states, these 'bottom-feeders' have no rights to initiate legal action or to do much of anything except call and harrass you. The FDCPA clearly provides a way (section 805c) for the debtor to tell them to stop all contact. To read the FDCPA, click on:
http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm

There are a few cases (unusual) where the person contacting you is actually the owner of the judgment. This can be done when your debt has been 'pooled' with a batch of others and sold by the original creditor. This 'nother bunch of bottom-feeders are called 'debt purchasers'. They purchase huge pools of debt for $0.03 to $0.06 per dollar. Once purchased, they own the debt and have all the rights of the original creditor.
As an example, here is a link to a 'pool':
http://www.chargeoffclearinghouse.com/\webreports\ImmediateSale.htm

 

[Ladynred]

Thanks for the clarification Halket !

Interesting... .03 to .06 on the dollar ?? wow...

I wonder if this company on my butt over my 2nd mortgage purchased it at a price like this. The original bank (First Plus) went bankrupt itself and no longer exists. The bank that originally 'acquired' their loans was Countrywide, and they are still quite viable, so I'm wondering what the case is now.

I like the 'bottom feeder' references.. they certainly are. Its amazing and almost comical how fast they back down when you start quoting the FDCPA

 

[cdkjm876]

bottom feeders

Hal. You stated that they take their percentage. Can they add a fee on top of the original debt? The collector in question has added $150.00 on top of the debt that I owe.

Thanks.