How Not To Respond To A Col­lec­tion Agency

By Dean Kaplan+

So you are con­tacted by a col­lec­tion agency because you broke your apart­ment lease agree­ment and moved out while still owing two months in back rent pay­ments. The amount the agency says you owe makes no sense to you as it is a lump sum num­ber that doesn’t relate to any of your past due pay­ments or secu­rity deposit. You send them a let­ter ask­ing for a detailed break­out of the amount due and you wait to hear back.

Some weeks later, you receive a cou­ple of threat­en­ing let­ters stat­ing that you owe the same amount as before plus another amount that you can’t fig­ure out. Still feel­ing con­fused and frus­trated, you send them another let­ter ask­ing for a detailed break­out of what is owed and state that you will be pay­ing off the two months of unpaid rent pay­ments by send­ing a check for $20 per month until the debt is paid off. You enclose a check for $20 and send the let­ter and check cer­ti­fied mail to the agency.

The agency receives your let­ter, cashes your check, but calls and leaves you a mes­sage say­ing that they do not accept the terms of your pay­back plan, and to pay the total amount due imme­di­ately or risk a law­suit. You assume that since they cashed the check, they are legally accept­ing your $20 per month pay­back terms, and you con­tinue to send monthly $20 pay­ments under this assumption.

This sce­nario is a good exam­ple of a con­sumer oper­at­ing with­out know­ing the law. There is no law that says that since the col­lec­tion agency cashed the check, they are accept­ing the terms of his pay­back plan. In fact, their cash­ing the check means noth­ing, except that you have made a small pay­ment on the debt you owe. The next step the agency will likely take is to file suit against you. Make sure you keep an eye out for any­thing that comes in the mail relat­ing to a law­suit. If a suit is filed and you do not appear at the court hear­ing, the judg­ment will go against you, and you will be respon­si­ble for what­ever the agency states as the amount owed. Your appear­ance at the hear­ing gives you the chance to argue your side. Once the judg­ment goes against you, then the agency can move for­ward to gar­nish your wages to obtain the amount owed.

Hid­ing in a fort is not the best way to deal with debt collectors

It is never a good idea to ignore a col­lec­tion agency. You did the cor­rect thing when you asked for a detailed break­down of what the agency claimed you owed. How­ever, mak­ing a small pay­ment was a mis­take. In the case of a very old debt, there is a statute of lim­i­ta­tions. These statutes vary by state, so check in your state to ascer­tain what the time limit is. If a debt is beyond the statute of lim­i­ta­tions, and you decide to make a pay­ment, even a small one of $20, this would re-start the clock on the debt, thereby mak­ing you respon­si­ble again to repay the entire amount.Anytime you are con­tacted by a col­lec­tion agency, and you know that you legit­i­mately owe the debt, it is a good idea to talk to the col­lec­tor and attempt to work out a pay­ment plan. Most col­lec­tors and their client com­pa­nies are will­ing to explore options, if you truly are not in a posi­tion to pay­off the debt in full imme­di­ately. Obvi­ously, any repay­ment is bet­ter than no pay­ment at all. How­ever, the agreed to plan must work for both par­ties involved.

The Kaplan Group is a bou­tique col­lec­tion agency spe­cial­iz­ing in large (over $10,000) debt col­lec­tions due from busi­nesses. Founded in 1991, the com­pany has a stel­lar rep­u­ta­tion (A+ rat­ing with the Bet­ter Busi­ness Bureau) and is rec­og­nized as one of the lead­ing col­lec­tion agen­cies for results on large and com­plex mat­ters.