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.
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.