Getting out of debt...how to handle collectors?

[Iceman26]

I FINALLY got through to the first one, and man, they are intimidating.

 

They're telling me NO payment plans, they can only accept the full amount today, can they do that?

 

I said that there's no way that I was going to pay off the full amount today and have been on hold while they talk to their supervisor for the past 5 minutes...

 

Thanks for all the great advice guys! But I'm stumped about the payment plan thing...

 

OK, you need to tell them that all you have is X amount of dollars. If they won't take it, than there is nothing you can do about it, because you simply don't have the money.

 

Don't let them push you around and bully you. They have no power over you.

[Iceman26]

Make sure that you have a written letter, or that you send in a letter with your payments, confirming whatever payment or payment plan you have agreed with. Make sure you pay them with a money order, and not a personal check, and make a copy of the money order you are sending them so you have proof that you gave them money.

 

They don't care about your credit rating, so if you don't have a letter saying "Paid in Full" or "Settlement Paid" than you. will have a harder time clearing up your credit with the credit bureaus if they don't keep their end of the bargain.

[Dilly]

I am so confused. Can you not go to jail if you don't pay your bills? What will a collections agency do to you? Anything?

[Scout]

Can you not go to jail if you don't pay your bills?

 

No. You won't go to jail. On the other hand, if you purposely write bad checks, you can go to jail. But that's two different things.

[Iceman26]

I am so confused. Can you not go to jail if you don't pay your bills? What will a collections agency do to you? Anything?

 

Around the time of the American Revolution, they had jails called "debtors prisons" where people who owed money they couldn't pay would go.

 

A collections agency can't do anything to you besides ding your credit and call incessantly (I changed my number because of it). However, I had a lawsuit filed against me by a credit card company I owed a significant amount of money to. I ended up settling with them and didn't have to go to court, but if you don't have any money or assets there isn't really anything they can do.

[Dilly]

Warniong - off topic - way distracting and more of a vent!!! I owed like $900 to a hospital that didn't do jack for me when I graduated and had NO MONEY. The stupid jerks kept calling and harassing me and I even wrote the CEO a letter, threatening a lawsuit, since the nurse and fellow (M.D.) were incredibly rude to me in the hospital. OK, OK, I couldn't pee and I had a very good medical reason for it, and I kept telling them to google this condition and they didnt', and kept asking me what illicit drugs I had taken or what mental disorder I had. I was so f-ing pissed off - then, the stupid lousy no good loser of a Emergency Room Chief came in telling me he was going to MRI me. I'm like, hmmmph, interesting. How much $. He said, $1-2 K. I said, whyyyyyyyyy? He said, you might have a nerve issue. I said, how high is that on your differential diagnosis - he said, not very. I said, have you looked into the condition I mentioned? He said, no. I insisted they take that damn catheter out of me immediately and I left. I am still pissed today as you can see. F-ing bunch of authoritative no good worthless money grubbing finger waving assembly line medical health care professionals. IDIOTS! I'm a health care professional and they did not like my backtalk either. I left that place after two hours, three drug test screens, and lots of inquiries about my mental state. I was emotional-yes, I couldn't pee... but I learned three days later after a hands-on neurologic exam by a caring HCP what the dealio was (very personal and physiologic in nature). I hate the staff at Thomas Jefferson Memorial Hospital in Philadelphia. HATE THEM and I don't hate anybody else.

 

Anyway, I called the debt collector back and he only reduced the total to $660. I paid the damn bill and to this day (three years later), regret it. For the record, I don't even do drugs (any illicit meds) and don't usually have physical manifestations of my emotional traumas aside from increased heart rate and weight loss.

[Scout]

I had a similar experience with a rude doctor who only popped his head in the room I was in to remark to the nurse, "Her pain is way out of proportion with her condition!" (i.e., I was being a whiny baby). When I got the emergency room bill, I called the hospital and flat out said I wasn't paying for the doctor's five-second insulting visit, and they could sue me all they want, I would welcome publicizing the fact they were trying to rip me off. And they took it off the bill.

[Dilly]

God, I am so jealous! I am so mad about what happened and apparently lack the gusto to hold out until they worked it off the bill. GRRRRRRRRRRRRRRRR.

[Scout]

God, I am so jealous! I am so mad about what happened and apparently lack the gusto to hold out until they worked it off the bill. GRRRRRRRRRRRRRRRR.

 

Don't be jealous. I have another bill where I'm going through something similar, they refuse to take it off my credit report. And the bill is my insurance company's fault, but they refuse to acknowledge it.

[Dilly]

jealous prolly isn't the right word. but there are some bills that should simply not be paid based on principle. honestly. such as...a $150 vet bill i didn't pay years ago - my dog was autopsied shortly after his death. i arrived at the vet and asked to see the report. the vet had not compiled the report, but supposedly had done the autopsy. he found no cause other than a "small amt of blood in abdoment." i tell you i was tortured by this. i needed to know and had taken the dog there to the vet the day before he died and they told me he was just dehydrated. anyway, a day passed and i decided to tell my then-fiance to get the carcass and take it to NC State's Rollins Institute. he did. they did a double-autopsy. the second autopsy report clearly defined what happened (gastric torsion) and the vet should have known. I see that some thngs get overlooked and don't hold the vet accountable for the dog's death - unfortunate as it was... but that report was incomplete at best and a dishonest attempt to hide the cause of his death - they even suggested to me the dog may have died from "poisoning", the bastards. I got my measely $150 back and i feel good about that.

[BornToResist]

I'm in collections for a medical bill as well. It's ridiculous. I had really bad stomach pains and I went to urgent care because my dr. was closed...the doctor freaked out on me and told me that it looks really bad and he could tell that I was playing it off and it hurt more than I would say...so he told me to get over to the ER or my appendix would burst. What the heck? Anyways I was so terrified so I went to the ER and waited 2 hours in the waiting room. When I finally got back to see the doctor, I told them what I felt and what the other dr. said, and he told me he had to give me a PAP SMEAR and an IV and all this stuff...

 

He left the room and I got dressed and said "no thanks" and left. They charged me $600.00 for waiting and leaving. SO STUPID.

[Scout]

Don't pay this bill. Medical bills are overlooked on credit reports anyway. This is ridiculous, in fact, this bill is outright fraud. There must be some agency you can report this to.

[Dilly]

I've read that if you ever go the hospital, that you need to review your bill carefully, because you tend to get charged for everything even when you deny care. SO STUPD!!! FRAUD INDEED!!!

[Scout]

I know, and we wonder why the cost of healthcare is so outrageous in this country. It's because the hospitals are guaging us. These are FOR PROFIT hospitals...so much for the power of the "free market" to lower prices.

[renaissancewoman101]

I hate hospital bills. About two years ago, I had to go in for ear and nose surgery (try to correct hearing and fix nasal septum). Because of some adverse reaction I had to stay overnight in the hospital. The bill was about 13K, of which insurance paid most of it. Funny thing is when then send you the initial bill, they didnt give me a list of detailed charges. Just some things. IF I wanted a list of detailed charges, I had to call and SPECIFICALLY request it. Sometimes I think hospitals assume that most people have insurance so they can charge whatever they want, because they assume that insurance will pick up most of the tab.

 

No wonder our health insurance system here is so screwed up.

[charley]

I'm in CA too. It would take 7 years for it to be wiped off my credit, and that's not really what I want to do.

 

What do debt councellors typically cost?

 

Free at E since I plan to do this, at least for a while at and later maybe we'll have a question and answer thing, if there's interest.

 

For now, I'll just say this: Whatever you do, don't tell the collection agencies that you now have the money to pay them off in full. The most you should tell them is that you'd like to make a settlement agreement if possible. Then let them suggest a payoff settlement they'd accept. This is your chance to bargain a little. This if the debt is more than 2 years old and less than 6.5 years. If it's less than 2 years old, they probably won't take less than full payment, but you can try. If the debt is more than 2 years old, it doesn't hurt your credit as much as one that is between 90 days and 2 years would. If it's 6.5 years or more old, then they will likely want to settle before it drops off at 7 years. Alternatively, you could wait until the 7 years is up and then it will probably drop off your credit and they forget the debt. However, if the debt is enough money to be worth the paperwork to them, the lender can turn it in again at 7 years and the 7 years starts all over again, according to my mortgage broker. That seldom happens since most debts are not worth enough money to be worth the trouble for the lender to turn it in again. However, you cannot assume something will drop off at 7 years, though it usually it does.

 

The "statute of limitations" people keep referring to is how long it stays on your credit after it was reported to the credit bureaus. However, it is legal for the creditor (lender) or collection agency to report than same debt a second time at the 7 year mark in my state, or some other year mark in other states. Then that debt starts all over again on your credit for that time period a second time. This seldom happens because most debts are not for enough money for most lenders to do the paperwork to report it again, but they could if they wanted to. Hopefully you aren't important enough for that type of attention.

 

More info will be in the thread I started.

[charley]

The cheapest they would go was 20% off which was good...but they still refuse to take payment plans. They let me get off the phone and everything.

 

Their primary motivation for accepting less money to settle is that you'd pay that amount immediately. If you can't do that, then you're looking at a payment plan for the full amount. I don't think you can have it both ways. I mean that I doubt they'd agree to take less total money and a payment plan. Why would they agree to that? I wouldn't agree to it if I was them.

 

If you can prove me wrong, then more power to you. However, what I say above is typically how it is.

 

I'd suggest you either aim for negotiating the least total amount possible, but paying it off immediately. i.e. - negotiate a reduced amount they will accept for payment in full and pay it off right then as payment in full; or negotiate to pay the full amount in payment arrangements that you like. The reason I suggest these two choices is because they are realistic goals.

 

The ideal thing would be to figure out how many you can pay off immediately and then negotiate the best terms you can for a discounted payoff. Then pay those off at the discounted amounts you negotiated. Then negotiate payment plans for the rest of the debts that you did not have the money to pay off, but be aware that you will likely still be on the hook for the full amount on the ones with monthly payment plans. If you later get another lump of money, repeat the above process by negotiating payoff amounts for as many more debts as possible. Every time you get a lump of money, you are in a position to negotiate a payment in full deal at a discounted amount.

[charley]

I would also suggest that you get the agreement in writing before you pay and a receipt when you pay.

 

When filling out a check for your final payment on a debt, see the "Pay to the order of" area of the check. Just above it, write "Payment in full for account (account number here)". Also, see the "For" area of the check. Down in the "For" area write "Final payment in full of account (account number here)". Then, when they cash that check, that check becomes a signed legal contract that they've agreed to accept as final payment in full of that debt. If they don't sign, but instead use their company stamp, that stamp still counts as that company's signature. So once they cash it and you get the processed check back from the bank, you then have a signed contract proving you've paid in full and proving they agreed to accept it as final payment in full. Of course, it's ideal to also get them to agree in writing in advance to the terms. Also ideal to get a receipt when you pay. But if worse comes to worse, the cashed check by itself can serve as contract, agreement, and receipt. Don't lose that cashed check.

 

That check is a contract because it's signed by both parties. Hang on to that check in case you ever need proof that you paid in full.

 

The check is legally all the contract you need. However, I'd still recommend getting them to fax you a written agreement in advance before you pay and a receipt after. It just adds to your evidence that you've paid in full, but the cashed paper check is sufficient by itself.

[BornToResist]

Thanks for all the information, charley!! Very useful. I'll be checking out your other post too.

 

What I found, is that sometimes you CAN bargain with them AND set up a payment plan, as long as you give them post-dated checks. They no longer take you at your word or anything, so you gotta give them something to go to the bank with.

 

But I FINALLY settled with all those pesky collection agencies and I will be completely debt free by the end of February! I still have a couple medical bills to settle, but they are giving me the run around and they are either small amounts of money, or will be re-submitted to my insurance.

 

My slate is clean! I feel so great! Thanks everyone for all your help!

[charley]

Overdue medical bills are not overlooked by credit agencies or credit scores. However, overdue medical bills count less against your credit than an overdue bill of any other type of the same amount. Why? Because it's a matter of the credit bureaus and lenders looking at your credit history and trying to determine your character and trying to take into account what type person you are. Lenders, such as a mortgage broker (buying a home), will overlook some credit damage due to medical, but their tolerance is limited. Your credit score counts medical at a reduced penalty, but it still hurts you. It does count against you, but counts less against you than other types of overdue debts.

 

If you have an overdue medical bill, that does not necessarily indicate that you are an irresponsible person. It might just indicate that you have been sick. thereforeeee, they aren't going to count that as heavily against you as they would if you had an overdue credit card bill of equal amount.

 

The type of overdue bill they count least against you are medical bills. The type of overdue bill they count most heavily against you is a late or unpaid house payment or rent because that indicates either severe irresponsibility or that you are financially going down the tubes.

 

 

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If you lack sufficient money to keep all bills current and payoff all overdue bills, then you need to prioritize and strategize.

[charley]

Hi BornToResist. It's great that you got your debts paid off. Now, how would you like to get that late payment history off your credit history? Want to also raise your credit score a lot?

 

You've accomplished one step, which is you got the stuff paid off and I'm really impressed with how well you did at that. However, there's several more things for you to do, if you want to repair your credit history without having to wait many years for late history to drop off. Also, many other things to do to raise your credit score.

[charley]

You know, I think as a bargaining tool, I'd try sending them a check for a reduced settlement and write the payment in full stuff on the check.

 

Then, if they cash it, you're done with that debt and it's legally paid. Even if the collection agency is smart enough to realize what you've written on the check, they'd be very tempted just to cash it anyway and take that as a reduced settlement because a bird in the hand is better than two in the bush.

 

If you try this with a collection agency, I'd try making the check for 60% of the balance owing, but writing all the payment in full and final payment stuff on the check. Even if they're smart enough to realize what the legal implications are of cashing that check, they'll be darned tempted to cash it anyway and take 60% now as payment in full.

 

If you're a gambler, then try this with a check for 50%, but they might not swallow that. Can't hurt to try though.

 

If they won't accept the above, then perhaps they'll make you a counter offer. Perhaps you should start the process in the first place simply by asking them if you can work out a reduced settlement, then see what they offer and where that goes. I can't really go into bargaining here to much because that would be a thread all to itself.

[CharlesF]

Keep in mind that when you don't pay your bills, your creditor gets screwed.

[charley]

Keep in mind that when you don't pay your bills, your creditor gets screwed.

 

True. If a person can pay their bills, they should. However, sometimes people have catastrophic medical events, or other unexpected disasters, or a divorce, or other situations that make it impossible to get cleared up, except by doing some negotiating for a reduced settlement that they can pay, or other techniques I've described.

 

A settlement for a reduced amount (discounted settlement) is sometimes the only option a person can do.

 

A check for "payment in full" of a discounted amount (reduced amount) is a powerful bargaining tool.

 

Likewise, credit challenges to late payment history AFTER it's paid off makes good sense.

 

The business world, of which I'm a part of, thinks the system is all great and dandy when they understand it and the public doesn't. Well that isn't fair. I hope I've leveled the playing field by showing the public how the system works as I've seen it from the inside and outside. My conscience is totally clear about providing credit advice, and advice about how to bargain with collection agencies. I'm proud of it.

 

And by the by, I paid off all my back medical bills (broken neck) in full, except the two they wouldn't take my money for because they'd dropped off my history due to being to old. I still drove there in person and told them the amount I knew I owed. I tried to get them to take the money, but they wouldn't. So I paid all my bills off, except the two where they refused to take the money and they told me to forget it. So my conscience is totally clear. Then I restored my credit history and score. So I know this stuff both as a business person of many years and as a debtor whose been through tough times and come out the other side smarter, wiser, and stronger.

 

You might say I'm a liberal conservative, or a conservative liberal. An oxymoron you say? We used to call ourselves moderates, but where have all the moderates gone? Long time passing. Here's a moderate right here. A moderate is another word for sane and fair. I'm conservative enough to understand the credit system and liberal enough to share this knowledge with the public.

[charley]

Also, I might add that the creditor is better off if a negotiated settlement is reached and they get that payment in one lump as compared to drawn out payment plan.

 

Due to the time value of money and hassle factor, a lump sum negotiated settlement may be in the best interest of the creditor and collection agency. The evidence of the truth of my statement is that they often accept and agree to negotiated settlements. They agree to them when they are in their best interests. So these agreements benefit the creditor, collection agency, and the debtor when compared to the status quo.

 

BornToResist also proved that it's possible to negotiate a reduced settlement combined with a payment plan. That's a new one to me. I always heard it was either a reduced settlement or a payment plan that you can negotiate, but she proved that both are possible in combination. The collection agency agreed to accept what they negotiated with her because it's in their best interest to do so because she's doing the best she can to pay them off. The settlement makes it possible for her to pay them off.

 

So I don't like the implication someone made in an earlier post that she's screwing her creditors by negotiating a settlement. That is simply not the case. She's doing the best she can given her circumstances. The collection agency was apparently satisfied with the negotiated arrangement since they accepted it. The collection agency speaks for the creditor because the creditor signed over their negotiating rights and collection responsiblity to the collection agency. So if the collection agency is satisfied, then the creditor must be to since they gave the collection agency the authority to deal with debt and debtor.

 

The reason she had to ask for a payment plan is obviously because it's not easy for her to pay off the debt, even AFTER negotiating a reduced settlement. So she is not trying to screw her creditor. That is not her intent. Her intent is to pay it off and that requires her to get the best arrangement possible.

 

As for any advice I gave, it is a tool. I hope people will use that tool in a responsible manner in combination with doing their best they can to pay their debts responsibly. But just like a gun manufacturer, or car manufacturer, I cannot control how people use what I've made (advice) and with what intent. My intent is to be helpful to the public. I hope those using my advice will do so with sincere intentions to pay their debts as best they are able. That may very well necessitate them to bargain with collection agencies, and if so, then do it.