Negotiating and settling debts that are past due at all stages of debt collection is thoroughly discussed throughout this site. With all of this detailed information and discussion, don’t forget to plan and prepare for one of the basic elements of settling your credit card debt. All successful debt negotiations have two things in common…a documented agreement (covered in the previous section) and paying the settlement agreement.
NOTE: This post is part of our Debt Settlement Guide. If you’ve missed any of the previous content, or would like to start at the beginning, please see the links at the bottom of this page.
At this point, it should be well understood that the main ingredient to completing a debt settlement program is having the money available to complete the lower pay off deals as they are negotiated. There are recommended ways for establishing and fortifying your “war chest” of cash resources to fund the debts you’re settling. The focus of this page is the type of bank account you should use that your funds will be deposited in for the purpose of, first accumulating and holding money, and later used to distribute payments in satisfaction of your debts that are negotiated.
There are two recommendable ways that these accounts have been traditionally set up – “self saver” accounts & Escrow Accounts.
Using Escrow Accounts for Debt Settlement
Third-party escrow services are the most common type of account used by professional debt relief service providers. When an escrow account is set up correctly, your money is deposited into a separate FDIC insured account in your name. You add money to the escrow account every month in order to build up your “debt settlement war chest”. Pushing money into your escrow account is typically done through an ACH or auto-draft on the same day each month. You can usually add additional money to your escrow account (like from a tax refund or other source), anytime.
The amount of money in your escrow account will build over time. When there is enough in your escrow account to fund a targeted settlement with one of your creditors, the professional you hired will begin serious debt negotiations. When an agreement is reached and documented, the money in your escrow account is used to fund the settlement. You will continue the process of saving and sending money to your escrow account each month until the next settlement is reached. You then simply wash, rinse, and repeat.
If you’re using a typical debt settlement company to settle your credit card debt for you, virtually all of them will use an outside third-party escrow company for warehousing your money that they will later use to fund the settlements they negotiate for you.
Debt settlement attorneys may/may not use an outside escrow service for holding your money until settlements are reached. Attorneys will often use segregated trust accounts for holding client funds. Attorneys are held to a fiduciary standard when dealing with client money, so escrow accounts are not necessarily something that will be offered to you.
A key to the escrow account is that you can request your money be released to you at anytime. A legitimate debt settlement company will only recommend escrow accounts that are set up in this manner. There are monthly fees associated with using most escrow services.
I have always looked at outside third-party escrow accounts as an unnecessary expense that is passed on to the person hiring a debt settlement company. But I also recognize the efficiency that a debt settlement company needs to do their job, and escrow accounts set up in your name at an FDIC insured bank provides many efficiencies for settling debt.
Using Your Own Bank Account to Pay Debt Collectors
A “self saver” account is just a standard checking account set up independent of anyone, in your own name, and often at a local bank branch. It should be an account that offers you the ability to fund settlements using check by phone, and ACH types of payment. You should open an account separate of the checking account you use to pay your monthly bills. Similar to how you work with a debt settlement company, or settlement attorney, you would add money to your account each month and allow the money to accumulate.
When settlements are documented and accepted, the payment in satisfaction of the now-reduced balance will be drafted from this account. Fees for this account, if any, will be what are charged by the bank you open the account with.
Because CRN has primarily advocated DIY debt settlement, we have always promoted self saver accounts as a way for you to save up money over time in order to pay collectors as they are negotiated. When our members ask for a professional to do the negotiations, we have had no trouble working with our members using the separate self saver account approach. You save on escrow account fees, and your money is in your absolute control at all times. This way of providing professional debt negotiation also assures that you see every agreement to settle in writing, and every settlement is discussed with you before it is accepted and paid. We find this to be the better way of providing debt settlement services, but we are one of only a few companies that operate this way. It may be less efficient for us, but it saves you money, provides the most protection, and offers the most transparency of what is going on with your settlements.
There is one type of person that will benefit more from using an outside escrow account service. If you cannot trust yourself with the money you’re saving to settle your unpaid bills (even though you can withdraw funds from your escrow account anytime), the separation from being able to hit the ATM, or write a check, can make a difference.
Why Pay Collectors Through a Separate Bank Account
There are benefits to using a separate account to pay collectors (settlement agreements). Some of the benefits are hard to overlook, and some are just not as critical of a concern as they once were. Some of these benefits are:
- The money is not mingled with funds used for regular living expenses. The tendency for most people will be to leave money in this separate account untouched except for its intended purpose – funding settlements.
- There is less of a temptation to use the funds for a discretionary purchase.
- Settlement funds on deposit in the account can be limited to the amount needed to fully fund one deal at a time which helps avoid problems if a transaction error were to occur that would have otherwise caused you to run short of money to cover other checks you have written, or auto draft payments for bills. Transaction errors are extremely rare, but leaving nothing to chance is just good planning.
Your set-aside account should not be opened at a bank with whom you have an account you will be negotiating a settlement with. If you currently have either a checking or savings account with a creditor you are behind in making credit card payments to, move accounts. Having your accounts, whether for personal daily use or for set aside funds, at a different bank is imperative.
A bank, typically, cannot see your balances, deposits and transactions with another bank. They can see balances, debits and deposits you have with accounts internal to their own institution. Negotiating a reduction in balance that you can afford to pay is complicated by objections that the creditor may raise if they can see that you have more than what is represented as your ability to fund on deposit in an account with them. The bank is likely not going to weigh whether some of those funds are for rent or a mortgage payment, and will not really care if some of the balance they see on deposit is earmarked for a different creditor you have fallen behind in paying.
The best thing to do in order to prevent these kinds of objections from even occurring is to have all accounts currently in use at a different bank. If you would like to keep a checking account open with little money on deposit, until any past due credit card balances are settled with that same creditor, that’s okay. You can go back to using that bank after satisfying your settlement agreements. It is sometimes a matter of how convenient that bank is to your work or home, or even the friendly tellers at a certain branch, that you’ll miss.
One key to experiencing as smooth a debt settlement process as possible will be your continued funding and the safe holding of the money you will need to meet all offers to settle accounts for less than the balance owed. Placing those funds in an appropriate escrow or self saver account, as outlined above, is recommended.
This completes our Debt Settlement Guide blog series. If you missed any previous sections of the guide, please see below. If you’re looking for something specific that wasn’t covered within the guide, please use the search bar to the right, see our Debt Settlement FAQ, or post in the comments below for dedicated feedback from Michael or shared experiences from our readers who have been there.
This Debt Settlement Guide includes:
An Expert Guide to Credit Card Debt Settlement
How and Why Banks Settle Credit Card Debt with You
Types of Accounts to Include in Your Debt Settlement Plan
Why Settling Credit Card Debt is Like a Race
How to Settle Credit Card Debt Quickly
How to Talk to a Debt Collector
How to Negotiate Credit Card Debt Successfully Yourself
7 Largest Credit Card Banks and How They Settle Debt
Get Debt Settlement Letters and Agreements from Collectors
How to Pay Debt Collectors After You Negotiated a Settlement (you are here)
Hi Michael,
I have let several credit card balances get away from me. I did not have the money to pay. They have been charged off and the total sum is around 70K. I have been saving and my intention was to settle the debts one by one on my own. I think at this point almost all of them are with outside collection agencies. Do you have a resource that details how to negotiate with 3rd party collectors? Thank you very much.
You can schedule a call with me here: https://calendly.com/debtbytes/15min
I can offer some guidance on the call.
Hello again.
I received a call from an aggressive and annoying person, demanding that I verify my date of birth and social security number, etc. They said they are from “Admin Recovery”, which seems to be a collection agency. I did not provide the info. He provided his name and contact information, and told me to contact my bank top verify, and gave me that number.
They were referencing a credit card that I had reached a settlement agreement on, and which I paid in a lump sum by phone at the time of the agreement. The card shows on my informal (web based) credit report as being closed, with a $0 past due balance, and remarks of “Payment after charge off/collection”.
The bank did take a long time to process the settlement. I wonder if it somehow got sent to collections during their processing of the settlement (which was made in the last month prior to charge off).
Is there any action I need to take? Or should I ignore this clown? If he continues contacting me, what can be done?
Thank you very much.
I would call the bank you negotiated with and verify the account is settled and that the collection placement was made in error. Let me know what comes of that call if anything odd.
You are correct. The bank made the collection placement (charge off). This is in spite of the fact that a settlement agreement was reached and the full settlement amount was paid on the spot by phone (which was part of the deal). It did take two weeks from that time for them to send the settlement letter in the mail. The dollar amount indicated on the letter was the exact amount of the payment that was already made. Thirty days after the settlement letter it seems they sent it to outside collections (looks like they never applied the payment to the settlement). The bank says they will contact their internal collections department on the matter (presumably to have it withdrawn from the collection agency). I did inform the outside collection agency of the situation (so that they will not keep calling me).
I was concerned from the start about the payment being applied properly to the settlement. When the account kept showing as “open”. with my lump payment recorded and the remaining balance owing, I repeatedly called the bank, but they simply said to wait and that it was being processed.
Additionally, even once it is corrected, I am stuck with additional months of missed payments on my credit report, as well as it being reported as a charge off, when in fact it was settled and paid prior to charge off. Can that be corrected?
It can take several banks 2 billing cycles to get the credit reporting of the settlement reflecting correctly.
I would not be caught up on whether the account charged off or not. It would likely have little to no impact on the credit reporting. Nor would an additional 30 days late on an account that already went past 90 days late. See my video for more on debt settlement credit reporting and charge off.
Hello again.
I have now been contacted again by Admin Recovery. It is going on six months since their last contact.
As can be seen in my previous correspondence, I had contacted the internal collections department at the original bank back in May and they were supposed to correct the issue. Apparently they charged off the account (in error) despite the settlement having been paid in full in a lump at the time the settlement was made. I also contacted Admin Recovery to inform them of that situation and they seemed to stop contacting me (though I constantly get missed calls from bogus numbers).
Why would they be contacting me again now six months later? One would assume it is still showing in their system as an account for collection that had been charged off to them. Or could they simply be fishing around trying to see if people would make a payment that is not owed?
It is disconcerting to be dealing with these people again. I refused to verify my identity on the phone call. Is there any action to take? In the meantime I am simply ignoring them, but I do not want to put up with annoyances forever, especially for an account that was supposed to have been settled already.
Thanks!
I want to be sure I understand what happened most recently. You did pick up a call and identify that Admin Recovery is who is calling you, or you have not picked up a call from them since earlier this year?
Yes, I picked up a call from Admin Recovery just the other day.
I had to ask who was calling and what organization they were from. I do not like people calling ME and asking questions and asking my name without first identifying who THEY are.
The lady was saying “I need you to verify your identity so that…” etc. etc. I refused to verify. She was annoyed but could not really continue with anything.
That account never should have been charged off (it was settled prior to that) and it is of course difficult to go back and fix that.
Thanks. I would consider filing a complaint with the CFPB against the collection agency. They should not be trying to collect on a paid account.
Charge off on a settled account does not really mean much. Watch my video about r9 charge off credit reporting.
I called the bank and after a long wait, and multiple transfers, they confirmed that the account is settled in full. They are going to send me a fax stating as much. Should I proactively pass this on to Admin Recovery? I would certainly file a complaint if they do not cease contact with me. I am not sure if they are making multiple phone calls, because I only picked up the one call and the rest are junk calls with spoofed phone numbers. Thanks again.
I just recently settled with my third and final creditor (TD Bank). They were the most difficult negotiators, but also the most straightforward and least annoying of the banks. After their initial offer of 65%, We had been stuck at 50% for a long time, and after getting in the last stretch (150 to 180 days past due) they started going UP again with their offers to 60% or so. I said, no way and offered a flat amount between 40 and 45% as a lump payment right then and there. I said there is only so much money to deal with, the other 2 creditors have already agreed to better deals, and if I can’t get all 3 on board for the deals I am not paying anybody and will take more aggressive debt relief measures (implied bankruptcy). They did finally agree to 45%.
The thing that stressed me out is that would not send a written agreement, and insisted that the phone agreement was recorded and was sufficient. I made a lump payment on the spot and it took forever (and three phone calls in between) to get the settlement letter. It was unnecessary stress and I should have just said that I will send the payment when they fax or mail me the settlement offer. It is just a reminder to maintain control of the situation to the extent possible.
It looks like it is all working out, but the account is not even showing as closed yet on the credit report. The other two creditors showed the updated account status almost instantly. I suppose I just wait at this point.
Hello Michael, I had a business credit card with suntrust bank that was sent to first financial asset management collections.They have sent me an offer to settle a $14,088.61 debt for $4,200.00.The letter says the offer to you is as follows: Make a payment of $4,200.00 to our office no later than 10/15/19 and we will consider this account as settled in full and your obligation to suntrust bank will be considered satisfied. Are these settlement terms enough or should i ask for another letter? Thank You.
Yes. I followed all these steps as planned. I contacted them. Agreed on a settlement. Received a letter stating all the information needed and then proceeded to make the payment… it is now settled but they are telling me they can’t release the “paid in full” letter to me for me to send to the credit bureaus for 30 days from the payment…
Is that legal? Is that common? This is my first time having to deal with a judgement like this before.
Yes, it is common to have to wait like this, and more so if it is a judgment. I typically see judgment satisfaction finalized within 60 or so days, so 30 means yours is moving fast.
Do you need to get a home loan through or anything like that?
Yea, I’m working on getting a home loan and needed to settle the judgement first. That was the only thing holding me back.
Talk to your loan officer about making progress on the loan and give him/her all the paperwork you have and proof of payment. They will get as far as they can hopefully, and then if the title company is waiting for the notice of satisfaction to be filed with the court, it will be the final hurdle to clear.
Hello Michael,
This website has been a very useful resource in helping me determine what my next step is in relation to my financial situation. I am currently dealing with $74,000 in credit card debt, a $14,000 auto loan, and $35,000 in student loans. I have a good income, but I just cannot keep up with the payments on everything. My options are chapter 13 bankruptcy, debt settlement, and credit card hardship programs. My question for you is, what are the advantages of debt settlement over a chapter 13 bankruptcy? Are you able to negotiate a retroactive positive account credit history with creditors during the debt settlement process? I ask this question, because I recognize that I will need to be able to purchase a new vehicle and a home in the next few years, and I do not want to go down a road that will prevent me from doing these things entirely.
Check out this post about the impacts to your credit reports and access to financing from debt relief choices you make today. Everything you are asking about, and more, is fully answered there.
Hello Michael,
I owe 15K in credit card debt to US bank. I am recoverng and unable to work. Last payment I made was the first days of Dec. 2015. Counting from the first missed payment in January 2016 to June I am now 150 days late. Please advise if I should wait to the 170 day to settle this debt
Around May 20 and June 1, 2016 respectively, I spoke to 2 collection clerks at US bank. Each asked me if I could pay $300 towards the unpaid due of $1500 . I said no. Each asked how much I had in checking and savings. I said about ,,$150 in US bank and ,„$70 in other bank. Each asked if I had a retirement acct. I said an IRA with,8K that I will use as collateral for a loan for the settlement clerk 1 said I could qualify for. For the record, Michael, the balance in my IRA is $1000 more than the estimated 45% of the cr. card debt. Was this extra $1000 reason for not qualifying me for the settlement?
I will be withdrawing this 1K tomorrow for living exp..
Next they asked how soon I could have the funds I said next day. Then they said that I needed to answer a few questions to see if I could qualify THIS TIME. I flunked the test in May and also in June. The questions they asked were: How much income I get? Zero. For Im not working. How much is your rent or mortgage? ,$800. which I did not pay last month. Utilities And cell? 63.. Car payment? Zero. and gas and home and auto insurances and food and internet and cable and misc.? No internet and no cable nor phone $500. Any loans? Zero.They insisted on the loan question. Other cr cards? Yes. Min pay $50 to ea. 2. I said I stopped paying a third for $140+. .I was told I did not qualify. I said I was attempting to settle my debt but if they were unable, I would have to let the acct. be sent to outside collections. At that point I was told to keep trying, at the next due date that I might succeed. and was given his direct line. I did not call. .
After reading your website 3 times I gathered that I flunked the test because my credit report will not show my past due cr card for the unpaid cr card $140+ until the end of June. My cr score is about 620 despite my not paying US bank. I read in this blog that someone showed delinquencies on all his cr. cards and that gave him an option of settling for less ( thid person was at the stage of outside collectors). Michael, I intend to settle other cards also but I dont have the funds yet…. so I kept them current. Is there a chance US bank will disqualify me a third time for a settlement and send me to an outside collector? I included the questions and my answers so you can suggest where you think I’m failing. I did not say Im borrowing from a friend for my living expenses. and they did not ask. Too lenghty, but hope helpful to others. Thanks a bunch!!!
Try to get US Bank to accept your offer when you are 170 or so days late. If you cannot get the deal done then, you are likely going to have to do that with the first agency to get the account. If you need help feel free to call in at 800-939-8357, option 2 rings to me.
Michael,
I am thinking about selling my home, transferring my equity to a bank that I don’t owe money to.
Will the banks such as Chase, Citi, BoA etc be able to see my balance?
I am sure they will know that I have liquidated my property. Does this change the settlement process?
Or is it smarter to borrow money first from family and friends to settle, and they sell my property to pay them back?
Those banks only have visibility into accounts you have with each of them individually. It would violate privacy laws for them to see into other banks accounts.
If it were me, and depending on how much you could borrow from family to fund the settlements prior to listing a home for sale, I would do that. Debt collection is much more sophisticated than people think. Just having a home listed can create additional hurdles when you are trying to negotiate the best settlements.
If there is no other alternative, it is what it is, but savings being impaired is a reality in a lot of files that I see like this.
Hello Michael , my husband passed away Dec 30th 2014 I have 20 credit card with 60, 000 spreak out over them all the most being 8 thousand on one…..at the same time I care for elderly people in my own home one at a time ….the lady I cared for died right after my husband did in January, now I have no reasonable income other than SS with is not much . I do have equity in my home about 200, 000 there is no way at this time I can pay those cards I will barely be able to pay my ordinary bills ….what are they capable of doing to me on unsecrued cards?
Your biggest concern will be being sued.
What state are you in?
What do you estimate your ability is to save up money each month in order to settle accounts one by one as the opportunity arises?
Hi there,
I have a few questions. I owed kohls department store about 885 on my credit card. I was no longer able to pay it, fees from kohls and different collection agencies have added $600 to that. Will anyone ever settle for the principal amount? It’s been about 11 months of non payment. What percentage of the total bill , will credit cards typically offer after almost a year? Do you think its safe to pay over the phone with a debit card?
Thank you in advance 🙂
A realistic target for settling a Kohls account with a debt collector is around 40 percent of the current balance owed. That target can move up or down depending on the circumstances, and who the debt collector is that you are dealing with. Do you know the name of the debt collector handling your Kohls card right now?
If I negotiated the deal with the collector, and had the settlement terms and agreement in writing, I would not have any trouble paying a legitimate collection agency over the phone, or using my debt card to pay it.
If it did not have everything in writing, or a recording of the phone call with the collector where all the details of the settlement were discussed openly (and where I told the collector I was recording and why), I would not use any form of payment, debit card or otherwise.
Michael,
My husband passed away 7 weeks ago. It is a extremely difficult time. We live in WA state. There are three credit cards (Lowes, Discover, Cap One) in his name. I have chosen to not pay these and my thought is to call them after delinquent and offer to settle for 50%. I just can’t afford to pay the full balance on all of these accts, with the loss of my spouses income and all the medical bills that have been accumulated. I also have a Cap One CC in my name and was told by them once it is late I will have a better chance of a settlement. I don’t want it to get to the stage of suing. Is my thinking on this a good strategy? Can they put liens on my house or seize my assets?
My next question is all the medical bills. Can they put liens on my house or seize my assets?
A – Sorry for your loss. It is true that you typically have to be between 90 and 180 days late with payments to settle with Citibank (Lowes account), Discover and Capital One. You do have a realistic expectation for settling at 50%. It is a process, but one that can be managed.
Liens and levies on unpaid credit card debts only happen after you are sued and a judgment entered. The sooner you settle these, you remove that risk. Ideally you will want to settle before 180 days on nonpayment to eliminate the risk.
As far as the medical bills go, what are you looking at here? What amounts? Who to?
If the CC accounts are in his name? Why not tell her to send death cert. They can’t come after her for that debt, as she isn’t part of it.. I know this is an old post! But this happened to my brother. His late wife took out credit in her name only. Unknown to him! Step-Daughter sent copies of death cert to them. He never heard from them again!
Thanks for this article! You’re FABULOUS! Here’s my question:
I am going to get all my money out of Chase before negotiating. I just opened a new account at a bank where I don’t have any credit owed. That will be my bill paying bank.
Should I also open ANOTHER account somewhere else to use just for the settlement process I’m about to embark on?
Mary – I am big on having a single account dedicated to paying the settlements you negotiate. For convenience of use, real time transfers from the comfort of your home, and simplicity of obtaining documentation, I normally suggest having the set aside settlement account be at the same bank you have your bill paying account with. This would mean having two accounts at the bank (not mingling settlement savings with normal checking account).
Hi Michael,
I have not opened a separate account for a one time lump sum payment. The attorney’s office of Midland Funding wants a payment of check by phone today. Is there concern that they will try to access my bank account again on their own at a later date? And if that is the concern, should I close my bank account after the payment is made and move my money to a new account?
SV – Making a one time payment on this settlement using your only account should be fine. If I were in your shoes, I would not close that bank account after funding the settlement. If you have more settlements to contend with in the future, open a new account to manage your way through those.
This comment has been moved here from the ongoing comment discussion about settling a debt when sued.
“Hi Michael-
Is it common or uncommon for people to use pre-paid debit cards to make debt payments? I just keep worrying about the collection company misusing my bank account. Again, I don’t know much about pre-paid debit cards. Would the only drawback to using a pre-paid debit card be that you aren’t able to have “proof” of payments being made, whereas with a bank account you’ll have that proof?? I just wish they’d accept money orders. Is there any other way of payment that I could request they accept that doesn’t put my bank account into their hands?
Thanks for your help!–DMG”
Donna – I moved this post from here over to this page as the topic more closely relates to our comment exchanges.
In my experience it is far more common to make payment arrangements with a bank account. You appear to be vacillating on this a bit. I understand your hesitations, all I can offer you is the benefit of my experience.
I have been helping people resolve debts for a while. I have personally worked many thousands of files. My company and the people I have worked with thousands more. In all of that, I have only seen a handful of instances where there was a payment discrepancy. They were not fun to overcome, for the service provider, or for the consumer. Some of the resolution involved a phone call and a fax and that was it. A couple of them were a bit more involved than that. And one of them involved the mother of all headaches that finally only got resolved when a multi-hundred page report was filed with the OCC against a major bank.
Not bad odds really. All of those instances span nearly 20 years. And I have not seen one (other than a satisfaction of a judgment not filed), in a couple years. What you have is a document outlining your payment agreement, on the debt collectors letter head, with payment dates etc. They need to pull payments on time, which I see more foul ups with them not pulling a payment than anything else. But I am assuming your concern is that more money would be pulled than was agreed to. That is why I suggest a separate bank account be used, and only the money needed to meet payment requirements be deposited within a few days of payment pull date. If there is a problem, it will be limited and manageable. If you pay through your normal account, the letter and bank records can be used to hit somebody over the head with.
I do know that people use prepaid cards to fund settlements. You will have a record of transactions. If you are more comfortable with that, go with it. My thing is that bank accounts are more sticky, where a prepaid card may not be something a person keeps for any long period of time. This can make obtaining records if you need them later (due to losing prior printouts, computer crashes losing scanned docs etc.), more difficult, where getting the bank you are a customer with to help is simple and quick.
You should be able to go to your current bank and set up an account and use it for ACH type of payments right away. If your bank offers a way for you to connect the two accounts you can even make transfers to cover your payment arrangements right from your computer at work or home.
Hi Michael. Seriously, thanks so much for all your help with this. So much to think about! I have to call the debt collector guy back today because I still haven’t received a written agreement from him. We talked via phone this past Monday to come to an agreement on payment, but I haven’t received a written agreement….and I’m supposed to be making my first payment next Wednesday, the 27th!
My question, I guess, is that if I call today and I STILL don’t receive a written agreement from them by next Wednesday, am I still required to make my first payment? The office is like 5 minutes away from where I live, so I don’t understand why I haven’t received a mailed letter from them yet. Kinda fishy…
Thanks!
DMG
No letter outlining the negotiated settlement means no payment. There are limited instances where you may need to set up advance payment arrangements, and even give the account information your settlement payment will be drawn from, prior to having a physical copy of the settlement letter. The only time I encourage this is when settling with an original creditor (Wells Fargo, Chase, Bank of America) when settling a credit card before they charge off the account. I never encourage this with a debt collector of any stripe, and never allow payment toward a settlement or agreement with anyone to go through without the documentation.
You should call and let them know you have made arrangements to have the money in time to make the payment, but the money will not be available until you have a written agreement. It is good to be proactive.
Hi Michael,
I called them yesterday and told them I hadn’t received a letter yet. He told me that I wouldn’t be receiving a letter because I had made a “promise to pay,” meaning I told him that I would call every month on the 27th to make my payment via my pre-paid debit card. I told him that that shouldn’t mean I don’t get a payment agreement in writing! That made absolutely no sense to me! He then put me on hold to speak with his manager (so he said, anyway) and came back to tell me that he would send me a payment agreement in writing, and that I should have it by Tuesday.
I’m going to wait to see if I get this letter on Monday or Tuesday, but I have a bad feeling I won’t get it. As I mentioned before, I’m supposed to make my first payment on Wednesday. Now, if I don’t get this letter by Tuesday, is it acceptable for me to call them and tell them I will not pay on Wednesday if I don’t have a letter from them? Can they require me to pay them on Wednesday without a written agreement in place, even though they said they would send it?
Thanks,
DMG
Donna – Basically what you have shared to date (correct me if I am wrong), is that you are making arrangements with the Mandarich Law Group to pay the debt, now owned by Cach llc, in full and over time making monthly payments they said were an acceptable amount.
Mandarich Law Group, and by extension their boss Cach LLC who hired them, should not be trusted. Cach llc may not be informed of how Mandarich Law Group is handling the collection, but they chose to hire them, and impugn their own reputation by extension (not that I think they really care). Why can they not be trusted? Collections is a simple process. Sending out settlement letters and payment agreements is very standard stuff. First they say they are going to send you something in writing, then they are not going to, and now they might….
So, what is at risk here? Cach llc placed your account with a collection attorney in California likely with authorization to sue you as part of the collection effort. If Mandarich is just playing collection games and had no intention of sending a settlement letter or written payment agreement, it could be because they are thinking to ring up the bill some by suing you. This kind of thing can and does happen from time to time.
Lets hope they follow through and make this easy by sending the written payment agreement/settlement letter. If they do not, and are playing collection games, post an update. I can refer you to local counsel to assist you in resolving this. If they are involved in collection chicanery, and because you have been such an open participant in the comments on the site, I would like to approach you to put together a chronology of events to publish and show your experience (anonymously of course), of how debt collectors behave, even when someone is trying to pay them. If you are up to this sort of thing that can go a long way to raise awareness at a much larger level than just this website page, keep good notes.
They cannot require you to pay them with out a letter. If they do send the letter in time, or late, post a comment update. I do not trust them at this point and neither should you.
Hi Michael-
Yep, I don’t trust them either. Especially when I live right around the corner from where their office is…it shouldn’t take this long to receive a written payment agreement letter in the mail from them. Just another reason why I don’t want them (or any collection agency/law firm) to have access to my bank account info! I know you questioned my hesitancy about giving them my account info, but I just don’t trust people. And as we see, they’re looking like they in fact shouldn’t be trusted. 🙁
I’m thinking about calling them tomorrow (Monday) and telling them to just fax it to me. I wonder if they’ll try to wiggle their way out of it and come up with some excuse about why it can’t be faxed. Do you think I should ask them to fax it?
Good to hear that I’m not required to pay without a written agreement. I’m going to let them know this, too, if I don’t get a letter by Tuesday. I need to see what we agreed upon in writing.
Oh, and I also forgot to mention to you that when I initially talked to them last Monday, the guy said I would be receiving reminder letters every month about making a payment by my due date. When I spoke to him on Friday about wanting the payment agreement letter sent to me, he said he would send it, but that I then wouldn’t be getting the monthly reminder letters. What?! I told him I don’t care about receiving monthly reminder letters…I know and will remember that my payments will be due the 27th of each month, and all I care about is having a payment agreement letter! I mean, is he serious with this nonsense?!?! Please!
I will definitely keep you posted! Thanks for you help!
-DMG
Donna – I often respond to reader comments knowing that many others will read through the comments later. Especially pages of the site that are being published as part of our free online debt relief program, like this one. Paying a settlement agreement, or when setting up a payment plan, when done with a debt collector of virtually any flavor (not the original creditor) should be done through a set aside account (described in the above article) when ever possible. I still do not like the prepaid card method as much, but I understand why people will gravitate toward that.
Faxing letters and agreements is certainly part of any law firms legal practice. Whether they will fax one in this case is something you will find out when you call.
Debt collection can be full of all types of nonsense. It is a bit sad that a law firm is being this inconsistent with what they say, but then do not do. Would not be the first time though.
Michael, I have been in the industry for more than a decade now, usually working on behalf of the creditor. Your explanation and thoroughness are a wonderful asset and truly is a must read for a consumer suffering from distressed debt.