Should I Send The Collection Agency $10 Per Month,

Making a nominal payment to a collection agency in hopes of avoiding a lawsuit is the wrong thing to do. Such an act may do much more harm than good. This is a common question at my law firm. A potential client calls and says that they have defaulted on a credit card account.

This is a myth of the highest proportions. For reasons that I cannot explain, consumers often believe that it is better to send something, no matter how small, on an account that they have defaulted on, than to make the collection agency prove their case. In my opinion, it is one of the worst mistakes that you can make on a delinquent collection agency account. What these individuals fail to realize is that making that sort of gesture may do much more harm than good.

Lets look at the facts: The individual has defaulted on an account. The original creditor has given up on collection and sold the account to a collection agency. We dont know when the default occurred, so time is of most importance. Making a payment, or an effort to pay, might be a large mistake for a number of reasons.

The first reason is that you are acknowledging that you owe a debt to the collection agency. I would never recommend that a client do that. I prefer that the collection agency prove that a debt is owed, and to further prove that they are entitled to collect. Dont do their work for them!

The second issue of harm in sending such a payment is that it removes the Statute of Limitations defense. The Statute of Limitations is a law (which varies from state to state) which sets forth the amount of time that one has to file a lawsuit on a given subject. In Pennsylvania, where I practice law, the Statute of Limitations for Credit Card debt is 4 years.

You can imagine the scenario where Joe Client defaults on a credit card in the year 2002. He fails to make payments for 5 years and the account ends up with a collection agency. 10 check. Not only is Joe acknowledging that he owes a debt to collection agency, he has effectively terminated his argument of Statute of Limitations (which in this case would have prevailed in a court of law). Further, the collection agency (or anyone who sues you) is not obligated to accept anything other than payment in full of whatever amount it is that they are owed. 10 payment is of no use, in my opinion.

This works in favor of creditors who know they could make more money if you dont consolidate. But the truth is that debt consolidation is not all that difficult to obtain, provided you find an accredited company to help you to consolidate. It may take some research on your part, but look into the advantages of consolidation and dont let the creditors discourage you from consolidating your debt now. Of course you didnt. A creditor is not going to tell you this, but debt settlement is something that is extremely beneficial to consumers.

It allows you to negotiate with your creditors and find ways to pay off your debt without paying the total amount. The thinking behind this method is that youll be paying back the creditors at a profit but also helping yourself in the process. Its not something creditors want everyone to use but it is something thatll help you if youre savvy enough to know about it and smart enough to speak to your financial advisor about using it.

Anytime you owe a creditor, the creditor will send you a statement every month and include a “minimum payment required” amount that lets you know how much money you need to pay them this month. Most people only make that payment because they believe thats all they need to pay to help them pay off their balance.

However, this amount only represents the number that creditors want you to pay in order for them to make a profit and you to simply maintain roughly the same amount of debt on your balance. Start paying above and beyond your minimum monthly payment when you can. By doing so, youll start to put a serious dent into your debt rather than just maintaining one consistent level of debt. Are you simply overwhelmed with debt and feeling hopeless, This is something that creditors love. They want you to feel as though you cant pay off all your debt.

These types of people are content with paying off the minimum monthly amount every month and essentially turn into subscribers for credit card companies. They make payments every month and get little to nothing in return as far as eliminating debt. Lose this feeling and start to take control of your situation. If you dont think you can beat debt, you probably wont. Use your knowledge of these secrets against creditors and start to take back the control of your financial freedom today.

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