What can you do if the collector insists that the collection agency will only accept payment in full?
You might find yourself in a situation where you are receiving payment demands from a collection agency and the collector is demanding payment in full. Furthermore, you are prepared to make a one-time lump sum payment for less than the current balance owing but the collector is insisting on payment of the entire amount. The purpose of this article is to provide you with insights if you find yourself in this scenario.
1. Basic principles of settling a debt
It is helpful if we address this issue in the context of some of the basic principles of debt settlement.
A creditor will not entertain a settlement under which it accepts a one time lump sum payment for less than the outstanding balance as settlement in full unless an account has not had a payment for a minimum of six months.
Your creditor--or its authorized collection agent--has no legal obligation to consider a settlement offer that you make.
The fact that at some point your creditor might be willing to discuss a settlement offer is no guarantee that it is willing to agree to a generous settlement.
Not all settlements are created equal.
There can be a huge difference between a mediocre settlement and a very generous settlement. On larger debts this can mean the difference between eliminating thousands of dollars--and potentially tens of thousands of dollars--of your debt.
2. Do not acknowledge that you owe monies in writing
It is important that when you are communicating with your creditor, or its collection agency, that you do not make a written acknowledgement that you owe monies. This might result in restarting the clock on the limitation period on your debt.
If you want to read more about limitation periods you can read an article on this website titled "How do those with unpaid accounts benefit from the passage of time--aka--limitation periods?"
Your settlement offer will be more attractive if you inform the collection agency that you can make your payment within five business days of receipt of a satisfactory settlement letter.
3. Scenario where the collector insists on payment in full
It is possible that the collector responsible for your unpaid account is insisting on payment in full despite his or her collection agency employer is prepared to accept a settlement.
One tactic that you can utilize is calling the main phone number for the collection agency and ask to speak to the supervisor for your creditor.
If you owe money to the ACME Bank then you can ask to speak to the supervisor for ACME Bank accounts.
This individual is your collector's boss. If you are able to get this person on the phone you can identify yourself, as well as your account, and explain that your collector will not discuss a potential settlement.
In this scenario, the supervisor might be prepared to negotiate a settlement directly with you.
4. Wait several months and make another attempt at a settlement
You might find yourself in a position where you cannot negotiate a favourable settlement today with a collection agency.
In this situation your best course of action might simply be to wait several months and then contact your creditor or its collection agent to negotiate a settlement.
From time to time creditors will recall an unpaid account from a collection agency and assign it to another collection agency. During this transition an unpaid account might be with the creditor's in-house collection department for a few days.
If you attempt to negotiate a settlement on your account a few months later you might find that your account has been placed with a different collection agency.
5. The potential expiry of a limitation period
The more time that elapses from the date of your last payment on your unpaid account the closer you will get to the expiry of the limitation period on your debt.
You will be in an attractive position if the limitation period expires on your unpaid account.
Firstly, you have the option of not paying a penny to your creditor.
Secondly, you should be in a better bargaining position negotiating a favourable settlement with your creditor or its authorized collection agent.
Creditors know that the longer that an account remains unpaid the less likely it is that they will recover any monies.
The passage of time can be an indebted Canadian's best friend.
Our firm has published a YouTube video titled "Collection Agency Won't Negotiate With Me".
In this YouTube video I describe what an individual can do if the collector is demanding payment in full of an outstanding account.
Patience can be a major asset if your goal is to negotiate a favourable settlement in connection with one or more of your outstanding accounts.
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