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Shouldnt we only be responsible to pay the original amount of the debt?  

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My Husband has this old credit card debt from about 6 years ago. It was with US bank for 7500. A collection agency purchased this account from US bank in 2000. My husband agreed to pay them 400 dollars a month which we could not pay. Then he went down to 330 a month which was to steep for us at the time as well. we sent a bunch of payments, but eventually defaulted. I began dealing with them and agreed to $100 a month. Which I have sent faithfully and blindly for 5 years(no statement has ever been sent to me). I had sent them close to 7200 already. I tried to reach them, but they had moved their office. And changed phone number I had no way of getting in touch to try to settle the remaining of the account. So I stopped sending payement this january with the hopes they would contact me. They did, but said my husband still owes 3500 due to interest and late fees. At a rate of 12% over the years. I asked if I could settle this account for 850 which would bring the total amount of money they recieved from me to 8050. More than the original 7500. They said no that I have to pay the full 3500 because we defaulted to many times before (really just twice.) My question is. Is this normal for a collection agency to charge interest and late fees? They forced my husband into signing an agreement that said they would charge us theses additional fees if we defaulted on the original agreement. Is this legal? Shouldn't we only be responsible to pay the origianl amount of the debt? What are our rights here? Please help.
 

asked Mar 20, 2006 06:18 AM

Anonymous
Best Answer
10
best answer

yes, it's legal.

I can't help wishing you'd contacted an attorney before taking any action. When you started repaying, the debt was probably already dead (unenforceable), depending on the statute of limitations in your state; but when you signed an agreement and started repaying, you started the clock ticking all over again. This was not wise. Furthermore, from the tone of your message, I get the impression that you really have no idea whether that collection agency even is a legitimate holder of the debt. If you don't have anything from the original creditor, they could come after you for repayment and the fact that you've been paying someone else would not be a defense.

These guys rely on the good will of just plain folks who really want to be honest and do the right thing. But this is not a moral issue, this is a legal issue. You only have an obligation if the law says you do. So please talk to a lawyer before making any more decisions like this. Half an hour of a lawyer's time will be cheap in comparison to the costs you'll needlessly incur.

You've gotten yourself on a debt treadmill, and the best you can do at this point is to demand disclosure of the terms of the loan and make sure you're not ripped off on that score.

answered Mar 20, 2006 06:40 AM

10 Answers

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No the debt was not dead at the time we started paying the collection agency. It had been a corporate account with my husbands company that he was responsible for paying on his own. Meant for business expenses, that he should have expensed gotten money from the company, and then payed. but he charged up with personal things, and could not expense it, and was sent to collection agency in 2000 we started paying in 2000 so it was not dead yet. As for the collection agency being the one to truly own this debt that I am not sure of. My husband hid this debt from me in the beginning, ang lied to me about what is was really for so I am not sure if this agency really has the debt. How do I find that out? and if they are not the ones who hold the debt truly what do I do? Also recently we baught a new car, and the dealer told us when he pulled our report that this debt is just showing contant late every month for 5 years not charged off. What does that mean?

answered Mar 20, 2006 06:58 AM

Anonymous
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So it hadn't been six years elapsed time between the default with the original creditor and the time you began repaying the loan? Remember the statute of limitations doesn't start over just because a collection agency took over the loan. It runs from the first time the debt was in default, regardless of who the creditor was.

The indication on the credit report saying that the debt has been late every month for the last five years means just that. It's not charged off because the debt collector is still hoping to get money from you. When they charge the debt off, that means that they're cancelling the remainder of a debt as uncollectible so that they can deduct it from their federal taxes. The phrase, "charge off" means to charge the uncollectible debt off against current income. An accrual-basis taxpayer pays taxes on money it's owed, not on the basis of cash it actually receives. That means that the creditor has already paid taxes on the interest and fees it expects to generate from the loan, and when it decides that the remainder is uncollectible, it can deduct the amount from its tax basis for the current year.

If the debt is company debt (even if your husband is the person who used the credit card or whatever), why is your husband personally liable? (I'm looking for a specific, legal reason why he should have to pay someone else's debt. A company is usually a separate "person" for such purposes.)

answered Mar 20, 2006 07:10 AM

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Juat a few months elapsed between the time he stopped paying the credit card to the time he started payng the collecter. My Husband is liable for this money because he charged up the account with personal items that the company would not pay for non-business items. The card was issued to him by the company, but was in his name. And he was responsible for sending payment himself to the card. the company would only reimburse him if it was a legitmate business expense.

Will this debt come off his credit report by itself since it is showing no payment has been made in over 6 years?

answered Mar 20, 2006 07:22 AM

Anonymous
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It will not come off by itself as it is - the indication on the credit report is merely that the payment is late, not that there was no payment, right? The last seven years of data can be reported, including current debts, and this is still a current debt.

answered Mar 20, 2006 07:28 AM

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I believe it is just showing late all these years. SO I guess I should just continue to pay this collecter until it is paid in full correct?

answered Mar 20, 2006 07:33 AM

Anonymous
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Maggie,

I think you have the right to get some documents of your payment. You have been paying for last 5 years and haven't received any papers – this is not right. And how the debt can be reported late every month for 5 years while you were paying the agreed upon payment? You have to speak with the CA immediately.

If possible, offer them a good amount and get your account reported in your favor. But always ask for written documents before you pay.

Another point I would like to include here, it is always good to consolidate your debts whenever you anticipate falling behind with your payments. Consolidation ensures regular payments and helps to obtain a good credit in the long run. You can still consolidate the debt and avoid dealing with the collection agency.

answered Mar 20, 2006 10:26 AM

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Va Leagl
Hi ,I was wondering if you could read the threads on SIMMS and GECC,and give us any advice.I live in Va.and I was wondering if I have any legal recourse on all of this interest that they are making me pay.I took a loan from them Jan 2005 for $600 and have paid over $3000 to them last year,Im now in consolidation and they say that I still owe $1900.They state that they do not renew loans ,they issue new ones,so all that money I paid was for 24 different loans.What do you think,any help would be great.

answered Mar 20, 2006 10:38 AM

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Thanks Stan I actually got the CA to fax me my entire history with them. I now have a record of every payment I have sent, and the agreements that were signed by my husband. How exactly to I go about getting the credit report to show that we have been making payment on this account for 5 years?

answered Mar 20, 2006 10:59 AM

Anonymous
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maggie,

You have two options - talk to the collection agency. Tell them that you are going to pay the balance but they have to report it properly to the credit bureau. Also tell them that you had paid an agreed upon payment so the account cannot be reported as late.

If they cooperate with you, it's well and good, otherwise dispute it with credit bureaus directly. Now you have documents of your payment. So you can send copy of all the documents in support of your claim. Bureau will run an investigation and rectify the incorrect entries. Do let us know if you need any more info.

answered Mar 20, 2006 12:12 PM

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