Hi,
I was wondering if what I've been hearing is true or if it's just another one of those myths that people make up to feel good about themselves. I live in Wisconsin and have a $1,200.00 bill with the Children's Hospital that has been turned over to one of those collections law firms and they demanded that I pay it in full immediately or go to court, then they settled for half the bill one day and the rest within 2 weeks... pretty demanding if you ask me. My question here is this, I called in and offered to pay $600 dollars because that's what I was asked to pay the day before, I agreed to call in and pay it the next day, when I made the attempt to pay, the lady on the phone was quite rude and would not accept my payment, claiming that I needed to pay $785 and that she wouldn't accept anything less. So is it true that if they refuse to take a substantial payment from you that your debt is reduced to zero immediately because of this. Is some or any of this true, I can't seem to find any information on this anywhere online and can't get an attorney on the phone to save my life. Thanks for your help.

Jeff

It must be an urban legend, that if a collection agency won't take a substantial payment, that your debt is reduced to zero immediately. I don't think that is true. If so, they would never be paid, Jeff.

It does seem strange. Generally debt collectors will make a settlement offer of 50% or even 70% and still be happy because it's all pure profit for them.

You might want to check with you local courthouse (often you can do this online w/ a search function using your last name) and make sure that no lawsuits have been filed against you.

The only reason I can think of why a collector would not accept payment is that they already commenced a lawsuit.

You might want to read this article about how collection agencies operate once a lawsuit has been served... Served a Summons Or Credit Card Debt Lawsuit - Don't Call the Creditor!

Good luck!

P.S. Just so you know, usually medical collections are not looked on as harshly as other types of debts when applying for mortgages, car loans, etc... so don't stress too much about it being on your credit report... especially since you are working at paying it off.

How old is this debt? WI has a 6 year Statute of Repose which extinguishes the debt on expiration of the Statute of Limitations.

No this is not true, they may refuse any payment other than payment in full if they want.

In some cases if you have a good job, they may prefer a judgement and a garnishment to get all of their money.

Also even if they make a offer over the phone, don't do it unless they send it to you in writing, it is very very common for them to agree to an amount on the phone, you send it, and then in a week you get a notice you still owe the rest.

Common law (the law developed from case law rather than statute law) suggests that a debtor has the right to reduce any debt by any amount at any time subject to the default provisions of the debt. You have a legal right to reduce debt at any time as to mitigate damages to you. If a CA refuses the payment, they are responsible for any damages arising from their refusal. Example, you owe $1200.00. Assume the interest is 12%. The interest on $1200.00 is $12.00 per month. Had you made the $600.00 payment, the balance would be $600.00 and the interest $6.00 per month. The CA cannot prevent you from making the $600.00 payment to mitigate your consequences.

However, payment of the $600.00 does not prevent them from suing you. They just sue for a smaller amount.

Realistically, it is to costly to sue someone over $1200.00. They stand a better chance of collecting if they continue to nag you with unreasonable demands.

The process of collecting debts is simple. Make a demand (full payment)... give a consequence for failure to meet the demand (legal action)... attack self esteem. The use of this process is keep the CA in control of the process.

What is the best way to deal with Collection Agencies? Do not ask what they will accept. When you do, there answer is almost always a demand for full payment. Tell them what you intend to do. Pay the $600.00 either to them or the hospital. Make remaining payments on your terms. Do not allow yourself to be intimidated.

Here is what I suggest you do. Send the CA a letter stating that you have enclosed a partial payment of $600.00 and that you will pay the remainder in installments of your choosing (say $200.00 for 3 months possibly sending post dated cheques). It is not likely they will sue for $600.00. They will cash the cheques and that is that.

Good luck