I Smell A Scam....

[blas]

It may be legit, it may not be. But something just has my bullshit detector going off.

I'm in the same boat as a lot of people, having trouble paying my bills. Especially my medical bills. With my hours being cut at work and only getting partial unemployment, obviously I'm putting my rent and my car as higher priorities than my over-priced Pap smears and physicals (I don't see any reason why stuff like that needs to cost as much as my monthly rent or even more.....and why having insurance doesn't seem to make much of a difference!).

I'll be honest. I'll skip a monthly payment here and there. And I ONLY pay the minimum that's required (by the way, it's extremely unprofessional to call my payments "inadequate" when I make more of an effort than other people, considering I do give $50 or more when I do pay my monthly bill). I never miss a payment with the collection agency I was sent to (because of my "inadequate" payments. My total bills were over $1,000, this clinic has an obnoxious policy of requiring a 10% payment every month.....I did NOT have $100 to give a month. $75 would put a damper on things, but I'd do it. $50? You bet. But it wasn't good enough, and because the county wouldn't give me assistance because I'm single and make "too much money" *say that to my apartment and the car I drive and where I work!!*...I was sent to collections) but I only make the mimimum payment.

So to the scam. Lately, I have been getting a letter almost EVERY week from the clinic telling me they are offering a GREAT deal! If I pay $x (a large lump sum) they will take x% off of what I still owe them, or they'll make it so I only owe them x$.

I didn't buy into it. So almost every week, they keep sending me more offers.

Now the collection agency is doing it. Claiming that they received special permission to offer me to pay less than what I owe. If I give them $x, they'll make my remaining balance only $x or they'll take x% off.

I just smell bullshit. I can tell it's their valid companies and addresses, but there is NO fine print. There is always an expiration date on these "deals", but there is no fine print or other kind of explanation. It just is what it says. I have a feeling it's a scam to get more money out of me but they really won't do what they say.

What do you think?

For now, I'm sticking to my monthly payments and that's it. And if the clinic ever again dares to call my payments "inadequate", then I'll demand my "inadequate" money back. I could sure use it for gas and my other bills! And hey, clinic, you can take your multiple hundred dollar Pap smears and shove them right up your "inadequate" asses!

[tamezin]

I hate to tell you this, but more than likely it is legitimate. This is SOP for most collection agencies. The older your debt is the more likely it will be determined to be uncollectible. It is generally better for the owner of the debt (which may at this point be the collection agency but not always), to collect a % of the debt.

Be aware, that if the portion they write off is more than $600.00 (in the U.S.) then it is taxable and you will get a 1099 at the end of the year. And the debt can be reported to the credit bureaus as a settled debt vs a paid off debt and can adversely affect your credit rating.

[blas]

I don't owe the collection agency $600+, but I still don't plan on doing it. If I paid a lump sum to them, I'd fall short on rent or my car or groceries. I'm not going to go hungry to settle a debt faster.

[Ironclad Alibi]

I agree with tamezin's assessment. They would rather have a lump sum now instead of a trickle of small payments over time. It's a good deal if you can swing it, but it sounds like you have a handle on your expenses and know what you can and can't pay. So stay the course.

[tamezin]

I don't owe the collection agency $600+, but I still don't plan on doing it. If I paid a lump sum to them, I'd fall short on rent or my car or groceries. I'm not going to go hungry to settle a debt faster.

Then stick to your payment plan and don't let them get pushy. If they try to push you for more than you can afford, you can always submit an C&D then they have to stop contacting you with anything other than your bill.

[tacohuman]

i'm wary of things like this. for one, it may get the collectors off your back, but it does show as a charge-off on your credit. if you do decide to do it, i'd make sure to get *in writing* that if you do this, the debt will be considered paid in full and settled. i made the mistake of not doing so with a large debt i had when i was young and stupid, and then 10+ years later was contacted by a collection agency who had purchased the remaining balance and threatened to sue if i didn't pay it in full immediately.

i might have been able to fight it, but the expense would likely have been more than the remaining balance owed. fortunately, i'm in a much better financial place now than i was then, so i was able to pay it off and now no longer have that over my head, but the point is that i was under the impression it was already paid to the satisfaction of the original creditor.

[MoxisPilot]

This is more than likely legit. We owed money to an apartment complex, and they were willing to settle with use for a 50% lump sum payment.

Better to cut their losses than cross their fingers.


Edit to add: If you talk to them, they may be willing to remove it from your credit report; the apartment complex and the collections agency we worked with removed it from ours.

[bainsidhe]

I agree with others here, it may be legit because the collectors figure a lump partial payment is better than multiple mini-payments. Be careful though, if the original creditor as well as the collection agency are making offers, you may pay one off and still get hassled. For example, if the agency bought the debt, then they'll still want to collect even if you paid the original creditor. Not saying they'd have a leg to stand on, mind you, but it'd be a real pain in the rear.

[Geekus Rex]

Then stick to your payment plan and don't let them get pushy. If they try to push you for more than you can afford, you can always submit an C&D then they have to stop contacting you with anything other than your bill.

One thing to watch for - some agencies (and a lot of banks) will sue immediately upon getting a c&d request. A lot of other factors go into it with most companies, but keep an eye out for the possibility.

[Record Store Tough Guy]

i might have been able to fight it, but the expense would likely have been more than the remaining balance owed. fortunately, i'm in a much better financial place now than i was then, so i was able to pay it off and now no longer have that over my head, but the point is that i was under the impression it was already paid to the satisfaction of the original creditor.

It actually wouldn't have cost you much, if anything. The statute of limitations on collecting a debt is seven years. All you would have needed to do is send them a letter asking them to validate the debt, and if they couldn't, well, fuck 'em. What they did was illegal, and if they had kept trying to illegally collect the debt, you could have sued.

It may very well have been paid to the satisfaction of the original creditor, and the shady collections company was acting in bad faith attempting to illegally collect a settled, beyond SoL debt.

If you've ever owed a debt to anyone, even if it's paid off, read up on the FDCA and FCRA, know the FDCA and FCRA, and love the FDCA and FCRA. They are very much your friends, and potent weapons against the shady collectors.

[taxguykarl]

Be aware, that if the portion they write off is more than $600.00 (in the U.S.) then it is taxable and you will get a 1099 at the end of the year. And the debt can be reported to the credit bureaus as a settled debt vs a paid off debt and can adversely affect your credit rating.

Technically 1099-C and I've seen them for as little as $75. Tamezin is correct that this is considered income, unless the debt was discharged in bankruptcy court.