Debt buyer payment plans: Yay or nay?
I don’t advise payment plans with debt buyers for three reasons.
First, just speaking with a bill collector signals that you have money and are willing to pay. That moves you to the top of the list for more annoying phone calls and dunning letters.
Second, making a payment to a debt buyer restarts the statute of limitations. So if you haven’t paid for several years, time is running out for them to collect. If you make even a small payment, that restarts the statute of limitations. Now you’ve given them another five years to collect.
Third, any payment plan is likely to be a very bad deal. The people you’re dealing with on the other end of the telephone are low-level workers who have no authority to offer any serious discount on the debt they’ve been ordered to collect. Any “savings” you supposedly get by agreeing to a payment plan are often an illusion. If the claim is for $9,000, they might agree to take $8,000 and let you pay that off at $250 per month for several years. But the fine print in the settlement agreement often states that if you miss any of these payments, you agree to be liable for the entire judgment amount (less any credits for what you’ve paid).
What’s more, these agreements also agree that, without any further notice to you, the debt buyer can go back to court and get a judgment against you for that full amount. And you won’t know about it because you’ve agreed that they don’t have to tell you. Now they’re in a position to collect, and suddenly your paychecks are being garnished or your bank account is frozen because of a bank levy.
Fourth, you don’t get out from under the emotional and psychological weight of this debt. You will still be paying hundreds of dollars per month for years to try and make it go away. If you couldn’t keep up on payments before the lawsuit, what’s different now?
Does it ever help to try to explain to a debt buyer the reasons for non-payment?
Debt buyers don’t care why you didn’t pay. By the time they get the debt, it has long been written off by the original creditor. Their only interest is in collecting.
Will you have to actually go to court for a debt buyer lawsuit?
If you hire me as your attorney, you will not have to appear in court except in the rare instance when a case goes to trial.
What’s the process of successfully handling a debt buyer lawsuit?
After the lawsuit has been filed, within a certain amount of time, you must file a written appearance with the court. If you don’t, eventually a default judgment will be entered against you. In Illinois, if the amount claimed in the lawsuit is $10,000 or more, you must also file; have a written answer to the complaint; and include disclosures of facts, witnesses, and theories of defense under Supreme Court Rule 222.