Question:
Maybe someone can answer a few questions I have.
I own a small business in California. I had an outstanding debt with one of my
suppliers for $4,000. They agreed to accept payments on this debt, neither on
a specified payment schedule nor specified amounts. I have paid the debt down
to $1,500 approximately twice as fast as I originally expected to (ie, 4
months). Without any notice whatsoever, the company has turned me over for
collection action on the balance due, despite receiving a payment less then 10
days prior.
Can a company that has agreed to accept payments and received them in a timely
manner turn me over for collection at this point?
Also, any suggestions on what to tell the collection agency about *my* rights
under the original agreement? I still intend to continue making payments, but
am worried about a negative credit notation on my credit report.
Any help on this would be appreciated.
Answer:
If the creditor has entered into an agreement to forgo collection actions
while payments are being made, the creditor is bound by that agreement, and
it is not proper to take any action that would affect your credit record as
long as you are keeping up your end of the bargain. But if the agreement
was oral, the difficulty will be in proving that there was an agreement and
proving the terms of the agreement. If they deny that there was any
agreement, or deny that your payments complied with it, then it's probable
that you will lose a civil suit for collection because you will have the
burden of proving your defense. Even aside from the burden of proof, it
will be difficult to convince a court that the creditor agreed to forego
collection actions without some idea of how much the payments would be or
how often the payments would be maid. You would be arguing that the
creditor made an irrational agreement. The best solution is to pay off the
balance as soon as you can. If the agreement was written, then you should
send a copy to the collection agency.
