If I am being sued by a 3rd party collection agency for an amount I believe is more than what I owed the original creditor, what should I do?

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If I am being sued by a 3rd party collection agency for an amount I believe is more than what I owed the original creditor, what should I do?

The amount is for $5,649.60 plus interest of 8.75% starting from about 1 1/2 years ago. I currently do not have that due to financial hardship. I am employed,but do not have enough extra income after monthly living expenses are paid. Would like to work this out and get my credit score rehabilitated but have no idea where to start.

Asked on May 7, 2012 under Bankruptcy Law, South Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

First, the third party debt collector has no more rights than the original creditor had, so the third party debt collector can only seek to collect whatever the original creditor could have. That means, for example, that unless the original creditor could have charged you interest, the third-party debt collector cannot. So it is possible that you owe less than they claim; review the terms of your original debt to see what you should owe.

Second, if you want to work things about, try calling and speaking with the debt collector. First have them validate or prove the debt, including their right to it; assuming they have the right to collect, try to negotiate a payment amount, plan, or schedule you could live with.

Third, though, you have to be aware that is is completely voluntary on the part of creditors or their debt collectors whether to come to some payment plan or arrangment--they are allowed to seek payment in full of whatever you owe them. Therefore, you may need to also consider bankruptcy as an option.


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