If I changed the terms of an agreement with a debt collector and they cashed my check, are they bound by the new terms?

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If I changed the terms of an agreement with a debt collector and they cashed my check, are they bound by the new terms?

I changed the terms on a payment agreement before I signed it and returned it to a third party debt collector. When I sent in my payment along with it I wrote on the check “as per agreement signed on X”. They cashed my check and rejected the payment agreement. I changed the first payment from $200 to $100 and requested clarification of principal and interest amounts being credited with my monthly payments within 10 days prior to my next payment. I nstead received a “notice of intent of legal action”. Can they do that if they cashed my check that went with my signed agreement?

Asked on May 30, 2012 under Bankruptcy Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

Yes, they can do this:

1) When they sent you the agreement, they were making you an offer to form a contract; if you had accepted that offer as is and performed under it, it would be valid and enforceable.

2) When you changed the agreement, however, you rejected their offer; therefore no contract was signed unless they specifically accepted your new counteroffer.

3) In the absence of an agreement, a creditor is allowed to simply apply any payments received against the amount due; therefore, since they had the right to apply your check against what you owed them, the check did not constitute "consideration" for a new agreeement (your counteroffer), since they had the right to cash the check and apply it against what you owed them. Thus, the fact that they cashed the check neither provided consideration to bind the agreement nor even demonstrated their acceptance of your counteroffer, since, as noted, they had a right to take the money you sent them regardless of what you wrote on the check. (There is a common myth that writing something on the check has legal effect; while I won't say that it never does, in the majority of cases, it does not.)

Therefore, they were entitled to cash your check, to ignore your counteroffer, and then to proceed against you legally. Your only right is that whatever you did pay by check needs to be properly credited against your balance.

In the future, be aware that you can't bind someone simply by modifying an agreement they'd sent you for signature: you need to make your counter proposal and get their clear, unequivocal agreement to it.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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