Expert: Timmy Chou - 11/11/2004

Question
Hello Mr. Kahn,
 I purchased a T-Mobile cell phone around 06/04. and cancelled service a couple of months later when I quit a job where the phone was no longer needed. I was not told of the early termination fee,($200.00), if I didn't pay for 12 months service.
 A credit agency bought the indebtedness from T-Mobile. They were calling me daily to pay $344.00(includes early termination fee). After faxing T-Mobile a request for documentation showing I signed an "early termination contract", I've heard nothing from them. Someone, (outside of T-Mobile), informed me that simply activating the phone would mean the same as signing the contract.
After informing the credit agency I needed to consult with counsel, a rep. said they would cease calling, but they would begin calling again on 11/17/04. They've resumed calling anyway at least every other day now.
 My query is whether I am liable to this credit bureau for the entire $344.00, or just the "actual billing" portion of this figure,($144.00)?
 If I am liable for the early termination fee, what is the minimum anount I could agree upon with the credit agency to pay back per month?
 Thank you for any counsel.

 Sincerely,
 
 Michael D. Eidson, LAc.

Answer
Thank you for your question!

Mediators act as neutral third parties to disputes and never "get involved" in judging the merits of conflict, but merely use special techniques to help the parties decide how to negotiate their own settlement.

I am not an attorney but I can respond to your question from my business consulting experience.  Note that this situation may have numerous complex legal considerations and you should consult an attorney.

In my experience the early termination fee is pretty standard and difficult to get waived.  Nevertheless if you did not sign anything you may be able to get it waived.  

You must send a registered letter to the collection agency denying liability for the debt and asking for written documentation of the debt and written evidence you agreed to pay it.  You must also demand they comply with the Fair Debt Collection Practices Act and cease calling and harassing you or dinging your credit file until they can prove the debt.  That said, if part of the collection effort is for phone use, which you do not dispute, pay this right away to T-Mobile directly and send the collection people evidence of the payment.  You don't want to cast yourself as just a whiner trying to skate on the bill.

If it turns out you must pay the bill, you will have to try to work out the best deal you can with the sharks.  You will no doubt have agreed to pay cost of collection and other charges including interest as well and it usually means the collection agency has very little incentive to help you at all - - - unless you are threatening bankruptcy - - - which would be foolish for $300.   

As you have seen, you are probably in for a fight.  But your best bet is to pay what you owe, and then push back on the term fee.

These are some ideas.  Feel free to follow up with additional questions.

For your information, the pros and cons of the types of dispute resolution methods follows.

GOOD LUCK!

Arbitration, Mediation, and Litigation

Arbitration: the referral of a dispute to one or more impartial persons for final and binding determination outside of the judicial system

Benefits of Arbitration:

    Confidential, no public record
    Limited exchange of documentation, information
    Quick, don't have to wait for a court date
    Arbitrators have expertise in the subject matter and are trained in conflict resolution
    Cheaper than litigation
    Preserves business relationships

Negatives of Arbitration

    It's a compromise, no %100 winner
    Complex arbitration can be costly
    If not satisfied, may litigate the arbitration procedure
    Poor results with an unskilled arbitrator
    Both parties must agree to cooperate in the process

Mediation: the process by which parties submit their dispute to a neutral third party (the mediator) who works with the parties to reach a settlement of their dispute.

Benefits of Mediation:

    Neutral mediator can objectively suggest alternatives not considered before
    Parties are directly engaged in negotiating the settlement
    Can be quicker than litigation
    Less costly than litigation
    Preserves business relationships
    85% of American Arbitration Association cases mediated find successful solutions

Negatives of Mediation

    may not reach a binding decision
    unskilled mediator

Litigation: using the judicial system to resolve disputes

Benefits of litigation:

    a clear winner and loser
    uses a prescribed set of procedures
    more predictable outcomes
    is final

Negatives of Litigation:

    waiting for court dates can do more harm
    usually more expensive than mediation and arbitration
    part of the public record