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Business Debt/S_Corp personal liability to collection agency

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Expert: - 2/7/2008


Question
QUESTION: I am the President of a one person S-Corp. I am 120 days out on an Amex
credit card taken out in my companie's name. Amex has written me letters
saying they will report this to both business and consumer credit reporting
agencies. A collection agency now has the account is saying the same unless I
pay within 2 weeks. Can they do this and do you think I could negotiate a
lower pay off with the agency?

ANSWER: In my opinion you should call the collection agency and explain the situation, if you are unable to pay this bill tell them why and offer a settlement amount. Remember that it will still be reflected on your credit report but it will show that once it was placed for collection you settled the account, still not good but better than not paying.

---------- FOLLOW-UP ----------

QUESTION: Hi,
Thank you so much for your opinion and fast answer. After writing you I did
talk to the agency and they were very rude and told me they did not own the
debt, but were acting on behalf of Amex. I attempted to negotiate, but he
would not budge an inch. I then talked to a very nice supervisor at Amex that
was very helpful. She told me that of course the agency "owns it for the most
part and can negotiate". So I am at a loss on that front. She did tell me
however too that I am not quite 120 days out and I can pay Amex directly the
past due amount ($2,700) before the 120 days and bring the account current,
but it would still stay with the agency. Very confusing. The debt is $22,000
with all of the fees and now 30% interest rate and I could pay  about $10
-15,000 to settle, but can't seem to get anywhere. Thank you.

Answer
This could very well be the case, most agencies work on a contingency basis, they don't purchase the debt from the creditor. When that is the case they cannot accept any settlement without consulting with their client.
I'm not sure what your question is, are you asking who to pay?

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Michelle Dunn

Expertise

As one of the Top 5 Women in Collections, one of the Top 50 Collection Professionals, and winner of the Business Excellence award, I can answer any questions about debt, debt collection, improving business credit, creating a credit policy, enforcing a credit policy and collecting on past due accounts. I can also answer questions in regards to starting a debt collection agency since I have been a bill collector for over 24 years, started and ran my own collection agency for 8 years, and maintain my 12 year old Credit & Collections Association for members of the credit & debt collection industry. I am also the author of the popular and award winning book "Starting a Collection Agency, how to make money collecting money" now on it's 3rd edition. This book has won a the Writers Digest self published award as well as the New York Book Festival Award. I am a repeat contributor to the Wall Street Journal, and have been featured on NPR, CNN, as well as many other national radio and television programs. I have also been featured in national publications such as the Wall Street Journal, Forbes, Smart Money, MSNBC and much more. I have 17 published books to my name and am an accomplished speaker and consultant. I currently write 9 columns for newspapers, magazines and online portals worldwide.

Experience

I have over 24 years experience in debt collection, I started and ran my own collection agency for 8 years and I am the founder & owner of my Credit & Collections Association that I founded in 1998. www.credit-and-collections.com

Organizations
My Credit & Collections Association, I was also a member of the American Collectors Association and Plymouth Chamber of Commerce for 11 years. I am a member of many writing groups as well as my local Women Inspiring Women chapter. I am a member of Know More Media as an expert for their blog on business credit.

Publications
Business NH Magazine, Smart Money Magazine, MSNBC, CNN, Forbes.com, The Wall Street Journal, Home Business Magazine, Entrepreneur Magazine and website, many books, newspapers and television programs as well.

Education/Credentials
I have written 17 books in my collecting money series and one for Entrepreneur Press called the Ultimate Credit and Collections Handbook. My newest book is being published by John Wiley & Sons in May titled, The Guide to Getting Paid, how to weed out bad paying customers, collect on past due balances and avoid bad debt. This book is also being sold to many colleges as a text book.

Awards and Honors
My book Starting a Collection Agency, how to make money collecting money won an award from Writers Digest and the 2007 New York Book Festival in the "How to" category. I have won 2 awards from Dun & Bradstreet and Governor Jean Shaheen. I was nominated as one of the Top 5 Women in Collections twice as well as having been selected as one of Collection Advisor's Top 50 Collection Professionals by my peers.

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