Expert: Chris Ebert - 7/8/2009

Question
Quick background, my husband and I are trying to raise our credit scores which are mid to high 500's due to unpaid medical bills, a few utilities, and I have a debt with Capital One from when I was in high school. We are paying off a number of things, particularly those who are reporting in 09, which includes a few utilities, a medical bill, and what we hoped would be Capital One, but they're making that exceedingly difficult.

The card was originally for $300, but it's gone unpaid since 2004 so with interest it has gone up to $1,400. I called their recovery department and spoke to Shmilia who agreed upon a $500 settlement, split up into two payments of $250 by the 3rd of July and $250 by the 3rd of August. I asked for an unambiguous letter in writing from them before I paid them anything, this was on the 26th of June. I told her that I would NOT pay unless I had the letter for my own protection and she said fine, but that the offer would expire on the 3rd if I didn't pay it. I said I hope it got there because there was no way I was sending them anything without a letter.

Well, the letter finally arrived ON the 3rd, stating "Pay $500 by 7/3/09 to settle your account!" This was NOT what we had agreed on, as the agreement was essentially $500 by 8/3.

I called Shmilia back and she said that the offer is now expired because I didnt pay. I told her that I refused to pay because it was not to the terms that we had agreed upon. She said that the letter WAS indeed what we agreed upon.

From my point of view, I'd say that it was not, because if I had not paid the full amount and made the partial payment, then the offer would also be void because I did not pay the full amount listed as the letter said. For my own protection, I wanted them to send me a letter detailing our agreed upon terms. What I got was a letter with my name misspelled and terms that we did not discuss on the phone.

So my question is, what do I do #1, and #2 was I right not to pay it? Any and all advice would be appreciated. Thanks.

Answer
Jessie,

You should wait until you get a letter from them. If you do not then you could reset the statute of limitations. Since the last payment was in 2004, then they can not sue you in Texas or California. In the letter, you also need release from the remainder of debt. If you pay them and do not get release from the remainder of the debt then they can count your payment as just an installment and resell the remainder to a collection agency. In short, it will never go away if you do not get release.

We have created a debt settlement worksheet. I hope it helps.

http://www.henleycreditlaw.com/pdf/DebtSettlementSheet.pdf