Expert: Regan Shinski - 8/29/2009

Question
I hired a lawyer 3 years ago to help me with a case. I gave them $2000 up front but since my DA had a family emergency upon arrival to court we had to reschedule, leaving me $1200 in debt with my lawyer for the extra time, not to mention this must have been the WORST lawyer in history, not prepared in court, asking me for my highlighted copy of the police report, etc. So for the past 3 years I have been paying this lawyer $30 a month, every month, consistently and I always update them with my new address when I move so they don't have to hunt me down. I just received notice that they are sending me to collections. I thought collections were for people who don't pay their bill, but I have been paying mine and regularly. They charge a very high interest rate but even so, the total amount of the bill is decreasing. Is what they are doing legal? They have already charged me over $100 for the discussions they have had in the office (without me) regarding sending me to collections, do I have to pay for that? They want me to pay in full but I don't have that kind of money right now. If I continue to make my $30 a month payments, will there be a negative mark on my credit report? I don't want my credit to get damaged in the process.

Thank you so much for your time!

Answer
Dear Dalen:

You did not send this question to me, but I see that no one has answered it.  (It was sent to the question pool for anyone to answer it.)  I hope this can be of help to you.  To specifically answer your questions:

*  They are within their rights to send any debt to collections if the AGREED upon contractual terms were not met.

*  I don't like their charging you over $100 to discuss sending you to court!  The exception MAY be if it is in any fee agreement you signed.  Even so, this is questionable at best.

*  If it is sent to collections and you do nothing, it WILL damage your credit.  Without question.

*  Continuing to pay $30 per month does NOT guarantee it will not go to collections.

If they will not work with you, I think you have to get more aggressive.  Start by sending a complaint to the bar association, your state's attorney general, and any other professional organizations they belong to.  Provide the full history you described and then some.  They should also be able to provide you the formal dispute or arbitration process for fee disputes.  At the very least push that $100 issue hard.

IF it goes to collection do NOT ignore it!  As weird as it sounds, there is an outside possibility it may be a blessing in disguise.  When you receive their first communication, it should say something to the effect of "if we do not hear from you within 30 days, we will assume the debt is valid."  Don't ignore it.  Send a certified letter within that 30 days asking for debt validation under the FDCPA.

The best option to protect your credit (no guarantees) is contact them within that 30 days.  They cannot report it to the credit bureau within that time period or before they respond to your request for validation as described above.  If you want to pay, this is your chance.  Collectors will often be willing to negotiate for much less than the balance owed.  You can also get favorable terms such as that $30 per month.  I would not pay the full amount.  Tell them you are considering filing bankruptcy anyway.  This may spur them to negotiate a better deal - they would rather get something than nothing through bankruptcy.  It is critical you get an agreement/settlement in writing from them before you start sending money.  Make sure the agreement states it will not be reported to the credit bureaus.

Hope this helps.  You can do it.

Good luck,
Regan