Expert: Regan Shinski - 2/26/2010

Question
Hello and thank you in advance for any advice that you will be able to provide, I will greatly appreciate it.
I have the following problem, recently I was not able to make my regular minimum payments on my Household Bank credit card and so my account (which was closed anyway) was sent over to a collection agency-NCB Management. When I was contacted by NCB about an arrangement plan to pay the $3,000 balance I owe, I was told that 6 months will be the maximum amount of time I will be allowed to settle my debt with them. I made the first payment of $433 but since I was still able to access my online account at Household Bank and also receive emails from them (that the payment was posted, etc.) I decided to give them a call and ask if I could make my payments online to them (Household Bank) instead of going along with NCB's plan, the reason being I could extend the time period to pay off my balance and therefore reduce my payments (my monthy payment with NCB would have been $500 minimum). A number of representatives from Household told me that I could do this, all I will have to do is call NCB and let them know that I will be paying Household directly, I was also told that NCB cannot take any legal action against me if I make payments on the account even though I will not make them through NCB. I was told that the account has not been bought by NCB that it was still with HSBC. So, I called NCB and told them this, well the lady on the phone got really aggravated telling me that I cannot do that, that my account at Household will be locked in a month or 2 and so it will be impossible for me to make the payments that way, also that I will still be in collections until I pay that balance and will still have to take calls from them, she was also trying to force me to say on the phone that I refuse to pay them. I did not ask if I will be taken to court if I don't go along with their payment plan, but I did ask to get a Household person on a conference call, she refused. She also changed her story saying that she never mentioned a six month plan but said it could go up to a year. What should I do, should I go ahead and start making my payments online to Household and ignore the NCB payment schedules/calls whatever they will try to get me to pay? Can they sue me for not paying through them, if I'm still paying through Household? Can I trust the reps at Household, the lady from NCB was convinced that they cannot give such information and that they are misleading me? I also called one of the managers from customer service at Household and he told me the same story as the reps. What I should I do? How can I get out of this mess?
Thank you so much for any help.

Answer
You need to find the status of the debt.  Ideally, you would get something in writing from household or the collection agency that household still OWNS the debt.  Once you get that, you can freely enter into a new agreement with household and only pay them.  The best way to do this is simply to ask.  You send a formal letter to household and you can probably follow up with a call.  If you are LEGALLY allowed to record in your state (single-party notification) I would record it if at all possible.  

At the same time, you send a letter asking for VALIDATION under the Fair Debt Collection Practices Act (FDCPA) to the collection agency.  Send it certified mail.  You can also put in the letter that you want all future communication from them to be in writing.  Essentially if they call you after they receive that letter, they have violated the FDCPA.  So you won't have to continue taking calls from the collection agency as their rep said.  I would NOT speak with the collection agency on the phone again under ANY circumstances unless you are legally recording it.  I believe it was mistake to speak with them in the manner you did in the first place.  Although you have honorable intentions, it is NOT wise to speak with a collection agency unless YOU are recording it and YOU are trying to get something from THEM on the recording.

Once you are confident the debt actually belongs to Household, just make the payments as you and they have agreed.

Now the exception is if you entered into a new contract with the collection agency.  I would mostly be worried if you signed an agreement from them.  You also asked about being sued.  The collection agency can sue you if they own the debt or at the instruction of the creditor in limited circumstances.  This is why you want to get the status of the debt ironed out.

Save all the letters you send, document the date, time, person you spoke to, and what was discussed if you talk on the phone.

Good luck,
I hope this helps.

Regan