Expert: Regan Shinski - 3/25/2010

Question
QUESTION: Hi Regan,

(Too many follow-ups, so I am having to start a new question.)

To recap: I was reported to a collections agency for a hospital bill I have been fighting.  I followed your advice and wrote them a letter disputing the bill, and I also obtained copies of my credit reports.  

The collections agency sent me another letter demanding payment and also called me two more times and left messages, but they never furnished proof that I owe the bill.  

The latest is that I just received a third letter, this time offering a settlement of 50% of the disputed amount.  

Does this mean they have no proof that I owe the debt?  If so, I feel I should keep fighting, since it's still a lot of money they are asking for.  I am also only 7 months away from the statute of limitations in my state.

On the other hand, I do want to get this over with, and although it would be painful to pay such a high amount for something I do not feel I owe, I would be willing to pay it to simply be done with it and never worry about this again.  What do you think?

Also, if I do decide to pay, should I try paying the hospital and not the collections agency?  There is language in the settlement letter that states both the hospital and myself agree to release each other from all claims related to the charges for the account if I do pay it.  Does that mean there is no chance this will end up on my credit report or do I need that in writing?  Anything I need to do or be aware of?

Thank you very much for your help, Regan.  I appreciate it very much.

Sincerely,
Chris

ANSWER: Did your letter include the provision about having all future contact in writing?  If so, they have violated the FDCPA by calling your multiple times.

I can't make the decision for you.  If you are certain you are only seven months from the SOL and it is NOT on your credit reports yet, I am not sure why you are fighting this.  Most people would take that in a minute as I deal with people everyday that are struggling to get accounts removed from their credit reports.  Where are your damages? (legally)  You run the risk of waking the sleeping giant and making the sue you before the SOL expires.  Most people would say to let it go and make them take the next step.  If you have proof you told them not to call you anymore, document the calls.  Try and get proof of their continued calls through phone records, photos of caller ID records, or a legally recorded phone call.  Get past the SOL and deal with it at that point.  If they sue you before then you can settle or pursue your countersuit options before the court date.

If you want it over immediately, you enter into a settlement.  They have started at 50%, I would try and get lower.  Get it in writing with proper releases from collection agency and hospital.  Get signed document before sending money.  Have a provision in there that prevents them from reporting to credit bureaus.

If you want to pursue them, you need documented proof of their violations.  This cab be them calling you as described above, not sending required validation documents, or any other host of violations.

Good luck,
Regan

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

QUESTION: That was fast!

Thanks for that.  So I'd like to try to negotiate a lower settlement.  In that case would you advise me to call the collections agency to try negotiations?  

They haven't given me enough time to write a letter before the "offer expires," so a phone call seems to be the only option unless I'm willing to chance them going the other direction.  

If I paid it without negotiating, would they report it to the credit bureaus?  Could they?

What if they tell me they won't send me any provisions that prevent them from reporting to credit bureaus?  How can I get them to do that?  How firm should I be on that?

Their letter states that they are authorized by the hospital to offer the settlement and that by accepting they will release me of all claims.  Not sure if that means they will not report to a credit bureau.  And does that count as a proper release from both hospital and collections agency?

I have proof of their violations, too, but I want it to be over as soon as possible.

Thanks so much for your helpful advice,
Chris

ANSWER: It's just negotiations.  I really can't tell you how they will respond or how to play it.  You really kind of have to go with the flow and feel them out.  If you really have violations on them, I don't know why you would want to pay or certainly why you would pay 50%.  MAYBE 50% less the statutory penalty for their violations but I think you could get even better.

Regardless, you have to be firm to a point but it's really difficult for me to say.  Each negotiation is truly different.

I would hold firm on the credit issue and seek confirmation of their ownership of the debt from the hospital or make the check payable to the hospital.

If you call to do this, I would consider recording the call.  You have to either notify them that the call is being recorded or live in a single-party notification state.  Otherwise I would only make offers in writing.  I won't be overly worried about the date they gave you in the offer.  They want the money, they can wait a few days.

Paying without a settlement still puts you at risk to have them report to the credit bureaus.

Thanks and good luck,
Regan

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

QUESTION: It's all over...hopefully...

I confirmed that the hospital allows the collection agency to negotiate more than they are able to, at least that's what they told me.  The hospital would not go lower on the amount, and they would not guarantee they would not report me to the credit bureaus.  

I called the collection agency, and living in a single-party notification state, I recorded the conversation without telling them.  Although they would not lower the amount, they did promise me it would not be reported to the credit bureaus if I were to pay soon.  However, they would not put that in writing, but I have a recorded statement promising me they would not report to the credit bureaus.  I also asked for permission to record the statement and they promised me again.    

Perhaps I caved, and I'm sure I could have fought it more, and I am going to be paying off my credit card for a while now.  I can pretend I am paying a service to clean up my credit report and that I'm paying an attorney to handle all the paperwork I've just saved myself from having to do going forward.  It still stings though.

If I had continued to fight this, and I was successful in getting them to go lower than 50%, the scenario could have ended up that I only paid, say, 30% but took a hit on my credit report, right?  Does the fact that the collections agency never sent me confirmation of my bill factor into any of this?  I wonder if they offered the 50% settlement for now to save themselves the work of gathering paperwork from the hospital in order to try to show I owed anything at all, and that if they had to do more work they would want more money then.  Anything to that theory?  Of course, they could have already looked into the hospital records and discovered they had nothing that could substantiate such a high bill in the first place too.

Either way, at least now there's no chance that they will take legal action right before the statute of limitations ends, and I will try to make peace with my decision to pay it by getting it out of my mind.  But I did want to let you know how it all turned out.  

If you hear from me again, that means they reported me to the credit bureaus anyway.  What do I do then?  Just play the credit bureaus the recorded conversations?  

Thank you very much for your advice throughout this ordeal.

Sincerely,
Chris

Answer
Hello Chris!

Congratulations on getting it resolved.  Ultimately that is the best thing.  In today's world, credit is worth far more than 50% of this bill would be.  Most people do not realize that but the reality is that spoiled credit costs a LOT in higher interest rates, declined credit, annual fees, and other costs on cars, homes, and credit cards.  It can take up to seven years or more to clear up, so even the slightest adverse action would cost more.

There is no way to tell what you could have gotten from them.  50% and no credit reporting is solid and the fear of lawsuit is over.  Look at it this way, many people pay the FULL amount and live with the collection showing (as paid) for seven years, so I would say you made out ok.

IF they report it, contact me again.  You will have a VERY solid case for a simple lawsuit or settlement.  In fact, there are many people in your position who would almost WANT them to report it because you would be able to EASILY collect money from them.  You are in good position if that happens.  You did an excellent job to record that aspect of the conversation.

Good luck, let me know if anything changes.
Regan