Debt collectors are trained to to intimidate or manipulate the people they call. Should you ever give a debt collector money? and what are the legal effects if you do so?
Giving them money can be a big mistake.
Giving them Money Encourages Debt Collectors
Many people have a natural impulse to bargain with debt collectors. They hope if they give a collector money they’ll go away. This does not work.
The person calling you is a low-level employee. Usually the caller will have no power at all to make any kind of deal with you. Or they will have some limited power to accept delays or offer a small discount. On the other hand, the caller’s salary will depend to some extent on getting you to pay. If you offer anything – a promise or a payment – you guarantee that they’ll call you many more times. You are sending a clear signal that they can push you over.
Of course, it costs practically nothing to call you, so any encouragement whatsoever means endless calls in the future. Giving them nothing does not mean they’ll stop calling, however.
Legal Effects of Payments
If you give a debt collector money the legal impact is even worse than just calling them. if the debt is so old that the statute of limitations does or might soon protect you, your payment can restart the clock. If you were disputing the debt, the court might take your payment as an admission that you owe it.
And if the debt collector lacks any means of proving the debt in any way, your payment will help them past any problem.
You Can Still Fight
That isn’t to say that you have lost everything if you made a payment. You still have a chance to win if they sue you. But every payment makes the road harder.
Making Partial Payment Can Kill Your Right to Defend
Partial payment can seem like such a good way to make a debt collector go away, but don’t do it.
Debt collectors love getting people to make “partial payments” on debts – on any debts, but especially old ones. It isn’t just that they want some money, any money. If you give them the money you will probably be subjecting yourself to a lot of problems. And that is especially true if the debt is very old, even if it is beyond statutes of limitations.
Partial Payments Revive Dead Debts
If your debt is beyond the statute of limitations – that is, if it is too late for the debt collector to sue you – making a partial payment will revive the debt and start the life of the debt again. This is because of an odd thing about the law – it distinguishes between the life of the debt (forever unless paid) and enforceability of a debt (the right to sue to collect, controlled by statutes of limitations). To put that into plain English, the law regards a debt as continuing to exist until it is either paid or excused in some way even if it is long past the statute of limitations. And this little bit of B.S. allows for all kinds of unethical mischief by debt collectors.
It allows debt collectors in some jurisdictions to raid bankruptcy claims even though the debts would be illegal to try to collect, and it allows for the revival of debts by a debtor making a simple mistake. If you offer a gift, for example, that promise is not enforceable because there is nothing paid for it. Giving a debt collector partial payment will put you back on the hook for the entire amount.
Unless you make a signed written agreement that you are settling the claim for the amount paid, partial payments are a terrible idea. But of course what the debt collectors tell you is that you can pay a little now and then a little later if you get a chance. Wrong. Make that payment and they’ll be after you as hard as they can go.
Partial Payments Restart the Clock
Similarly, if the debt is old and you make a payment, it restarts the statute of limitations. I do not think it should do that if the payment does not, at least, take the debt out of default, but the courts haven’t listened to me on that one. Make a payment on an old debt and, voila, you have a new debt.
Don’t Pay Unless You Have a Plan
So with all that in mind, what do you do? I would suggest that there’s never a moral reason to pay a debt collector – it’s like feeding rats, and do you really want them to multiply? But there could be times when you might want to either for moral or practical reasons. If so, you must know what you’re doing. Your payment will revive the debt. Do you know how you will pay it? Do you have a reason to pay the whole thing? I would be extremely cautious in this as you are subjecting yourself to liability to a group of people more willing to destroy you than almost any other group.
I’d say don’t do it 99.99% of the time.
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Partial payments are almost always a bad idea on old debts. They (almost) never accomplish anything good for your relationship with the creditor or for your credit report. And they can cause massive problems for you because they revive the debt.
What You Should Do If You Get Called on an Old Debt
What you should do is find out who, exactly, is calling you. Find out the company and the individual. Then listen to what they say. If it is convenient, record the conversation. If not, take notes. Ask questions.
What You Should NOT Do
A 20 year old debt, not paid for 20 years, is beyond all statutes of limitations in all jurisdictions of which I am aware. However, you still “owe” the debt in some theoretical way. It remains a “debt,” and that turns out to be important. That’s because it can still be “revived” by any kind of payment.
You should know that they can’t sue you for such an old debt unless you revive it. They can’t hurt your credit report if you don’t pay it. And they can’t do anything good for you if you do pay it.
In my opinion, you should never pay such a debt. Unless you have a particular reason. A good reason might be that you need to do business with them and they have a policy of not doing so if you owe them money (utility companies are like this). So those situations might be different, but you still need to be careful.
Fair Debt Collection Practices Act
Just listen to what the debt collector says.
Let’s say he threatens to sue or tells you anything contrary to the above about hurting or repairing your credit. That would violate the Fair Debt Collection Practices Act (FDCPA). It is illegal for a debt collector to threaten you with action that he either does not intend to do or could not legally do. It is also illegal to deceive you about what he might do FOR you.
Suppose, however, he tells you that they can’t sue you, but that you still owe the money, and “wouldn’t it feel better” to pay it? Some people might say they have no money, and so the debt collector tells them, “No problem, you can just make a partial payment. Then, if you ever get any more money, you can pay some more…”
That also violates the FDCPA in my opinion because it is deceiving you and trying to take advantage of something most people don’t know. If you give someone a gift and say you’ll give them more later, that creates no obligation to pay. If you make a partial payment on a “debt,” you revive the debt and can be sued on it again. Even one that is many years past the statute of limitations and beyond causing you any harm,
Suggesting Partial Payments is Sneaky
Debt collectors are often trained to take advantage of people’s ignorance and to suggest partial payments on debts that are beyond the statute of limitations. If they try to get you to do that without telling you that you will revive the debt by doing so, they are misleading you. And that violates the FDCPA.
Partial Payments Revive Old Debts
By making the partial payment, you will revive the debt against you in its entirety, allowing the company to harass and sue you, and possibly even to damage your credit report again. Never, ever do it. Instead, take careful notes, and then go find an FDCPA lawyer to sue them.
If they get it all right and tell you that a partial payment would revive the right to sue you, tell them to go away and never call again. If they do, get a lawyer and sue them for that.
Other things to know
Partial payments will not just revive a statute of limitations after it has passed – it will extend it if it has not passed. Thus if the debt is five years old and getting close to the statute of limitations, your part payment will start the clock ticking again all over.
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