Collection agency chance of being sued? Question I owe a collection agency $850 if I pay $60 a month min. would that keep me out of going into the? the court system and being sued or in prison? I only get paid less then $1,000 a month and most of the money goes to other bills that are needed not things i want. Plus I do need money to live on to buy food and things I really need or if I ever get sick and need to make co-pays for doctors.

You can usually arrange with any collection agency to pay an amount each month that will keep them happy. I would think that a $60 per month payment on an $850 amount owed would be plenty. Call or write them and let them know that you will send a check for $60 each month until the balance is paid in full. As long as you do that without missing a payment you’ll probably never hear from them again.

A collection agency can initiate legal action against you because they’ve received an assignment of the promissory note from the original creditor. However, in most states, in order to do so they would need to serve you with a summons. They would send a process server to your address (if they have a current one) and he/she would need to physically hand the summons to you and have you sign for it before legal action may proceed and that would mean arbitration before a court appointed arbitrator. So, the process server would need to be paid, then there are filing fees and the arbitrator would need to be paid. My point in this is that it would cost the collection agency quite a bit to pursue legal action against you. For a balance of $850 it is unlikely they would consider it cost effective to spend so much to collect that amount. They would likely be happy with you sending $60 per month instead.

If they threaten to pursue legal action anyway, even though you are willing to send $60 per month, it may be an empty threat. One thing to be aware of is that collection agencies are notorious for not actually having the original, signed promissory note (though they won’t tell you that). Without the original, signed promissory note they would not prevail in court or arbitration and the case would likely be thrown out, and they know that. So, if they continue to threaten legal action ask to see a copy of the original, signed promissory note. (This is giving them a heads-up that you know they likely don’t have it.) That might make them more agreeable to doing things your way.

One really good resource for debtors in this kind of trouble is Debtorboards.com. Their website address is http://www.debtorboards.com. Lots of good advice, help and resources for debtors in your position. Also, seeking the advice of a good, local attorney is never a bad idea.

PS: No such thing as debtor’s prison any more.

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