Can a Debt Collector Refuse Payment?


A debt collector’s job requires him to collect the greatest amount of money possible from each debtor. If an individual offers to pay the debt, but at a lower amount than the company is willing to accept, the debt collector can refuse the consumer’s offer in the interest of increasing the company’s profits. In certain cases, however, refusing payments is nothing more than a negotiation tool for the company.

Payment Negotiation

Debt collectors often work on commission or receive a bonus for the amount of debt they recover over the course of the month. This gives debt collectors incentive to coerce debtors into making the highest payments possible and, in doing so, rejecting lower offers.

If you offer to pay a collection agency less than a debt collector tells you the company will accept, that does not mean that the company will return your payment. The collection agency will accept your payment but continue to demand higher monthly payments on the debt.

Accepting Payments

Debt collection agencies accept any payment you send, no matter how small, because the very act of making a payment on the debt resets the statute of limitations for lawsuits. Thus, accepting your payment extends the company’s right to file a lawsuit against you for the remaining amount you owe. Your risk of facing a lawsuit, however, decreases if you are making regular payments to the company, even if those payments are less than the company demands.

Types of Payment

During negotiations with consumers, debt collectors typically demand that debtors pay their collection debt via a bank draft. A bank draft gives the collection agency the right to automatically deduct the amount of the payment you owe each month. Unfortunately, collection agencies can easily abuse a bank draft by withdrawing more than the amount you originally agreed to.

Even if a debt collector tells you the company cannot accept your payments in any form other than an automatic bank draft, this is rarely the case. The company will cash any payments you send in via a money order or cashier’s check. This benefits all parties since the company receives payment for the debt and you protect your bank account information in the process.

Consumer Misconceptions

Some consumers mistakenly believe that when a collection agency refuses payment, the consumer ceases to owe the debt. This is not the case. While its often in a collection agency’s best financial interests to accept your attempts at payment, the company also reserves the right to return to you any payments it deems too small to accept.

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