Should I Send the Collection Agency $10 Per Month?

This is a common question at my law firm. A potential client calls and says that they have defaulted on a credit card account. After I explain what their options are, they inevitably ask “Can’t I just send them $10 per month? If I do that, then they cannot sue me, right?” Wrong! This is a myth of the highest proportions. For reasons that I cannot explain, consumers often believe that it is better to send something, no matter how small, on an account that they have defaulted on, than to make the collection agency prove their case.In my opinion, it is one of the worst mistakes that you can make on a delinquent collection agency account. What these individuals fail to realize is that making that sort of gesture may do much more harm than good.Let’s look at the facts: The individual has defaulted on an account. The original creditor has given up on collection and sold the account to a collection agency. We don’t know when the default occurred, so time is of most importance. Making a payment, or an effort to pay, might be a large mistake for a number of reasons.The first reason is that you are acknowledging that you owe a debt to the collection agency. I would never recommend that a client do that. I prefer that the collection agency prove that a debt is owed, and to further prove that they are entitled to collect. Don’t do their work for them! The second issue of harm in sending such a payment is that it removes the Statute of Limitations defense. The Statute of Limitations is a law (which varies from state to state) which sets forth the amount of time that one has to file a lawsuit on a given subject. In Pennsylvania, where I practice law, the Statute of Limitations for Credit Card debt is 4 years.You can imagine the scenario where Joe Client defaults on a credit card in the year 2002. He fails to make payments for 5 years and the account ends up with a collection agency. The collection agency threatens to file a lawsuit, and Joe Client sends in a $10 check. Not only is Joe acknowledging that he owes a debt to collection agency, he has effectively terminated his argument of Statute of Limitations (which in this case would have prevailed in a court of law). Further, the collection agency (or anyone who sues you) is not obligated to accept anything other than payment in full of whatever amount it is that they are owed. Sending in the $10 payment is of no use, in my opinion.