First, dont ever let them know where you work, or where you bank. They have no right to this information, and you have no obligation to give it to them. The only reason they want it is to make it easier on them to collect if they decide to proceed with legal action against you. So just say, "no comment", or "I'm prefer not to reveal that information".



Second, don't use personal checks to pay. It gives the creditor a world of information about where you live, your banking information, and in some cases your drivers license number. Get a POSTAL money order, or buy one from an institution not associated with your bank. If I buy a money order from Wells Fargo, I probably bank at Wells Fargo.

Make a copy of the cashiers check or money order and put it in your file. Make sure you keep it accessible and safe. Collection agencies are known for keeping lousy records - and if YOU can't prove it, you didn't do it. You don't want it to come down to nothing but a your word against theirs scenario.

Some collection agencies engage in the inscrupulous practice of accepting an offer for payment in full, only to reasign the balance of the debt to a new collection agency with which you have no such agreement. This is not legal in most states - of course, that doesn't keep them from trying!

THIS IS IMPORTANT. The states where it is blatantly illegal for the creditor to modify the terms are:

Arkansas, Colorado, Connecticut, Georgia, Kansas, Louisiana, Maine, Michigan, Nebraska, New Jersey, North Carolina, Oregon, Pennsylvania, Texas, Utah, Vermont, Virginia, Washington & Wyoming.

Some states have made modifications to this law. When the credit deposits a check intended as full payment of a debt, they can explicitly retain their right to sue you by writing the EXACT words - "under protest or without prejudice" on the check with the endorsement. Those exact words must be used. Anything else will not work. This applies in the states of Alabama, Delaware, Massachusetts, Minnesota, Missouri, New Hampshire, New York, Ohio, Rhode Island, South Carolina, South Dakota, West Virginia & Wisconsin

In California there is a seeming contradiction in the law that works as a loophole.

In California, the collector can make an arrangement, and then cross out any language pertaining to full payment. But California also has a different law that allows debtors to circumvent the first law. Basically it involves a procedure whereby the creditor is informed that you will be sending a check which includes a restriction. The restriction being that if the check is deposited, then it is payment in full. This is then written in specific language on the check and mailed with a letter which again, lets the creditor know that the check is payment in full.

Since not everyone lives in California, I'll write a separate posting on the blog to explain how this works there.