PFD Alternative

[Minato08]

I posted a while back about my efforts to PFD a collection on my report.  It was a small CA and the guy refused to bother with such a small amount (<$100) and refused to put anything in writing.  So instead I sent the PFD letter with a cashier's check attached.  The letter, and a note on the check stated that cashing the check signified acceptance of the offer.

So in about a week, the collection fell off of TU.  It did not fall off of EQ within the 10 day time frame, so I disputed it (one of the stipulations in the letter was that they will not verify the debt to any third party) and it fell off of EQ in 3 business days.  

I suppose it's more difficult for them to let go of money in hand.    

[jdxprs1]

very interesting idea. 

[RobertEG]

I think you have been very fortunate.

PFD is a contract agreement.  A note on a proffered check that its cashing constitutes legal acceptance of terms of an offered, but not previously accepted, contract with the credtior will most likely, if they dont delete, put you back into court for a breach of contract suit against them. I cant predict how the court might come down on this, but I dont think it is a slam-dunk.

I, personally, would always have a secured agreement before tending funds on a yet unaccepted agreement.

This is not a course of action that I would routinely recommend as a way of asserting agreement to a CR deletion, or avoiding the path of first having in hand a clear meeting of the minds in a PFD constract.

[britishbooklady]

I think CAs have to pay a fee of some sort every time they update information to a CRA. But, if the CRA contacts them to verify a debt, they don't have to respond and it doesn't cost them anything. It kind of makes sense when you're talking about a small-time business. At least you got the results you wanted...eventually. Congrats!

[llecs]

Very lucky indeed. As mentioned, they don't have to comply with that and they probably can cash that check without needing to delete. The PFD was non-binding. Writing a note on a check saying they agree to delete if they cash the check is a form of a restrictive endorsement. Some states allow it and some do not. YMMV. I'm in VA and I can write whatever I want, but it is non-binding.

[Minato08]

Just a little more information.  It was my expectation to have to threaten legal action for breach of contract.  Since money was always an issue with the CA, the idea of having to pay travel expenses and possibly damages in such a case should have been substantial leverage to get what I wanted.  All in all, it was the proverbial offer that the CA couldn't refuse. 

Since I expected to threaten to sue, I made sure to cover my bases.  The concern here was that the CA would be able to ignore the restricted endorsement and cash the check without being bound to its terms.  This is not true, or at least presents an arguable case here.  As this was presented, it was a contract and not a restricted endorsement as commonly used in these matters.

Typically, a restricted endorsement is used to obtain an accord and satisfaction, or settling the debt for less than what is owed.  Due to modernization and streamlining, courts have held that creditors may avoid being bound by such restricted endorsements if they write on the check "rights reserved", "under protest" or other language to that effect.  Creditors may then take the money offered and pursue the rest.  This is especially true where the court determines that the debtor acted in bad faith, where there was no dispute over the amount owed, or where the debtor offers $1 on a debt for a significantly higher amount.

However, my letter/offer was presented merely as an offer of settlement.  Furthermore, I made the offer for the full amount in order to avoid the possibility that it could be interpreted as an accord and satisfaction.  This was an offer for a completely new agreement. 

I did not merely write a note on a check.  I sent a letter setting forth the terms of the offer.  I attached the check.  Underneath the signature line on the check, I wrote: "Endorsing signifies acceptance of accompanying offer.  Void if rights reserved."  Thus, the language clearly referenced the governing agreement, as required by the UCC section governing commercial paper.  Also, the offer would be voided if the CA tried to reserve any rights, giving me rights to my money back if they tried.

So, there was more than luck involved and it is legally binding.  In case anyone is interested, I included the body of the letter I wrote. 

To Whom It May Concern:

Attached to this letter is a cashier's check in the amount of $XX.XX, payable to <CA>.  It is payment in full on the balance of $XX.XX.  Payment is subject to the following conditions:

1.      By cashing this check, <CA> agrees to delete any and all negative postings regarding this debt from all three credit bureaus.

2.      All necessary action on the part of <CA> to delete all negative postings shall be completed within ten business days of cashing this check.

3.      This account will not be verified to any credit reporting agency or any third parties.

Please be aware that this is the final offer of payment.  Negotiating the check signifies your acceptance of this offer.  If you do not accept, promptly return the check to the following address as failure to do so may be construed as an implied acceptance of the terms of this offer.

[Anonymous]

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@RobertEG wrote:

I think you have been very fortunate.

PFD is a contract agreement.  A note on a proffered check that its cashing constitutes legal acceptance of terms of an offered, but not previously accepted, contract with the credtior will most likely, if they dont delete, put you back into court for a breach of contract suit against them. I cant predict how the court might come down on this, but I dont think it is a slam-dunk.

I, personally, would always have a secured agreement before tending funds on a yet unaccepted agreement.

This is not a course of action that I would routinely recommend as a way of asserting agreement to a CR deletion, or avoiding the path of first having in hand a clear meeting of the minds in a PFD constract.

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A check with a restrictive endorsement and / or an accord & satisfaction are generally covered in the Uniform Commercial Code.  Rarely, if ever, does a restrictive endorsement such as OP described create a binding settlement agreement.  The creditor may cash the check and refuse to be bound by the proffered terms with impunity.  Since the vast majority of states have adopted the Model UCC, an unsolicited restrictive endorsement will generally not create an accord and satisfaction.

Even if we assume that OP does not live in a state which has adopted the Model UCC, every state has adopted the UCC Safe Harbor which allows a creditor to avoid the terms of a valid restrictive endorsement by refunding the amount of the check within 90 days.  Then there is also the issue of the credit agreement.  Many specifically disavow payment tendered with restrictive endorsements.

Courts have uniformly ruled that that a restrictive endorsement creates an accord and satisfaction only under two conditions:

1.  A previous settlement agreement existed between the parties; or

2.  There is a good faith dispute between the parties and that the consumer has given the creditor prior notice of the dispute.

That said, OPs logic that a creditor may just want to accept the money and delete to avoid any protracted battles over the validity of a claimed accord and satisfaction may be valid.  I would, however, be careful about which CAs or OCs I chose to try this stunt with.

[Minato08]

I'm in NY by the way.

For what it is worth, this should not be summed up as a mere restrictive endorsement.  Apparently it confuses the issue.  I explained above how what I did is different.   

This was a simple case of an offer which indicated the means by which the offeree could accept.  The check was conditional promise, as described under UCC § 3-105(2).  There was no way CA could legally have negotiated the check and not be bound by the terms.  A reservation of rights (signing "under protest" or to the same effect) is inapplicable here because there are no rights to reserve.  Furthermore, the offer is voided upon the CA's attempt to do so.  Once the check was negotiated, a contract existed between the CA and myself.  Therefore, I do not believe it appropriate to charcterize it as a "stunt",  but to each his own. 

This is just me sharing my success story. Like others here, I ran into a stubborn CA that would not put the agreement into writing.  This is an alternative method to achieve the same end.  With this, you have the written agreement and CA's signature indicating acceptance (on the back of the check). 

As for 06's comment above, not every state has adopted this section, NY is one of the hold-outs.  Nevertheless, the safe harbor clause (UCC § 3-311) deals with accord and satisfaction.  As I addressed above, this is not an accord and satisfaction because it is a full payment.  Also, even if one does live in a state where this statute was enacted, the debtor will be getting the money back.  So the best case scenario is that they succeed and get a deletion.  The worst case is that they get their money back and are in the same boat as before.  Net cost, a 44 cent stamp.          

[Anonymous]

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@Minato08 wrote:

I'm in NY by the way.

For what it is worth, this should not be summed up as a mere restrictive endorsement.  Apparently it confuses the issue.  I explained above how what I did is different.   

This was a simple case of an offer which indicated the means by which the offeree could accept.  The check was conditional promise, as described under UCC § 3-105(2).  There was no way CA could legally have negotiated the check and not be bound by the terms.  A reservation of rights (signing "under protest" or to the same effect) is inapplicable here because there are no rights to reserve.  Furthermore, the offer is voided upon the CA's attempt to do so.  Once the check was negotiated, a contract existed between the CA and myself.  Therefore, I do not believe it appropriate to charcterize it as a "stunt",  but to each his own. 

This is just me sharing my success story. Like others here, I ran into a stubborn CA that would not put the agreement into writing.  This is an alternative method to achieve the same end.  With this, you have the written agreement and CA's signature indicating acceptance (on the back of the check). 

As for 06's comment above, not every state has adopted this section, NY is one of the hold-outs.  Nevertheless, the safe harbor clause (UCC § 3-311) deals with accord and satisfaction.  As I addressed above, this is not an accord and satisfaction because it is a full payment.  Also, even if one does live in a state where this statute was enacted, the debtor will be getting the money back.  So the best case scenario is that they succeed and get a deletion.  The worst case is that they get their money back and are in the same boat as before.  Net cost, a 44 cent stamp.          

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Your understanding of NY law and the UCC are lacking.

Whether payment is for the full amount or a lesser amount, any requirement for additional performance must meet the terms of an accord and satisfaction unless, and only unless, the requirement is one which by law is an obligation.  Even then, failure to perform that task is not a condition of payment, but rather an issue of compliance with relevant statutes.  The NY UCC is clear on this issue in that any instrument that is in any way conditional has a restrictive indorsement. 

Further, you are taking the NY UCC out of context when you rely exclusively on Article 3 to justify your position.  The NY UCC is crystal clear in Article 1, Part 2, Section 1--207 that acceptance under reservations of rights is valid when considering restrictive indorsements.  As affirmed in Horn Waterproofing v. Bushwick, 66 N.Y.2d 321, 488 N.E. 2d 56, 497 N.Y.S.2nd 310 (1985), in New York you can have your cake and eat it, too.  When you encounter a restrictive endorsement, neutralize it by indicating above your signature or endorsement words such as “without prejudice” or “under protest.”

Your type of accord and satisfaction works well when you already have an agreement with the CA to perform a certain action and your restrictive endorsement reaffirms this prior agreement.  In cases, however, where there is no prior agreement or legitimate dispute of the debt, it is not legally binding.

[Minato08]

Sigh, here we go with the town crier trying to assert himself.  If you don't understand something, just say so.  There's no need to try to be insulting.  1-207 is not the safe harbor clause you spoke of by the way.  You conveniently ignore that you're wrong just to force an argument.   

This is not an accord and satisfaction.  Look up that definition, wikipedia has a nice simple one for you.  This is a separate agreement.  You may not know this, because there's no google page spoon feeding it to you, but a properly written contract can circumvent statute so long as it is not prohibited by statute.  Additionally, you don't seem to understand the "why" behind what you read, which is key in truly understanding legal matters. 

Although your foot is already in your mouth, 1-207 doesn't apply here for two reasons: 

1.  There are no rights to reserve.  When you understand that, you'll understand that if you get paid all of what is owed to you, there is nothing to pursue.  The fact that this is not an accord and satisfaction is relevant here.  The purpose behind that is to pursue the rest of what is owed to you.   

2.  I already explained to you that this is better understood as an offer and acceptance.  The offer was voided if any rights were reserved.

Your blanket application of the law, as well as your outstanding copy-paste ability,  illustrates your status as an armchair lawyer.  Please stop pretending.  You're clearly missing the issue altogether.

This forum is for people seeking help, not for watching unqualified persons beat their chest about the forums and feign legal expertise.  As it stands, you're doing more harm than good.  If you find that it's your calling, go ahead and take the LSAT and go to law school and put something behind what you say.  That way you can be more helpful, instead of wasting everyone's time.

Although I've shown you twice that you're clearly wrong, I'm sure you'll come back with another delusional response about something else completely irrelevant.  Maybe the next one will invoke the Rule Against Perpetuities.