Payday Loan settlement offer--urgent reply needed

[valley_man0505]

My sister-in-law just was just contacted by a collection agency trying to collect on a payday loan she never paid back.  For some reason, the payday loan store never cashed her post-dated check at the end of the loan term even though she did not pay it back.  The collection agency told her that they will settle for half the total amount if she sends them a check post-dated for August 31, but they have to receive the check by Thursday (only 2 days).  If she doesn't send them anything, they say they are going to debit her checking account for the full amount on Friday (full amount is close to $640).

I'm not sure how to handle this.  The whole thing sounds very shady, but they did not leave her any time to even request proof or a written agreement for the settlement.  My first instict is to request any documentation possible since they may not even have any right whatsoever to this debt.  Also, without a written agreement, there is nothing stopping them from taking the settlement and then cashing the original checks anyway.

Should she call their bluff and demand proof along with a written agreement and take the chance of losing out on the settlement option and having them cash the original check on Friday?  Is the collection agency violating any laws by not giving her any time to demand proof?  I know they are normally required to give you 30 days to dispute or request verification after their initial contact, but I don't know if this also applies with payday loans (especially when you consider the mountain of paperwork you have to sign when taking the loan--I have no idea what rights are being waived when people sign those).

I spent about 5 years fighting collectors and cleaning up my report.  I finally have a "clean" credit history again and I thought I knew how to handle collectors.  However, I have never had to deal with any payday loan collections.  If they truly do have her original post-dated check from the payday loan, all the normal "rules" seem to go out the window.

[valley_man0505]

Here is a follow-up.  Since she didn't have a long time to decide what to do, I gave her the best advice I could.  I told her send a DV CMRRR immediately.  I also told her to close her checking account in case they do try taking any money out of her account.  If they send the necessary validation, hopefully she can work out a new settlement or, worst case scenario, set up a payment plan for the full amount.

She miss out on the chance for a settlement this way by not following their "rules", but I just didn't feel comfortable having her send money to someone who seems to already be trying to bypass the FDCPA by not giving her a chance to dispute or request validation before agreeing to their terms.

[sharpie]

That makes sense to me, I had the same issue today - wondering if it is the same people, who just bought up a bunch of really old junk debts from a PayDay Loan place?

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@valley_man0505 wrote:

Here is a follow-up.  Since she didn't have a long time to decide what to do, I gave her the best advice I could.  I told her send a DV CMRRR immediately.  I also told her to close her checking account in case they do try taking any money out of her account.  If they send the necessary validation, hopefully she can work out a new settlement or, worst case scenario, set up a payment plan for the full amount.

She miss out on the chance for a settlement this way by not following their "rules", but I just didn't feel comfortable having her send money to someone who seems to already be trying to bypass the FDCPA by not giving her a chance to dispute or request validation before agreeing to their terms.

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[DCole3g]

I would not have settled either unless I had something in writing.  Generally CA will send a letter in the mail informing you that they are trying to collect a debt and then give you a chance to dispute it or not.  A phone call without a letter sounds pretty shady to me.

[User273165]

Have them send you a letter via USPS to verify the debt. Respond with a letter such as this. They will verify it and you pay it or they dont and you're done with them.....

Date

Name
Address

Company Name
Company Address

Re: Acct # *******

To Whom It May Concern:

I am sending this letter to you in response to a notice I received from you on 6/25/2012. Be advised, this is not a refusal to pay, but a notice sent pursuant to the Fair Debt Collection Practices Act, 15 USC 1692g Sec. 809 (b) that your claim is disputed and validation is requested.

This is NOT a request for “verification” or proof of my mailing address, but a request for VALIDATION made pursuant to the above named Title and Section. I respectfully request that your office provide me with competent evidence that I have any legal obligation to pay you.

Please provide me with the following:

• What the money you say I owe is for;
• Explain and show me how you calculated what you say I owe;
• Provide me with copies of any papers that show I agreed to pay what you say I owe;
• Provide a verification or copy of any judgment if applicable;
• Identify the original creditor;
• Prove the Statute of Limitations has not expired on this account;
• Show me that you are licensed to collect in my state; and
• Provide me with your license numbers and Registered Agent.

If your offices have reported invalidated information to any of the three major Credit Bureau’s (Equifax, Experian or TransUnion), said action might constitute fraud under both Federal and State Laws. Due to this fact, if any negative mark is found on any of my credit reports by your company or the company that you represent I will not hesitate in bringing legal action against you for the following:

• Violation of the Fair Credit Reporting Act
• Violation of the Fair Debt Collection Practices Act
• Defamation of Character

If your offices are able to provide the proper documentation as requested, I will require at least 30 days to investigate this information and during such time all collection activity must cease and desist.

Also during this validation period, if any action is taken which could be considered detrimental to any of my credit reports, I will consult with my legal counsel. This includes any information to a credit reporting repository that could be inaccurate or invalidated or verifying an account as accurate when in fact there is no provided proof that it is.

If your offices fail to respond to this validation request within 30 days from the date of your receipt, all references to this account must be deleted and completely removed from my credit file and a copy of such deletion request shall be sent to me immediately.

I would also like to request, in writing, that no telephone contact be made by your offices to my home or to my place of employment. If your offices attempt telephone communication with me, including but not limited to computer generated calls or correspondence sent to any third parties, it will be considered harassment and I will have no choice but to file suit. All future communications with me MUST be done in writing and sent to the address noted in this letter.

This is an attempt to correct your records, any information obtained shall be used for that purpose.

Best Regards,

Your Name

[valley_man0505]

I sent her a variation of the "form letter" I always used for DVs.  It is quite similar to the one posted by AJC1987.  She put it in the mail today CM RRR.  I'll update when/if anything else happens.