My Creditor Cancelled My Settlement Agreement After I Made Payments


Dear Steve,

I was laid off and couldn’t pay my credit card. I even ended up homeless. I finally got a job and contacted the credit card and got on a settlement plan with their collection agency.

I paid $1000 upfront and $250/month for 7 months. The credit card canceled their contract with the collector and my contract as well. Even though I paid on time, they are no longer honoring my settlement. They want me to start over – the $2750 that I paid them.

Do I have any legal recourse? Both parties never contacted me and now the credit card company has given it to another collection agency.



Dear Jennifer,

I’d love to tell you this is the first time I’ve seen this happen, it sure isn’t.

To safely make a settlement you should get the deal in writing and keep a record of the payments made towards the agreed total payment.

I’m probably fairly safe in assuming you don’t have the settlement agreement in writing. If you do, make sure you save that with all your other important papers and never lose it. And if you do, that’s the document you need to potentially correct this situation.

I suspect what happened here is the collection agency contracted used the settlement offer as a way to get some money and never had the authority or intention to actually settle.

If the collection agency extended the settlement offer without contractual authority from the debt owner, you would be left fighting the collection agency and the debt owner would not have to honor the deal. But if you have the settlement offer in writing you might just have a fighting chance of a positive outcome. You can use your proof of the offer, acceptance, and payments to show there was a formal agreement.

Without that written settlement agreement it is going to be a tough fight. See, it all comes back around to that written settlement agreement.

While anything is possible, if I had to bet, I think you’ll have to start over again. Be sure to get any new settlement offer in writing before making any payment.

I’m not saying you did this but it is situations like this that drive me crazy when people don’t consider bankruptcy to start with. For much less than you’ve already paid you could have had the total debt eliminated in about 90 days and had legal protection from your creditors.

I don’t know what other debts you might have but it might be a smart move to at least learn more about what bankruptcy would mean for you.

To find a good local bankruptcy attorney and have a free discussion about what bankruptcy would mean for you. Bankruptcy is the fastest way to get a fresh start for the least amount of money.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Damon Day - Pro Debt Coach

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