Does a Collection Company Have to Accept Small Payments? – Sue

“Dear Michael,

“Working with a debt relief company recommended by the bank. Have a visa credit card, was behind in payments because of job loss. Bank sold my debt to a collection agency (just received the letter). Sent the letter to my debt relief company. Prior to this, we have set up a budget. I am job hunting and want to pay off my debts. Does a collection agency allow small payments at a time. The debt is $15,000

can my debt relief agency negotiate with the collection agency


Hi Sue,

It sounds like the debt relief company you are working with is a credit counseling agency (CCA). CCA’s generally only offer a debt management plan (DMP) as a tool for paying down your debt. A DMP is not really much of a negotiation. It’s a payment plan that will typically set up a monthly repayment based “2.something” percent of your balance. Let’s assume it is 2.25%. With a 15k balance you may pay roughly 337.00 monthly for 60 months for a total of just over 20k.

If you are job hunting right now, do you have a predictable monthly income currently that suggests you can confidently meet all other bills and pay 337.00 a month? If you are not confident, you should not agree to the payment until you are.

You may be able to negotiate the debt for a lower pay off balance now that it is with a collection agency:

Who is the debt owed to?

How many months past due are you?

Who has the debt been assigned to (who is collecting on it now)?

What resources do you have to come up in a short-ish period of time to fund a negotiated settlement (e.g. could you put your hands on 6k)?

What state do you live in?

As far as sending a small amount of money to the collector (lower than the 2.25% example above) – it’s possible. If interest is being assessed you will want to be sure you are not putting yourself in a negative amortization scenario where your small payments get applied, but the balance grows anyway.

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If you can answer the above questions in the comment section below you will get some helpful tips and feedback.

Michael Bovee has worked with financially challenged consumers for the past 17 years and is a recognized expert in his field. Michael founded Consumer Recovery Network (CRN) in 2006. CRN offers debt settlement services and educational resources nationwide. He has served as its president since 2006.

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