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If I Pay a Small Amount on My Debt, Can I Be Sued?

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Mark Cappel
UpdatedJun 6, 2023
Key Takeaways:
  • Creditors may contact you when an account is in arrears.
  • The 'creditor cannot do anything if you make a payment' idea is nonsense.
  • Open a negotiation with the creditor if you cannot make a payment.
If I pay a small amount on my credit card every month, can the collections department still call me?

If I pay an amount on my credit card every month (it is currently 45 days late), can its collections department still call me about the debt?

The original creditor has the right to call you about the debt any time a contractual installment is late. If you are in arrears on your payments you can expect the internal collections department to call to see why you haven't brought the account up-to-date.

However, most major card companies will refrain from sending the account to outside collections (to avoid the cost to them) for at least three months, but more often, five or six months in arrears.

Common Non-Law, Legal Urban Myths

Your question brings up a phenomenon I see often in the consumer finance theater, "the common non-law."

I can’t tell you the number of times I have been told, "The creditor can't do anything if you make a payment every month on the debt." The rule is stated as if the amount is not really important so long as something is paid each and every month. This rule is nonsense and has no basis in law.

Another commonly held non-law is that if a defendant in a civil suit avoids service of process the plaintiff is totally stymied and cannot proceed. Again, this is nonsense.

Why are these misconceptions so commonly and widely held? I believe the first non-law grew out of the Great Depression when an Alabama lawyer began negotiating much reduced debt payments for his clients who had theretofore been assiduous in their debt payments, but could no longer pay those aggregate amounts each month. A private plan of repayment called for extremely reduced payments, and the creditor agreed not to seize property, garnish wages, and so on if the debtor made monthly payments. In very poor months the debtor could pay in the amount of his best effort, but he had to pay every month.

From the creditor's point of view, half the collection battle would be won if they could get debtors into a payment routine or, rather, rut. If creditors were not to be paid substantially in bad months, at least they could salvage some benefit from this repayment plan. After the plan was agreed to between the debtor and each creditor it could truly be said, "pay what you can — if you can't make the full payment, pay something each month and the creditor can't do anything to you."

These repayment plans spread throughout the country and became very popular. Instead of getting nothing, creditors were getting something. Years later this grass-roots semi-solution became the conceptual basis for Congress' amendments to the Bankruptcy Act when it introduced the unprecedented type of bankruptcy known as a Wage-Earner's Repayment Plan, or Chapter XIII (13) — with strong support from the creditors and bankers.

Collections Laws Today

So, we can start with the fact that creditors have a conditional right to contact you in the regular collections manner simply because the account is in arrears. But for other regulatory regimes, you will be contacted by an internal collector to pressure payment from you.

However other regulatory regimes exist at the federal and state levels. All regulatory schemes exist by governmental action, but none are private (that I know of) by, say, trade association rules or other private means. Most states do not have a comprehensive regulatory scheme, only a collection of prohibitions against collectors resulting from ad hoc abuses and the regulations passed in response to such abuses. These collector statutes usually came about when some especially egregious act by a rogue collector resulted in specific consumer injury, giving collection methods an exceedingly unfavorable press.

Other states, such as California, simply incorporated the federal statute into the state law in its entirety. California made one huge addition to federal law by providing that the restrictions on consumer contact apply equally to original creditors. The federal statute known as the Fair Debt Collection Practices Act (FDCPA) applies only to third-party collectors, so it would not keep your creditors from contacting you. (See Collections Advice to learn more about the collections process.)

Recommended Course of Action

Contact a well-connected organization, the National Association of Consumer Advocates (NACA). This is an association of lawyers across the country who practice consumer protection law. NACA has developed a network that should provide a referral for you to an experienced attorney in your state who can speak with you and definitively answer any questions you might have regarding this debt.

Most initial consultations are provided free of charge. Specifically, you should ask the attorney if there are any laws or regulations in your state that could prevent collection activity in your situation, and if making small payments each month extends any degree of protection. A wide ranging discussion should help you plan ahead knowing all of your alternatives.

For more information about consumer debt, and the various options that may be able to help resolve it, I encourage you to visit the Bills.com debt help page.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

Dealing with debt

Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q4 2022 was $16.91 trillion. Auto loan debt was $1.55 trillion and credit card was $0.99 trillion.

A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.

Each state has its rate of delinquency and share of debts in collections. For example, in West Virginia credit card delinquency rate was 5%, and the median credit card debt was $410.

Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.

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10 Comments

NNicole, Jan, 2023
I loaned my cousin $3000 in June of 2022. I had loaned them money previously and they always paid it back in full within a couple week. Well over the next couple months, her gf and herself broke up and then my cousin claimed she never knew her gf borrowed it ( a lie), fast forward to November, they got back together so I asked for my money again. My cousin said don't worry money is not an issue, I'd never screw you over, of course I'll pay you back. December 5th I sent another message to her GF asking to be repayed. She said she would. December 28th comes and now my cousin is saying she's not paying me back. I say that I am going to take them to small claims court. Well January 5th I get a notification from Cashapp that my cousin was attempting to send me $20 for payment on the loan. I declined it. I then thought to check venmo and see that on December 30th her gf send me $25 with no memo. So my whole question is- if I accept a small payment of $20 in a $3000 loan that is now in its 7th month, does that make it implied consent of repayment arrangements? I sent her a text after declining the cashapp payment stating that I would not accept payment unless it's the full amount, until a formal payment agreement was established between us.
JJACK WILLIAMS, Feb, 2023
Your sister is a he or she. 1 person can't be "them".
llaureen, Jan, 2020

I recently went on disability and cannot pay my credit card in the full amount - I am sending them 25.00 per month - that is all I can afford, can they sue me if I am making an effort to pay something?

DDaniel Cohen, Jan, 2020

Making a token payment doesn't protect you from being sued. If your sole source of income is disability, you may be better off saving up what you send them each month and use funds once accumulated to offer to settle the debt.

MMadina, Oct, 2012
I have a student loan with Genesis Lending and I am suppose to pay $80.00 a month and can only afford $40.00 a month. I get only $700 in Social Security. Can the student loan take me to court if I'm at least paying something on the student loan?
BBill, Oct, 2012
I have two reading assignments for you that will answer your questions about student loans and Social Security benefits: 1. Discharge a Student Loan 2. Creditor Garnish Social Security Benefits?

Also, reread the original article above, which discusses the central issue in your question.

RRebekah, Apr, 2012
I am working and recently had my hours reduced, so therefore my pay has been decreased. I had emergency surgery in Nov 2011 and recieved bills from the doctors and being that I was not able to pay in full I set up a payment plan with them and put it in writing agreeing to pay each month. I have made my payments even paying more than what I agreed to, to try and reduce my balance as soon as possible. Now the office is telling me that they are sending me to collections. Are they allowe to do that considering we had a writen aggrement? Please help me, Thanks
BBill, Apr, 2012
The answer depends on the terms of your written agreement. In general, if you meet your obligation under the terms of the contract, then you should not be sued. I recommend that you speak with an experience consumer law lawyer who can review your documents.
JJACK WILLIAMS, Feb, 2023
They can't sue you Becky.