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- Acceptance is valid if the power of acceptance is still in effect.
- There are five ways to terminate the power of acceptance.
- Acceptance occurs the moment the acceptance is dispatched.
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Can a collection agent or original creditor withdraw a settlement offer before the time-limit on acceptance lapses?
I began to negotiate a settlement with Encore Receivable Management for a credit card I could no longer pay. After a few calls we came to an agreement, they asked me to make the initial payment and that after that initial payment they would send me the contract. I requested that they fax me the offer so that I would have something in writing before the initial payment. That night they sent me the offer which stated that I would have 7 days to respond to the offer. I expected a call from them the following day to initiate the 1st payment, since they had been calling me a minimum of 3 times a day. After not hearing from them for 5 days, I called the phone number of the settlement offer letter. I was asked to call another phone number when I gave them my account information. The number I had been asked to call was for GE(where the credit card is from)and the rep that answered my call went on to inform me that my credit card had been charged off. I informed him that I had received an offer from Encore Management and he proceeded to tell me that GE use them to try and collect but that the offer was no longer available. I explained to the rep that the offer I received gave me 7 days to respond and he just repeated the same information. He then told me I had to options, to pay in full the debt or to pay a new settlement amount of $1,500 more than the original amount that was offered and that the offer Encore Management had agreed to was below the amount that they would ever agree to. In other words, Encore Management should of never agreed to that settlement. When I asked him why would they make that offer on their behalf he couldn't respond. I would like to know if I have any other options. Am I expected to just disregard all the negotiating I did with this other company especially after GE had confirmed to me, before I started negotiating, that Encore Management was given my account?
The main issue in your question is whether the collection agent or original creditor withdraw the settlement offer before the time-limit on acceptance lapses. In general, a contract is an agreement a court will enforce. A contract is formed when there is an offer and acceptance. I can't give you legal advice. Only an attorney can do that. I can, however, give you some general information that you can use as a starting point.
When is a Contract Accepted?
Law students and lawyers will recognize one potential sub-issue in your question, which is known infamously as the mailbox rule. The mailbox rule concerns acceptance of a contract. In most jurisdictions, acceptance of a contract occurs the moment the acceptance is dispatched. There is an importance exception to the mailbox rule that concerns certain language appearing in the offer. If the offer contains something like, "This offer will be accepted when your acceptance is received by me." The mailbox rule does not apply precisely here, but I mention it to acknowledge that some of its elements fit your facts.
You mentioned the collection agent faxed an offer to you that contained language to the effect that you had seven days to respond to (which we can safely assume to mean accept or reject) the offer. You called five days later to accept the offer. You were told the offer was withdrawn. The central issue in your question is, can the offeror (the collection agent) or the original creditor withdraw the offer before the seven days expires.
In general, an acceptance is valid if the power of acceptance is still in effect. Here, the power of acceptance was in effect for seven days. You called in day five to accept. Therefore, your acceptance would have been timely.
When is a Contract Terminated?
Next we look to see how the power of acceptance can be terminated. There are five ways to terminate the power of acceptance:
- Rejection by the offeree
- Counter-offer by the offeree
- Revocation by the offeror
- Lapse of time
- Death of the offeror or offeree
Let us focus on No. 3, revocation. In general, an offeror is free to revoke an offer at any time before it is accepted. Going back the mailbox discussion above, the offeror's revocation does not become effective until it is received by the offeree. The other four ways to terminate an acceptance do not apply in this case, and are self-explanatory.
Here, you called to accept the offer. It is unclear that you uttered the phrase, "I accept the offer," before the collection agent or original creditor said, "The offer is revoked." If you accepted the offer before the customer service representative could tell you the offer was revoked, then you have a contract. If the customer service representative told you the offer was revoked first, then I do not see recourse for you. I hasten to add that I am basing my discussion on the common law, which may not apply in your state of residence for this question. Consult with an attorney in your state to learn the exact rules in your state.
If the original creditor, or any creditor for that matter, does not negotiate reasonably, then you may want to hire a debt settlement firm to do the heavy lifting for you. Visit the Bills.com Debt Savings Center to learn more.
I hope this information helps you Find. Learn & Save.
Best,
Bill
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Debt statistics
Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q1 2024 was $17.69 trillion. Housing debt totaled $12.82 trillion and non-housing debt was $4.88 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 Nebraska credit card delinquency rate was 3%, and the median credit card debt was $463.
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.
