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Phone Payment for Debt

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Daniel Cohen
UpdatedMay 29, 2023
Key Takeaways:
  • Get a signed contract before paying a collection agent.
  • Do not allow a collection agent unfettered access to your bank account.
Should I Allow a Collection Agent to Access My Bank Account Before Signing a Contract?

A bill collector, who purchased my charged-off account recently, wants an over the phone payment from my checking account and allow them to take future payment from that acct. each month. I agreed to the terms, but only if I can get it in writing first and be allowed to send in my own monthly payments. I was told the agreement is only good if I make the initial phone payment, after which they will put it in writing and set up for them to take the money out of my acct monthly. Is this legal?

Assume for a moment that the collection agent is unscrupulous. In other words, a liar. Let us say you give this collection agent your checking account number and an authorization to make a withdrawal from your account. Instead of withdrawing $100 or $200 or whatever you agree from your account, it hammers your account with multiple $600 or $800 withdrawals until your account is overdrawn.

You call the collection agent, and assuming it picks up the phone, you say, "We had a deal for $100 or $200, what happened?" The collection agent will say, "No we didn't! You said we could take what we wanted!" You will object. Of course, the collection agent will say, "Nothing was in writing! It is your word against ours." Since you have no money in your account, you cannot hire a lawyer to fight this injustice.

Now let us assume for a moment that the collection is as honest as the day is long. Your asking for an agreement in writing will be not a problem for a collection agent who is on the up-and-up because anything an honest collection agent says on the phone it will repeat in writing. Honest people work that way.

Of course, the collection agent may have its own reason for not wanting to put the agreement in writing before it starts collecting money from you. But do you really want to find out?

The question becomes, "What should you do?" You have four options. First, do it their way and learn if the collection agent is honest or dishonest. Second, insist on it sending you a contract in writing that a person authorized to sign agreements at the collection agency before you send it a dime. Third, write your own contract, and send it to the collection agent for its signature. Or finally, do nothing and wait for this collection agent to give up and sell your account to a different collection agent.

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



Struggling with debt?

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 Q4 2022 was $16.91 trillion. Housing debt totaled $12.26 trillion and non-housing debt was $4.65 trillion.

According to data gathered by from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 8% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

Collection and delinquency rates vary by state. For example, in New Hampshire, 18% have student loan debt. Of those holding student loan debt, 5% are in default. Auto/retail loan delinquency rate is 2%.

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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