Advice if Creditor Applied Payment to Wrong Account
I am having a problem with my bank in that they applied my payment to the wrong account? How do I get this resolved.
I called Bank of America after correspondence to make a settlement offer on my credit card. I was offered an amount to pay, I gave them my checking account info, then they paid off a different credit card than the one that I was trying to settle. It was a card with a much lower balance and low interest rate. I didn't have enough cash in my account to settle both at the same time, so I sent the agree larger settlement amount on the higher balance higher interest card to the company with a self written letter settlement agreement. I never received confirmation or a written settlement notice for the large amount and it is still on my credit report for the unpaid amount that I settled for. The smaller 2% credit card with the lowest interest was reported as paid off legally, what can I do to fix this. I feel they tricked me into paying off a lower interest rate and keeping me in debt for the 21% rate. They cashed the check, is this proof that they agree to the amount for settlement, I was told this, but need to get the credit report to say it is settled.
After considering the situation described in your question, I must tell you that you are probably fighting an uphill battle in your efforts to force Bank of America to honor the settlement you had negotiated on the larger account. From your question, I understand that you sent the letter outlining the agreement to BoA after it had cashed your payment and applied the funds to resolve the smaller account. Assuming that is the case, I do not think that the letter you sent the bank will be of much use to you in your efforts to enforce this agreement. Had a written settlement agreement existed prior the payment, it would be much easier to go to BoA and demand that they apply the funds to the account referenced in the settlement agreement. Even if the creditor did not explicitly agree to a settlement, if you had sent it a letter outlining the agreement before you made payment, the bank’s depositing your payment would likely be viewed as acceptance of the terms outlined in your letter, thus creating an enforceable contract. However, since you sent the letter after payment was made, I would be surprised if any court would view it as an enforceable agreement. Without more substantial documentation, this disagreement as to which account the payment was to be applied devolves into a case of “he said, she said.” I would expect that, if this matter ended up in court, the creditor would say that this was regular payment on the smaller account with no strings attached, and you would probably be hard-pressed to prove otherwise.
Unfortunately, the practice you describe is rather common amongst collectors, who are given incentives to collect as much money on accounts as possible. When they see that a consumer has multiple accounts with their institution, some unscrupulous collectors will apply any payment made by the consumer in a way that is most favorable to the bank and to the collector. In your case, the bank applied your payment to an account with an interest rate 19% points lower than the account you intended to settle. Because of similar situations I have seen in the past, I always recommend that anyone who wants to negotiate a settlement or repayment plan with a creditor obtain a written agreement from the creditor outlining all terms before making any payment under the new agreement. A written agreement assures that both parties are on the same page as to which account is being settled, the amount of the settlement, and the payment due dates. If you would like to read more about the debt negotiations, and other debt relief options available to consumers who are struggling with their debts, you can visit the Bills.com debt negotiations page at http://www.bills.com/debt-negotiation-and-settlement/.
Lacking a written agreement outlining the settlement agreement you negotiated, I would be surprised if Bank of America would be willing to correct this “error.” You could possibly file a lawsuit against BoA for its refusal to honor your settlement agreement; filing a lawsuit may allow you to subpoena the creditor’s telephone recordings. However, suing BoA would likely cost you substantially more than settling the debt, unless the debt in question is quite large. Given the situation, you may have no choice but to accept that your previous payment was applied to your smaller account and start fresh in negotiating a settlement on the larger debt. In order to minimize the risk of any additional problems, I strongly encourage you to demand that the creditor mail, e-mail, or fax you a settlement agreement letter stating the settlement terms and which account is being settled. While most collectors will ask for immediate payment, while you are on the phone, you should insist on receiving a written offer letter before you make payment.
Since I am not an attorney, I cannot provide you with legal advice. If you think that this creditor defrauded you by misrepresenting to which account your payment would be applied, you may wish to consult with an attorney licensed in your state to discuss the situation and find out what recourse is available to you. I wish you the best of luck in resolving this account, and hope that the information I have provided helps you Find. Learn. Save.