Do I Pay All of That?
by Dave Ramsey

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Dear Dave,

I have old credit card debt that goes back a few years. The account has been sold and re-sold to several collection companies. The limit was $300, but with late charges and fees I now owe $1,500. Am I liable for the extra $1,200?

Monica

Dear Monica,

You agreed to their terms, which included the right to charge fees and penalties. Legally, they can do this. The honorable thing would be to send the company you contracted with a check for the full amount.

However, that company no longer owns the debt, and they won’t get the money. They sold the debt. The present holder is just hoping to get something out of it. They buy debt in volume, dirt cheap, and whatever they can collect from any creditor is profit.

The current collection company would probably be thrilled to settle for a lot less than face value. Make them an offer. Start low. Meet them somewhere in the middle. You can probably settle this for around $500.

Do not give them any money until you have in your hand – on paper, in writing – a statement showing the amount for which they will settle, and do not give them electronic access to your bank account, either.

Once you have this in hand, send them a cashier’s check or money order, and keep a copy of that payment and the letter for the rest of your natural life. If this comes up again, and it very well could, you’ll have proof of the agreed upon amount, and the fact that you’ve already paid!

– Dave

Photo by John Hughes

Comments on this article	ADD COMMENT
contract Posted by Sheila from CT I had a Capital One Card $200.00 Limit,but what wasn't explained was about over limit fees.I used it once it was 189.57,before i knew it it was 245. with the add fees.It took me $355.00 to get it closed I had to get a small credit union loan to close that account.Never again will i ever do business with Capital One.I only use my credit union Cards
Capitol One user... Posted by Cynthia from Oregon the paperwork you signed explained the fees. It's not their fault you didn't pay attention. Don't use a credit card at all. If you can't pay cash, don't buy it.
You really need more information... Posted by Robert from Wichita falls This debt has most likely been charged off and claimed on one or another of these companies' taxes as a business loss, or may even be out of statute of limitations. I understand that while on the surface the honorable thing is to pay this account. The companies' in question, however, may not be acting honorably. Often they engage in borderline legal activities, and illegal practices in order to up the balance in hopes of bullying you. See if your workplace has any financial planning assistance or if you have legal protection check with a lawyer before responding.