Collection agencies can derail a consumer proposal if terms are not met

A couple of weeks ago I negotiated settlements with several creditors on behalf of a client who really did not want to do a consumer proposal. (CP) It was probably a wise decision since, the more I got into the exercise, the more equity in his house and other “grabbable assets” he seemed to have. A CP would have revealed all that and the price would have been pretty steep.

The settled amounts I negotiated were mostly at 40 cents on the dollar, with no interest. One settlement was with a major Mastercard, who had handed the file over to one of the bigger Collection Agencies in town. We had agreed on an amount of $1,937.76.

Monday this week (well after I had closed the file) I got an “urgent” message from the collection agent I had dealt with. If I did not return the call that day, it sounded like the sky would fall upon me and my children.

I did not actually get the message till Tuesday, but was relieved to see that the sun had still come up that day and my loved ones were unharmed. I called the guy back and he was very aggressive right off the bat. We had “failed to honour the agreement” and now they were going to pursue the remainder of the debt – another $2, 800 or so.

I said “really, but why?”

The answer was because we had failed to pay the agreed amount. Apparently a check had been sent for ONLY $1,937 and the 76 cents had been forgotten !!!!

I smiled and said “oh, I was worried it was something serious.”

The guy took great offense to this – this is very serious – they could not and would not close the file without the remaining 76 cents. He said you have to get the client to go into his bank and pay the amount or instruct the lawyer who did the original payments to cut another check for $0.76 to settle the bill and it must be done that day or else. (By the way if the lawyer agreed to do this she would surely charge at least $100 for the service !)

I chided him and said “this seems pretty extreme, can’t you guys just take the $1,937 and call it a day? We’ll spend hundreds of dollars of our time simply discussing the matter.”

He flew off the handle and said he was going to get his supervisor on the phone who would explain the “seriousness” of the situation to me – since clearly I was not taking the matter seriously.

After several minutes waiting a youngish female supervisor came on the line and she was even more shrill than her underling. By my standards I thought I was very restrained on the call – I have been much much worse in such settings – but I was mostly in it for the entertainment – I was not in any way riled up myself. But she felt I was being very sarcastic and belittling and threatened she would destroy the whole settlement if I did not find a way to get them their 76 cents within twenty four hours.

Finally, in between her rants, I had a brainwave and asked if I could go online into my own bank account and pay the money myself via online banking. This seemed to stun her – why would anyone do that? Well, duh, to save time and money lady!

So that’s what we did. I created a new “ bill payment”, made the 76 cents payment, gave her the confirmation code, and we parted company finally with closure and a resolution.

The collection agency holds all the cards

I never did tell the client any of this – he is blissfully unaware. I wasn’t in it for a pat on the back. Just writing this down has taken time and I suppose at a cost, but I can justify it by saying there were a few lessons here.

1) Like it or not, the collection agency holds all the cards if you are trying to settle and avoid a bad debt write off. Learn to swallow and smile.

2) When something looks absurd, look for the easiest and most practical way out of the problem – think out of the box.

3) Don’t get into a heated exchange with people who can make your life miserable after the fact – the few minutes of personal satisfaction will be muted later by potentially months or years of regret.

There, it’s all off my chest now.

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