I have done some research on the issue of restrictive and conditional endorsements and these are my findings.. (Copied from a Law Journal for Collection Agencies) Bet you've made the mistake at least once of paying an old debt without first attempting to negotiate it! Here are some great pointers for avoiding this costly mistake. Never disclose where you work or bank If you are asked, simply say "no comment". The reason for this: If your settlement falls through, and the creditor gets a judgment against you, knowing where you bank or work will make it easy to collect the judgment. Never pay your settlements with a personal check How you make payments is very important, as it protects you from other creditors learning about your financial status and bank account numbers. For this reason, never send a personal check. Get a cashier's check or money order. Make sure you get the money order or cashier's check from a different bank than your own bank or the post office. Make sure you keep a copy of your money order or cashier's check and put it in a safe place! Collection agencies keep notoriously bad records and it's your word against theirs if you say you paid and they said you didn't...unless you have the copy of the money order or cashier's check. I negotiated a settlement with a creditor for less than I owed. The creditor is now suing me for the balance. Is this legal? Yes! You need to read the following information carefully. Some collection agencies will agree to settle with you for far less than you owe and then turn around and hire another collection agency to collect the difference. However, in many states this is illegal. Once a creditor deposits or cashes a full payment check, even if she strikes out the words payment in full or writes "I don't agree" on the check, she can't come after you for the balance. The states in which this law is enforced: Arkansas Colorado Kansas Connecticut Louisiana Georgia Maine Michigan Nebraska New Jersey North Carolina Oregon Pennsylvania Texas Utah Vermont Virginia Washington Wyoming Some states have modified this rule. In the following states, if a creditor cashes a full payment check and explicitly retains his right to sue you by writing "under protest or without prejudice" with his endorsement, then he can come after you for the balance. But those exact words must be used. If he writes "without recourse," communicates with you separately, notifies you verbally or writes on the check that it is partial payment, it is not enough. Alabama Delaware Massachusetts Minnesota Missouri New Hampshire New York Ohio Rhode Island South Carolina The bottom line is that the restrictive endorsement can work. The states listed at the top of this post have case law to protect you in the event that the creditor tries to collect more money after the setlement proceeds are tendered. The states at the bottom of this post require the accepting creditor to do specific things to protect their rights. Just another word from WestCap!
Re: Settlements and Restrictive End Westcap, you are incredibly appreciated. Thanks for taking the time to educate all of us. Doc
Re: Settlements and Restrictive End OKAY, This is probaly a stupid question but, I need to ask. Say I live in Michigan and the collection agency is in Minn. Which states law is used? The State the the Money order was bought in or cashed in?
Yes, that is indeed great information, but only for slightly under half of the nation. What do you suggest for those of us not so fortunate as to live in one of those states?
Re: Settlements and Restrictive End Lizardking, question for you. What happens if one of your old creditors sells the debt to a collection agency. (That could happen irrespective of your lawsuits against the CRAs, of course.) Then that CA adds their administrative fee and relabels the debt from, say, "MBNA" to "Michigan Collection Agency," and then reports that to all three CRAs. What's your next step? I was one of those inspired by your lawsuits. Although I have no chargeoffs (I paid off everything), I had a lot of late-pays. My lawsuits against two of the three CRAs were very successful. I alleged inadequate investigations and backed that up with letters from the now-paid creditors. (I found that fully-paid creditors were happy to cooperate with me against the CRAs, lol.) Both CRAs deleted everything, and I'm about to file against the third. In my case, since the debts are completely paid off, there's no chance that they'll re-emerge with some other label, thankfully. Doc
Re: Settlements and Restrictive End Hola,Westcap: Would you Please-Please read my Posts on "collection agency vs debt purchase" ????? I was sooo very glad to discover your wisdom, and am sooo in anticipation of your response. The Clock is ticking in my dilema. TIA, KNDT(kehoy2k@aol.com)
Re: Settlements and Restrictive End Aha, very good! I know this will sound groupie-ish, but I have copied and saved-to-disk more of your posts to a subdirectory called "Lizardking tips" than I care to admit. Thanks for continuing to share your wise counsel on this board, LK. Doc
Re: Settlements and Restrictive End Does LizardKing offer any credit consulting services on the side? I'm only halfway kidding.....
Re: Settlements and Restrictive End any chance of those 'lizardking tips' being republished in a 'best of' type thread?
Good post, but I am always suspicious of statements regarding the law in particular states that lack any citations. I have done some research on accord and satisfaction. While I am not going to take the time to research the law in each state that is on those lists, I went ahead and looked at Arkansas law. Arkansas case law suggests that a payee can not cross out a restrictive endorsement, cash the check, then pursue the balance. In Hardison v. Jackson, the Ark App Ct held that an A and S was established even though payee crossed out language indicating that payment was tendered in full satisfaction. Ark App 49, 871 S.W.2d 410 (1994) Hardison followed an Ark Sup Ct decision, Market Produce Co. v. Holland, where the Sup Ct stated: "It is true that, in order to constitute an accord and satisfaction, it is necessary that the offer of the payment should be made by one party in full satisfaction of the demand, and should be accepted as such by the other. **412 But when the claim is disputed and unliquidated, and a less amount than is demanded is offered in full payment, the question as to whether the creditor in such case does so agree to accept the amount offered in full satisfaction of his demand is a mixed question of law and fact. If the offer or tender is accompanied by declarations and acts so as to amount to a condition that, if the creditor accepts the amount offered, it must be in satisfaction of his demand, and the creditor understands therefrom that, if he takes it subject to that condition, then an acceptance by the creditor will estop him from denying that he has agreed to accept the amount *53 in full payment of his demand. His action in accepting the tender under such conditions will speak, and his words of protest only will not avail him." 38 S.W. 2d 317, 318 (1931) Now, I don't claim to know it all, but I have seen a lot of inaccurate stuff floating around the net re A and S. UCC 3-311 was revised (I think in '96 or '97), and it covers A and S. It is Stat. 3-311 in most if not all states..also see UCC 1-207, Stat 1-207 in most if not all states. IMO, New York has minority holdings (pro creditor) on A and S issues..
IMWO, Two very important aspects of A and S are: a) make sure that your debt is subject to a bonafide dispute, and have evidence that you dispute the debt. b) make sure to establish that it is the creditor's intent to accept the terms. send a letter to them (CRRR) before you send the instrument of accord, no matter which state you are in. after the creditor accepts the instrument, send them at least one letter confiming that they have accepted it, and ask them to refund the payment if it was not their intent to be bound by it. this all shows good faith..
