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Question: I had a debt in excess of $8,000 back in 2009. I received a letter from a collection agency saying they will settle it for $6,000. I happily agreed to save that $2,000 and paid the $6,000. I had received a letter showing that it was settled in full. Three years later, I get a letter in the mail threatening suit by another third party collection agency for that same $2,000 from earlier. Turns out that collection agency sold it to another one. Now I can’t find that letter since I figured everything was OK. When I call that original collection company, they said they have no record of me settling. They said it was just a payment for $6000 and that I never paid the rest. Is there anything I can do? Don’t they monitor and record all calls?

Answer: Your testimony plus proof of payment is sufficient basis for a defense of accord and satisfaction. Send a letter to the agency trying to collect the $2,000 stating that you settled the debt, refuse to pay, and will take legal action if any attempt is made to collect it again. Enclose proof of the $6,000 payment, taking care not to disclose financial information such as account numbers.

Check your credit reports to see if the debt is listed as unpaid. If it is, dispute the debt with each credit bureau in writing, again stating that the debt was settled and enclosing proof of payment.

If the agency continues attempting to collect, or lists the debt as unpaid on your credit reports, sue the second agency for violation of the Fair Debt Collection Practices Act and Fair Credit Reporting Act and the first agency for breach of contract and fraud.

People should keep a file relating to settled debts on a permanent basis. Complaints such as this are extremely common.

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