We owe about $1200 to a company. They said we have to make 4 monthly payments of about $300 each. We don't have that. They said if we don't make those payments it will be turned over to a collection co. and there will be interest and it will, of course, hurt our credit. But if we just start making monthly payments of about $30 to them anyway, can they do anything since we are making some kind of payment? Thanks.
You owe a small amount. You should start sending money on it immediately. $30 is OK! Of course they can turn it over to a collection agency, and the account does bear interest, but if you are making regular payments they are less likely to do so.
If they file a lawsuit on it, that is not the end of the world. You may appear in court, explain to the Judge your circumstances and that you are paying $30/mo, and ask the Judge to stay any garnishment or collection action while you make payments. Judgments usually bear 9% simple interest, and you will have to pay the court costs.
So, immediately send them $30 with a note and make sure you make timely payments and you will be done in 48 months or more depending on the interest rate. When the balance gets lower, you may be able to offer a lump sum in settlement.
Yes, your case can be sent to collections, eve if you send them money right away. They may be less inclined to pursue a judgment if you are sending payment, IF they haven't already filed a collections case in court, just because it is less expensive to them to not have to start court proceedings. However, if a case were already filed, they would have little motivation to stay proceedings when you still owe them money. In Michigan, the Judgment interest rate actually varies based on the month the judgment is entered.
Keep in mind, collection agencies are usually going to work with you to get you to pay. You probably would not get sued if you pay religiously on a payment plan. Yes it will hurt your credit, but if you can't pay $300 per month and your creditor is being difficult, there isn't a whole lot you can do other than see if they'll calm down with $30/month payments. There is no law that requires they take the $30/m payment plan, but they most likely do want to get paid.
Debt Collection Attorney
The creditor can bring a lawsuit if they find the payments aren't enough each month. Since not being able to pay is not a defense to the claim, you will probably have a judgment entered against you later.
That judgment will accrue nine percent interest per year until paid in full.