Advice on settling 4yr old debt with CA in CA

[tacomanator]

Hi!

In February I took a trip the emergency room. I received a bill shortly after and summarily requested a payment plan. The hospital agreed to the plan and to send the first bill, but the next correspondence I received was from a collection agency. After a bit of disagreement, I dropped the ball on the situation and then simply (and childishly) refused to take care of the matter. It's now several years later and I received a "settlement offer" from the CA. The terms of the letter are unclear, and I'm seeking advice to make sure I handle it properly. Details follow.

Summary of debt

Amount of original debt to hospital: $750
Interest applied by CA: $350
Current amount owed to CA: $1,100

Timeline

• February 2005 - Visit to emergency room
• Around May 2005 - Requested payment plan which was verbally agreed to by hospital
• June 2005 - Receive collection notice from Computer Collections, Inc. (CCI). Called CCI to dispute on grounds that payment plan had been requested and agreed to by OC and I had not yet received the first invoice.
• June 2005 to ??? - Various collection notices from CCI that were ignored
• Around September 2006 - Collection notice from new CA: CBSJ Financial Corp
• Around or after September 2006 - I may have had phone conversation with CBSJ. Told them debt was disputed and nothing more
• May 2010 - Received settlement offer from CBSJ for $435. The terms of this letter are deceiving:

Settlement Offer Letter

Dear Patient,

In these hard economic times, we know our patients are trying to clean up their credit. Hospital wants to help you by authorizing CBSJ Financial Corp. to offer you a one-time discount of 40% as an incentive to promptly resolve this debt. If CBSJ Financial Corp. receives a payment of $450 within fifteen business days of this letter, this account will be considered paid in full.

This is a great opportunity to resolve this outstanding debt and we encourage you to take advantage of this limited time offer.

Please call Collection Dept, 888-600-8047 to pay by phone or send a check or credit card information with the remittance slip attached below to ensure that your payment is posted with the discount.

To arrive a the $450 figure, one must subtract 40% of $740 (the supposed discount). What is deceiving about this is that, I suspect, if I pay the $450 this will only clear the amount owed on the original principal balance and CBSJ will still claim I am liable for the remaining $350 in interest. I further suspect this would "reactive" my account thereby giving them additional leverage against me by restarting the clock on the period in which the collection account can be reported to the credit bureaus. Finally, I don't believe this would weaken my position in bargaining for a "Pay for Delete".

I have no objection to paying the amount, whether a settlement or in full. However, I am seeking advice to ensure that I handle this properly such that the credit history item is deleted, the account is considered paid-in-full, and no further action by the CA can be sought against me.

I live in California and, as I understand it, the SOL is 4 years. My understanding is that the clock would start running sometime in June based on the above, but I'm unclear if my short conversation with CBSJ has any impact (even though I did not remit any payment or make any promises to do so).

I believe my next step is to contact the CA in writing to make an offer for a settlement stipulating my terms. Do I have to take any particular caution in doing this (to avoid resetting any clocks)?

Any advise you have to offer is greatly appreciated. Thanks in advance !

Drew

[chane]

Drew, yes that is correct. You need to get them to agree to remove it and send you verification that it is paid in full, if you make that payment. Once they agree, make the payment and monitor your credit report. Give them 15-30 days to remove it. If they don't contact them reminding them that they agreed to remove it. If they still don't either dispute it or sue them.

[tacomanator]

Great, so my take home is that it would be OK to contact them to negotiate a settlement (doing so would not reset the clock) and I should do all correspondance in writing. Does anyone have a guideline for where I should start in terms of negotiation? I seem to remember reading about 25%, which for me would be about $400 to settle the entire thing (given that SOL is expired).