If a collection agency contracts a certain amount for a settlement, can they later decide it was too little and make me pay a higher amount?
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If a collection agency contracts a certain amount for a settlement, can they later decide it was too little and make me pay a higher amount?
I have a contract with a collection agency for a settlement. The form clearly states that once I pay a certain dollar amount, the debt will be Settled in Full. They are now telling me it was a mistake and I will have to pay much more. Can they do that or are they obligated to uphold the agreement and take the amount they are now calling a mistake?
Asked on February 14, 2011 under Bankruptcy Law, Alaska
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
Contracts and agreements, including agreements settling debts, are enforceable. In a case like the one described in this question, if there was a contract between the two parties that a debt would be paid in full if a certain amount was paid, and that amount was paid, then the creditor or collections agency cannot later decide they want more. (Or rather: they can decide they want more, they just can't legally do anything about it.)
There would have to be some ground to set the agreement aside: e.g. fraud (the debtor misrepresented its ability to pay during negotiations); a material mistake (it's clear that the decimal point should have been in another place); etc. However, a party cannot simply change or refute an agreement after the fact without good legal grounds.
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