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The instrument by which those terms are conveyed is called a restrictive endorsement. A restrictive endorsement is a document drafted by your attorney or yourself and attached to your payment or placed on the back of a check, to inform the creditor that by depositing your payment, he agrees to report the item as you have specified or delete it exclusively from your file. The good thing when it comes to this method is that it closely always gets the best primary settlement. As much as it rubs the creditor the wrong way, it is still hard for a good deal of of them to send the cash back. After all, they make cash by gathering payments, not by sustaining your credit record. The disfavor to using this method is that sometimes, the creditor will reject the whole deal and send it all back. Other times, he will go in front and deposit the check with no intention of altering anything on your credit. As a matter of fact, this happens rather often. The remedy for such action is to file suit in little claims court. As a general rule, mortgage lenders will not honor this form of payment. This method is in general most effective with older accounts that have been reported on your file by a collection agency and accounts that have been charged-off. Most of these creditors have lost hope of gathering any funds and will consider this a windfall. Restrictive endorsements may likewise work with newer accounts if the creditor “perceives” the account may be difficult to recover. Disclosing your terms is through incremental notification, settlement and credit reporting, then negotiating each one separately. This combines parts of both into an effective open dialog to reach an agreement on the front end. A True Story: A friend of mine owed an older gas credit card bill. The account was being handled by a collection agency in New York City. My friend asked us what to do in regards to this bill. It was for $700.00 and was closely (6) years old. Knowing that most folks that were in this business in New York City normally left their offices on Thursday afternoon to go up to the Catskills for a long weekend, we told David to send a check for $150.00 to the collection agency. He likewise placed this notation on the back of the check. Depositing of these funds constitutes payment in full on account #xxxxxxxx. David mailed the check on Wednesday, knowing that it would get into the collection agency office in Friday’s morning mail. Guess who was running the office while the boss was playing golf? You guessed it. The, egotistical office manager that always wanted to assert her authority when the boss was gone. When the mail came in Friday morning, she went through the checks like a beaver chewing on logs for a new dam. Her fingers were clicking that deposit stamp and a smile of “greed” came all over her face as she totaled the deposits for Friday morning. Well, lets just call her “Jane” for now. Jane couldn’t walk fast sufficient to get to the bank to make the deposit. Mind you, she never read the backs of the checks. She just stamped for deposit only. When the boss called from the resort, he asked his girl how much of a deposit was made? When he found out that she deposited over $8,000 he was ecstatic. He could now brag to his golf buddies when it comes to how good his office manager was. Comes, Monday morning and the boss is the firstborn one in the office. He looks at the deposit slips, matches the amounts to the accounts and lo and behold, here is my friend David’s payment for $150. A detect of remainder due was sent to David. He made a copy of the back of the check and sent it to the collection agency. When the boss saw this, he knew that rather of gathering $700.00 he only accumulated $150.00 and he could NOT do anything in regards to it. Oh the power of knowledge. Regards, Regis Sauger |
