Fill and Sign the Payout Agreement Form

U.S. Legal Forms, Inc. Payout Agreement and Correspondence * * * ©2006 U.S. Legal Forms, Inc. All rights reserved. This payout agreement, developed by U.S. Legal Forms, Inc. (USLF), is protected by copyright, and may not be reprinted, distributed or displayed by any means without the express written consent of USLF. This payout agreement is provided without any warranty, express or implied, as to its legal effect and completeness. Please use at your own risk. If you have a serious legal problem, we suggest that you consult an attorney in your state. U.S. Legal Forms, Inc. does not provide legal advice. The products offered by U.S. Legal Forms, Inc. are not a substitute for the advice of an attorney. THIS PAYOUT AGREEMENT IS PROVIDED “AS IS” WITHOUT ANY EXPRESS OR IMPLIED WARRANTY OF ANY KIND INCLUDING WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT OF INTELLECTUAL PROPERTY, OR FITENESS FOA ANY PARTICULAR PURPOSE. IN NO EVENT SHALL U.S. LEGAL FORMS, INC. OR ITS AGENTS OR OFFICERS BE LIABLE FOR ANY DAMAGES WHATSOEVER (INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF PROFITS, BUSINESS INTERRUPTION, LOSS OF INFORMATION) ARISING OUT OF THE USE OR OF INABILITY TO USE THIS PAYOUT AGREEMENT, EVEN IF U.S. LEGAL FORMS, INC. HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 1 TABLE OF CONTENTS NEGOTIATING WITH DEBT COLLECTORS ...................................................................................................... 3 CORRESPONDENCE ................................................................................................................................................. 6 PAYOUT AGREEMENT .............................................................................................................................................. 9 2 NEGOTIATING WITH DEBT COLLECTORS DETERMINE WHAT YOU ACTUALLY OWE You either owe all the debt, part of it, or nothing. Once you know what you actually owe, start communicating with the debt collector to work out payment terms or prove why you do not owe the debt. It is best to communicate with the debt collector by telephone and in writing. NEGOTIATING POSITION The debt collector wants to collect your debt as soon as possible at the lowest cost. Taking you to court is expensive. It’s usually not in the debt collector’s best interest to do so if the debt is too small to justify the cost. However, you may have agreed in a contract with the original creditor that if they ever had to take you to court to enforce the contract (e.g., your obligation to pay an agreed upon amount) and won, you would have to pay court costs and attorney’s fees. If so, the debt collector may have the same rights that the original creditor had under the contract. This would increase the likelihood a debt collector would be willing to take you to court. Regardless of the size of your debt, or a contract allowing the debt collector to collect attorney’s fees and court costs, taking you to court would not be an attractive option if you have no property, assets, or ability to pay the debt. Such a defendant is sometimes referred to as being “judgment proof.” A debt collector may try to pressure and shame you into paying the full amount of your debt. However, they can not do so in a way that violates the FDCPA without running the risk that you, the state attorney general, or the FTC will take them to court. Going to court for violating the FDCPA may seem unlikely to the debt collector unless it’s apparent to them that you know and are willing to assert your rights under the FDCPA (see below). Their violations can become your bargaining chips. Once a debt collector knows it’s not worthwhile taking you to court, and they can’t harass or shame you into paying the entire debt, their only option left is to negotiate a payout agreement. If you don’t have any property, assets, or a good income, you might think you do not have anything to bargain with. However, if you chose to declare bankruptcy, the debt collector would gain nothing. They have an incentive to negotiate a payout agreement with you to collect what they can. You may have to provide documentation of any hardship you may have experienced, and your inability to pay the entire debt, before the debt collector will be willing to settle for less than the full amount. It is also in your interest to demonstrate to the debt collector that you are a person they could trust to follow through with a payment plan. To do this, promptly respond to the debt collector’s communications, to the extent they are not solely for the purpose of harassment, and keep any promises you make. Debt collectors keep track of broken promises. Try to establish a foundation of mutual respect and open communication with the debt collector. Make them aware of any financial hardship you have, the most you can pay, and that bankruptcy is an option if that is the case. Ask to talk to the employee’s manager or supervisor if they won’t listen or negotiate with you. Do not agree to anything you can’t pay. If they persist in engaging in debt collecting practices that violate the FDCPA, assert your rights as described below. 3 WHAT TERMS ARE IMPORTANT TO YOU? Decide what terms are important to you. You can negotiate the amount of the debt. A debt collector will be more likely to settle if you are able to pay the agreed upon amount in full. If the debt collector agrees to accept less than the full amount as payment in full, get the debt collector to explicitly waive their right to receive payment on the rest. You might also get the debt collector to waive any interest and charges. You can negotiate the payment frequency and amount. The debt collector may agree to this if: the payments are the most you can afford, the payments are large enough to justify the extra cost of processing them, and they believe you will make the payments as promised. You may want to include terms in your negotiations that protect your credit score. Ask the debt collector to agree not to report your late payment(s) to a consumer reporting agency or to report your fulfillment of a payout agreement as payment in full. If the debt collector has already filed a lawsuit, get them to agree not to enter a court judgment against you. Get the payout agreement in writing before you make any payments. If you do not get the agreement in writing, another employee of the debt collector may try to collect the rest of the debt from you even if you have made all the agreed upon payments. Make sure all waivers by the debt collector are clearly stated in the payout agreement. If you are not able to negotiate a satisfactory payout agreement with the debt collector, consider seeking the help of a reputable non-profit credit counselor or a professional mediator (see below). ALTERNATIVES TO A NEGOTIATED AGREEMENT It is beneficial to determine what your position will be if you are not able to pay off your debt or negotiate a workable payout agreement. The debt collector may hold on to your debt and wait until they have other claims from other creditors they can combine and enforce together. The debt collector may file a lawsuit against you. If you do not defend it, the court will enter a judgment against you for the full amount of the debt plus interest, court costs, and possibly attorney’s fees. A judgment will accrue interest at a rate set by statute from the date it is entered. If the debt collector determines you are judgment proof, they may abandon their collection efforts to get the claim off its books. Finally, you could declare bankruptcy. However, bankruptcy is expensive, will only discharge your unsecured debts, and will leave a stain on your credit for several years. FINDING ASSISTANCE If you are not able to effectively negotiate with the debt collector, consider enlisting the help of a reputable non-profit credit counselor or get the debt collector to agree to mediation with you and a professional mediator. 4 Credit Counselor A reputable non-profit credit counselor can provide education and counseling on: money management, debt management, and budgeting. They are also especially helpful if you find yourself owing multiple debts to multiple creditors. They can negotiate with your creditors on your behalf, set up a payment schedule that you and your creditors agree to, and set up a debt management plan (DMP) to simplify your payments and reduce your total debt. In a DMP, you are required to deposit money each month with the organization and they use the money you deposit to pay to your creditors according the payment schedule you agreed to. Even though the services provided by credit counselors can be very helpful to consumers, there have been a lot of scams connected with these types of services. Some organizations have kept their client’s money and not paid their creditors anything. Some organizations call themselves “non profit” but still charge high fees. It is important to shop around and investigate their background before choosing one.  Check for formal complaints with your state’s attorney general’s office, consumer protection agencies, and the better business bureau.  Ask if the company belongs to an association that sets standards for its members such as the National Foundation for Credit Counseling (NFCC) (800-388-2227; www.nfcc.org ) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA), then check with the association to confirm that company’s membership with the association.  Ask if the agency is managed by an independent board of trustees. If so, someone without a vested interest is keeping an eye on the company.  Ask if the agency keeps client funds in a trust account, separate from its operating funds.  Ask if they have a written code of ethics and written operating procedures.  Ask if they have a policy of providing fair and equitable treatment to all creditors. Creditors may not cooperate if they believe that your credit counselor favors one creditor over another.  Ask what training their counselors have, their certification, and what continuous training they are required to take.  Ask what fees they charge before signing a contract. Reputable credit counselors do not charge a large up front fee.  Ask if you will receive a monthly statement showing how much is paid to each creditor and when the payment is made. Mediator Mediation can be an effective way to negotiate with a debt collector. A mediator is trained to help the mediating parties rationally discuss their differences and come to a mutual agreement. The worst thing that can happen is not coming to an agreement. You won’t get stuck with something you never agreed on. You can find a list of mediators in the yellow pages of your phone directory. Try to choose one with experience in mediating debts. PAYOUT AGREEMENTS 5 After negotiating an agreement, you and the debt collector need to get your agreement in writing. Such an agreement is often called a payout agreement. A payout agreement should contain the following terms:  Payout amount.  Explicate waiver by the debt collector of their right to collect anything more than the agreed upon amount. This is very important. If you don’t get the debt collector to clearly waive their right to collect the full amount of the debt writing, you could wind up having to pay the full amount of the debt with interest.  Interest and late charges.  Conditions that constitute breach of the agreement and consequences for breach. If you breach the agreement by failing to pay in a timely manner, you may become obligated to immediately pay the full amount of the debt, including any amount waived by the debt collector. The debt collector could also potentially breach the agreement by failing to make an agreed upon report to a consumer reporting agency.  Terms to protect your credit score such as the debt collector agreeing not to report late payments to a consumer reporting agency or reporting your debt as paid in full following your fulfilling your obligations under the payout agreement.  If the debt collector has already filed a lawsuit against you that they will not enter a court judgment against you. 6 CORRESPONDENCE (see below) The first letter is written from the perspective that you are in a position to pay off some, but not all, of your debts. It does not mention that you are considering bankruptcy as an option The second letter mentions bankruptcy as an option and provides a place where you can offer the creditor an explanation for why you have not been able to make your payments. Both letters and the agreement are worded to avoid acknowledging the debt is valid to help you avoid losing rights or reviving a time barred debt. 7 (Your name) (Your Address) (Your City, State, Zip Code) (date) (Company name) (Contact person) (Company address) (company city, state, zip code) Re: Settlement Offer; Case # . Dear Sir or Madam: It has taken me awhile to be in a position where I can take care of the alleged debt associated with the above mentioned case number. I appreciate your willingness to discuss payment options with me. I hope we can work something out that is fair to all my creditors in light of what I owe and am able to pay. Please review both copies of the enclosed agreement. If you find the terms of my offer acceptable, please, sign both copies and one to my attention. I will then perform my end of the agreement. I am currently negotiating with several other creditors and have a limited amount of funds at my disposal. I will pay the creditors I am able to agree with first. I am eager to resolve this issue and hope to hear from you soon. Sincerely, Enclosure: Payout Agreement 8 (Your name) (Your Address) (Your City, State, Zip Code) (date) (Company name) (Contact person) (Company address) (company city, state, zip code) Re: Settlement Offer; Case # . Dear Sir or Madam: I have been going through some financial difficulties due to . I appreciate your willingness to discuss payment options with me on the alleged debt associated with the above mentioned case number. I do not want to declare bankruptcy and hope we can work something out that is fair to all my creditors in light of what I owe and am able to pay. Please review both copies of the enclosed agreement. If you find the terms of my offer acceptable, please, sign both copies and one to my attention. I will then perform my end of the agreement. I am currently negotiating with several other creditors and have a limited amount of funds at my disposal. I will pay the creditors I am able to agree with first. I am eager to resolve this issue and hope to hear from you soon. Sincerely, Enclosure: Payout Agreement 9 PAYOUT AGREEMENT (see below) Fill in the names and address of the parties. Then, fill in the appropriate amounts and remove one of the paragraphs bordered below and beneath with dashes. Feel free to revise anything but save a copy first and only edit the copy. You may want to remove the paragraph on consequences if you breach the agreement. However, the debt collector may want something in there causing the full debt to become due and payable if you default on your obligation to pay. The debt collector will probably object to the paragraph requiring them to pay liquidated damages if they fail to contact consumer reporting agencies as they promised. If you can’t agree on it, just remove it. It shouldn’t hurt to put it in though. 10 PAYOUT AGREEMENT This Payout Agreement (“Agreement”), dated , is between , having an address at (“Consumer”), and (“Creditor”), having an address at . Creditor alleges that Consumer owes Creditor the debt associated with case number (“Alleged Debt”). The Alleged Debt shall be defined in this Agreement to include all interest and any fees associated with the Alleged Debt. Consumer does not admit liability for the Alleged Debt but wishes to avoid the potential future costs of litigation. NOW THEREFORE, the parties agree for good and valuable consideration as follows: Consumer agrees to pay Creditor the sum of dollars ($@@@)) as payment in full on the alleged debt (“Payout”). - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Consumer shall pay Creditor the Payout as a lump sum payment in the form of a money order or certified cashiers check no later than following execution of this Agreement. Consumer shall be in breach of this Agreement if Consumer is more than five days late in making such payment. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Consumer shall pay Creditor the Payout in monthly payments of dollars ($) each due on the day of each month. Consumer’s first payment shall be due on . Consumer shall pay Creditor a late fee in the amount of for any payment made after the due date. Consumer shall be in breach of this Agreement if Consumer is more than 30 days late on any single payment or more than 15 days late four or more times during any `12 month period. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - If Consumer breaches this Agreement, Consumer shall owe Creditor the full amount of the Alleged Debt less whatever Consumer paid toward the Alleged Debt pursuant this Agreement. In addition, in the event of such breach, Creditor shall be relieved of all its obligations pursuant this Agreement including its obligations toward any consumer reporting agency. Creditor agrees to accept the Payout as payment in full on the Alleged Debt and hereby waives any right it may assert to receive payment on the remainder of the Alleged Debt. Following Consumer’s full performance of this Agreement, Creditor shall have 60 days to remove all prior negative or derogatory information it reported to any consumer reporting agency regarding the Alleged Debt, including references to late payments or charge offs. In addition, Creditor shall report the debt as paid in full to all three major consumer reporting agencies. Creditor shall not report or provide verification of the Alleged Debt except to report it as paid in full. In the event, Creditor has filed a lawsuit against Consumer with subject matter including the Alleged Debt, Creditor shall not enter a judgment against Consumer. Consumer shall be in breach of this Agreement if it does not fulfill the obligations contained in this paragraph or attempts to collect any additional payment toward the Alleged Debt above the Payout amount. 11 If Creditor is in breach of this Agreement, Consumer shall give Creditor notice and Creditor shall have an additional 30 days to cure such breach. If the breach is not cured within 30 days following Consumer’s notice to Creditor, Creditor shall refund to Consumer an amount equal to 30% of the Payout amount as liquidated damages. The parties agree that an accurate amount of actual damages to Consumer would be difficult to ascertain and that the above mentioned amount for liquidated damages constitutes a fair estimate of what the Consumer’s damages would be and that such liquidated damages do not constitute a penalty. Both parties agree that the Payout amount shall be confidential and in no way an admission of liability or acknowledgment by the Consumer that the Alleged Debt is valid. Agreed: CONSUMER CREDITOR signature signature print name print name title 12