Urgently need pre-paid debit card to pay debt collector

Question

I owe a sum of a few thousand dollars to a debt collector. I've already gone through the steps of getting a confirmation of the debt and it is a debt I know I'm accountable for. I need to pay this amount soon as they've told me it's already filed to go into litigation. I should note I'm also trying to settle with them for a significantly lower sum. However, in order to do this I need to be able to pay soon with a card or bank account. All the advice I've seen online suggests I should never give them my bank account information, so I've been trying to obtain a pre-paid debit card in short time.

My issue has been finding a card that I can get quickly and load north of $3,000 onto. It seems like all pre-paid debit cards I've seen only arrive in the mail (can't get same day in person). I've tried a digital alternative such as Movo, but it seems like I don't have any reasonable method to get the funds into the account.

Another route I'm considering is a Visa gift card. Would this work for the purpose of paying debt and is it advisable?

If not, is there any other method you could recommend?

Answer 1

This sounds like a scam. The debt itself may be legitimate but the debt collector doesn’t sound legitimate.

Legitimate businesses would never need access to your bank account. If you have the funds ready to go, get their routing numbers and do a funds transfer from your own bank account to theirs.

Giving others access to your bank account (user name & password, for example) allows them to get up to all sorts of shenanigans and make it seem like you’re the one responsible. Besides, your account’s terms and conditions probably prohibit you from giving your password to others.

Now, it’s possible to agree to direct debits from your bank account, but that is normally for recurring payments - such as for phone bills. It sounds fishy for a one-off payment.

Have a chat with your bank about the situation. They may be able to help determine whether this is a legitimate transaction, and offer solutions such as bank cheques or telegraphic transfers, and perhaps even talk with the debt collector to assure them that payment is on the way - that would be more credible coming from a bank than from an individual. In any case, be alert that the purported debt collector might just be a scammer who is taking advantage of your situation.

Answer 2

For the purposes of this answer I am assuming that this is not a scam, and that they are not the one who led you down the path of needing to use gift cards to make the payment. No legitimate business would insist on gift cards.

If you want to make sure that you are not providing them with any more banking details than is necessary, you should consider the use of a cashiers check. The check will be made payable to debt collector X or you. The bank will pull the money out of your account the day they generate the check. The check will not have your account number listed. The check cannot be used as a way to electronically transfer funds. Some banks charge for generating a cashiers check.

You can use the USPS to track the delivery of the check, and require them to sign for the envelope. This will have an extra fee but it will allow you to know that is was delivered and signed for.

Answer 3

Even if they were legit, they won't file litigation (which is a lawsuit) because the overhead costs are considerable. But who cares? It's not a lawsuit until they serve you. Then it'll be a month + til the first hearing, and the suit will be extinguished once you pay them, which you're planning to do anyway. Ergo it's no threat at all.

Absolutely not. This is a SCAM.

Most likely, a crook has hacked a collector's database and obtained information about your debt... and is now impersonating the bona-fide creditor in order to trick you into paying the wrong person.

There are two giveaways:

• The urgency. They want you to move fast before you get a chance to do research, sleep on it, etc.
• The desire to be paid by the exchange of information. And in such a manner that anyone could turn the data you are giving them into cash, from anywhere into the world. This person can be sitting in an Internet cafe in Romania working this scam on you.

How to pay to block scammers (in case they're real)

America still uses a method that works very well to assure only the right party receives payment. It is called a check. The check has a some wonderful security features.

It must be physically mailed. You can defeat a scammer who uses unwitting "office assistants" by independently researching/confirming the proper mailing address of the collector to whom you owe money.

Since you write the name of the creditor's business on the check, anyone else will have difficulty finding a bank willing to risk its own neck to cash it.

The check will have the account number, but only the most trusted companies can convert a check directly into an EFT withdrawal. Everyone else must take it to a bank where it is scanned and interchanged through the Check21 system. This eventually turns into an EFT, but a single check does not enable multiple EFT withdrawals. Tricks such as changing the check number would be spotted quickly. So the check solves the problem of giving them your account details.

A temporary account as RonJohn proposes, might be just the ticket. If you only issue paper checks I cannot see how you can be held liable for more check amounts than you wrote.

Consider the consequences of making any payment

If this were legit, the moment you make a payment, you "acknowledge" the debt. This has an effect on your credit report: it restarts the 7-year clock on reporting of that bad debt. You get very little credit for paying the debt off in full, it will remain a reported R9 bad debt for 7 years after your last payment.

If the statute of limitations had passed in your state, you are legally clear of the debt and do not need to make any payment. I wouldn't normally propose welshing on debt, except for the unfairness of the above credit reporting.

Negotiate for your best deal

A legit creditor fully expects to get a fraction of the full debt paid. You can easily settle for a fraction. The forgiven debt is reported to the IRS as income under normal circumstances.

However you can usually get a creditor to agree to terms favorable for you in non-monetary ways: such as

• to agree that there is a legitimate dispute over whether the debt is valid or not, and you are settling to close the matter. (whether it's really legitimate is irrelevant; you could mutually agree the moon is made of green cheese in a contract; you are only agreeing this legal fiction is the basis of your agreement.)
• Therefore it will not be reported or acknowledged as a valid debt to anyone
  • including a credit reporting agency
  • including the IRS for debt-forgiveness purposes

Write a contract to that effect and send it to them and have them sign it. This is typically done via postal mail or fax - which again frustrates scammers because they have trouble pretending to be that.

Answer 4

This concerns me:

I should note I'm also trying to settle with them for a significantly lower sum. However, in order to do this I need to be able to pay soon with a card or bank account.

Debt collectors are notorious for using any and all tactics necessary to get money from you as quickly as possible. It is very well possible that even if you pay them the $3,000 which you mentioned they will still have you on the hook for the full amount.

If you don't receive official paperwork that they have reconciled with you for a lower amount then they can still seek the full amount. Phone conversations are absolutely not binding and you would be hard-pressed to prove anything in court.

By paying them even partially your debt clock gets reset back to zero so if you were hoping to wait out this debt for 7 years then the 7 years will reset.

Answer 5

If you're really worried about the collections agency doing something bad like taking more money than agreed, then open a "burner" temporary bank account.

Transfer just enough to satisfy the debt, and then -- when the transaction posts to the account -- close it.

It'll take a few days for the money to be fully transferred to your new bank, though.

Answer 6

I can't really go into it due to NDA's, but I work in this industry and see people getting scammed all of the time for many different scenarios that rational people removed from the situation don't think they could ever fall for.

Please do not let yourself be scammed. If there is any doubt at all, there is a solution.

If you legitimately have a debt that you would like to pay, call the original business directly, ignore the collection agency and go directly back to the business. They will be more than happy to talk to you, take your payment and/or arrange for payment terms. They have already written off your debt as a loss, so to get money back from it after being paid for the debt by the collection agency is a win-win-win in their book. They may be less willing to be talked down from the original value, but you are unlikely to be scammed by the original business. Once the debt is paid back to the original business, when the debt collectors call to pester you, let them know that you have entered an agreement with the original business and request that they stop calling you. Per the conditions of the Do Not Call list and subsequent legislation, legitimate businesses won't call you back since you will then be able to sue them (scammers won't care and will continue to call regardless).

Anytime someone anyone reaches out to you for money, you should be on your guard. Anytime someone tries to hurry you with threats of any kind, be doubly on your guard. Anytime someone who has contacted you and doesn't leave contact information that can be verified, be on your guard. Anytime someone who you cannot verify wants payment over the phone or email, be on your guard. Anytime someone wants your account number, your login name, your password, your id, your SSN, your address, your date of birth, or the same info of someone you know, be on your guard. Anytime someone is willing (or demanding) to accept alternate forms of payment (like pre-paid cards), be extremely skeptical. And never ever ever ever do something if the people on the phone tell you not to let the people you are working with to arrange payment (like the bank or the retailer) know what you are doing.

You can always wait. Don't buy the debt collectors line that it is urgent. Get every agreement in writing and email.

Answer 7

Physical cash is legal tender for all debts public and private. Someone can refuse to sell you a product or service for cash, but if you already owe them money, they are obligated to accept cash to clear the debt. If they don't take cash when you offer it, and you have evidence of this, they're not going to look good in court when they try to claim you refused to pay them.

(Unfortunately, they aren't obligated to take cash and settle for a lower sum. This only works if you have enough cash for the actual debt.)

If you're having trouble getting a dedicated account set up, but you can just withdraw enough cash to pay the debt, you should tell then you will be paying in cash. They are obligated to take it.

Answer 8

Am I missing an obvious point here? Assuming it's not a scam, the debt is real and these are the real debt collectors for this debt, why not call them, get their bank details and then do a credit transfer?

This way they can't take more than is owed, you're not handing over your bank details to someone else, etc.

Answer 9

First off, be sure that this is not a scam, as others have suggested.

Similar to a cashier's check, you can also get a money order. These are often easier to obtain since they are available at many grocery stores and gas stations; you don't need to wait until your bank is open and wait in line there. A common brand is Western Union, and a sign will usually be posted by the door or by the service desk/checkout. I think that to get the money order, you will need to use cash or debit.

Answer 10

Assuming this is a legit debt and a legit debt collector, you shouldn't have anything to worry about using your banking information, as they won't steal your stuff. That's the whole thing about them being legitimate.

However, if you worry about someone hacking their database or the transaction, you can get a virtual credit card that still links to your bank account or other credit card, but has a finite limit to when it can be accessed.

https://www.creditkarma.com/credit-cards/i/virtual-credit-card/

Some of these can be set up as a one time use or for a limited amount of time, like 1-3 months, before they become useless. I personally know some people do this to pay their regular bills online. This way, if someone does hack their stuff, they just revoke the number and get a new one, instead of getting a new bank account or credit card. They still have to deal with all that's necessary for getting their money back because of the fraud, which would happen even with most other forms of identity theft, but they don't have to wait for another account to be made, since it didn't truly exist in the fist place anyway.

Full disclosure: I'm a CreditKarma user, but that's as far as I go. I'm also not affiliated with any bank, credit union, credit card company, or other financial institution beyond being a normal user.

Answer 11

Often when a company (you owe money to) get a debt collection agency they have given up trying to collect the debt directly from you. This means you probably should be able to get a discount. If you're going to be paying them, they should not care how. They should accept PayPal. You need to verify that the debt collection agency is acting on behalf of the company that you borrowed from. Also you should verify what interest rates you have been asked to pay. Some companies charge extortionate rates. If that has happened to you then you might be better off going to court, if the Judge sees that the rates are very high the court will rule that you don't have to pay as much. Also courts can rule an agreed payment schedule. However this is all based on your circumstances. If you genuinely got into difficulty that caused you to end up in debt the court may sympathize and help you. If you were reckless and just didn't bother paying the court may punish you. The same applies to how the company and debt collection agency has treated you.