I Have A Few Questions About Business Debt Collection

Q: Maybe someone can answer a few questions I have. I own a small business in California. I had an outstanding debt with one of my suppliers for $4,000. They agreed to accept payments on this debt, neither on a specified payment schedule nor specified amounts. I have paid the debt down to $1,500 approximately twice as fast as I originally expected to (ie, 4 months). Without any notice whatsoever, the company has turned me over for collection action on the balance due, despite receiving a payment less then 10 days prior. Can a company that has agreed to accept payments and received them in a timely manner turn me over for collection at this point? Also, any suggestions on what to tell the collection agency about *my* rights under the original agreement? I still intend to continue making payments, but am worried about a negative credit notation on my credit report.

A: If the creditor has entered into an agreement to forgo collection actions while payments are being made, the creditor is bound by that agreement, and it is not proper to take any action that would affect your credit record as long as you are keeping up your end of the bargain. But if the agreement was oral, the difficulty will be in proving that there was an agreement and proving

the terms of the agreement. If they deny that there was any agreement, or deny that your payments complied with it, then it's probable that you will lose a civil suit for collection because you will have the burden of proving your defense. Even aside from the burden of proof, it will be difficult to convince a court that the creditor agreed to forego collection actions without some idea of how much the payments would be or how often the payments would be maid. You would be arguing that the creditor made an irrational agreement. The best solution is to pay off the balance as soon as you can. If the agreement was written, then you should send a copy to the collection agency. .