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Law Educator, Esq.
Law Educator, Esq., Lawyer
Category: Consumer Protection Law
Satisfied Customers: 109879
Experience:  Attorney experienced in commercial litigation.
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I entered into a signed payment agreement with a collection

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I entered into a signed payment agreement with a collection firm in April 2011 (Zwicker & Assoc) to pay a specific Discover credit card a specific amount each month until paid in full. This account went to collection in 2007, but I never received any contact from anyone until 2011. I have been making my payments each month as agreed. In June 2012, I requested that that the payment amount be reduced to $100/month because my husband was disabled. This new schedule was accepted and payments were sent as agreed. This month I called to make a settlement offer and noticed that the balance open did not match my records, by approx. $900. I called to find out why - they chose to apply payments to a second Discover card that also went into delinquency in 2007, but for which I have never received anything - agreement, etc. (My agreement specifically references one account number and one amount.) The ME statute of limitations ran out on this second card in June 2013-which mean they cannot sue me to collect, etc. Now I learn they have been applying payments to this card (at least 6 of them) without my knowledge. Where do I stand legally?? Can they sue/garnish/etc. because of these misappropriated payments? Does the statute of limitations begin with the last misappropriated payment? What can they attach?
Thank you for your question. I look forward to working with you to provide you the information you are seeking.

No they cannot legally sue you for the expired debt and they could not apply the money you paid specifically for one account to another account. The statute of limitations on that account does not renew merely because they misapplied payment to it that they had no business doing as it was contrary to your contractual agreement.

Thus you need to start by writing them a letter and you need to inform them your contractual agreement was to make payments on the specific account and give them the number. Tell them they were in breach of contract by not applying the payments properly and they have to correct the breach and give you the proper pay off amount.

If they refuse to make the correction, then you can sue them for breach of contract and the court will order them to adjust your account and take the funds away from the other account.

The statute of limitations begins with the last payment on the account, but if they improperly paid the account it does not renew the statute of limitations.

In ME, if they get a judgment against you, which they should not on the old account because it is beyond the statute of limitations, they can garnish wages (not retirement or SS income) and they could place liens on any property that you own (real estate or vehicles).

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Customer: replied 3 years ago.

Thank you for your help. I am waiting for them to send me a copy of the payments as they posted them. When I spoke to one of their paralegals, he informed me that since I owed both cards, it was their option to apply payments in the manner they chose regardless of the agreement we have since it was from the same creditor. What I really think happened, is that someone noticed the statute of limitations was close to running out and they tried to maneuver funds to cover their butts with Discover Bank. I just hope we don't have to go to court over this. I am glad that I tried to reach a settlement last week - otherwise I would never have know what they did.

Thank you for you response.

If you had a specific agreement that specified the account, then they are not allowed to put it anywhere else. If all this fight is over is $900, it is not worth it for you or them to go to court and if they will not resolve the matter and insist they are correct, which they are not legally correct, you need to make them an offer to settle the entire thing in full and I would suggest starting to offer them $150 on top of the other balance to pay off the old debt. They will likely agree to take $300-450 eventually to settle the entire matter and not the full $900, and that would be likely in your best interest if you can possibly make the payments.
Customer: replied 3 years ago.

I received a statement in today's mail indicating that they began taking money from my monthly payments in August of 2012 without my consent or knowledge and applying them to the other Discover card account when there was no payment arrangement made to pay the second account. The balance is not the $900+/- but over $6000 if they can can do this.

Thank you for your response.

If you had a signed agreement that the payments were only for the one account, then they cannot apply them to the other account that you did not agree upon. Thus, you need to inform them of this and send them a copy of the agreement you signed specifying the only one account and telling them the other debt is time barred and there was no agreement on that account. If they refuse, then you would have to file suit against them.
Law Educator, Esq., Lawyer
Satisfied Customers: 109879
Experience: Attorney experienced in commercial litigation.
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