June 2000 Newsletter

"Payment In Full" Checks

The Lawyers Weekly USA publication on March 20, 2000 addressed the often misunderstood practice of cashing checks that are marked "paid in full".

Uniform Commercial Code (UCC) section 3-311, the cashing of any check tendered as "payment in full" constitutes an accord and satisfaction, discharging the unpaid portions of the debt balance, even if the recipient strikes out the payment-in-full language. If you cash the check with that language on it, you are barred from pursuing the balance. If you do pursue the balance, you expose yourself to an unfair debt-collection practices suit.

However, there is recourse for creditors. Section 3-311 allows creditors to:

• Provide in their contract that payment-in-full checks are invalid unless sent to a designated recipient, or
• Return the check within 90 days of cashing it.

If the payment-in-full check somehow slips through, the creditor can proceed on the balance by successfully arguing that:

• The check was tendered in bad faith;
• The debt was liquidated or not subject to a bona fide dispute; or
• The payment in full language was "inconspicuous."

We take a very conservative view of how to handle these types of checks. Checks marked paid in full that are short of the full balance due are returned to the maker. Unless after contacting our client, they agree to settle in full for the amount of the check. Some may consider my position as too conservative, but think of it as a beehive. Why kick it over, unless you like getting stung?

The above should not be construed as legal advice as I am not an attorney. The article is an in depth look at the issue and should be read in its entirety. If you would like a copy of the five page article, feel free to contact our sales staff for one.

Bob Barden
President

Congratulations to Shelly Duncan!

I would like to welcome and introduce you to the newest member of our management team, Shelly Duncan. Shelly is managing our Adrian collection office and joined our company a little more than a year ago. As a resident of Lenawee County for twelve years, she is an asset to both the community and our company.

A mother of two beautiful teenage children, Heather and Anthony, who attend the Adrian schools, you can understand why she is well versed in problem solving, negotiating and making good decisions that are not always popular.

In Shelly's short time with us she has accepted and excelled in mastering the challenges that have confronted her in this new position. She has asked questions endlessly, taken classes and is resolved in her quest for knowledge to better serve our clients.

Welcome to Shelly Duncan and best of luck!

Bob Barden,
President

How We Handle Disputes

Do you ever wonder why you receive calls or letters regarding an account sent to the Credit Bureau? The bottom line is we are trying to solve the issues and discrepancies a person may have with services rendered and/or the balance.

When the Credit Bureau receives a dispute from a debtor, a collector must cease collection activity! The Fair Debt Collection Practices Act, Section 809(b) reads: "(b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector."

The Credit Bureau receives many disputes on such items as amount owed, disagreement of services provided, and medical insurance issues. Normally, these matters can be cleared up with further documentation or a simple phone call. So, it is imperative that we receive your reply promptly as we are just following the Federal law.

Idealistically, the issues get resolved and balance gets paid. There are many reasons why a swift response is needed when a collector sends information or phones regarding a dispute from a debtor. Unfortunately, if there is no response to a dispute within 30 days, we may need to cease our collection efforts on your behalf. Once you, the client, address the issues, we may then work towards full payment of the bill.

Kim McGhee
Legal Collector

And the Winner Is...

Thanks to all of you who responded to Bob's question in last month's newsletter. It was great to get your e-mails, and some were quite interesting! The winner was Greg Sears of Michigan Head Pain and Neurological Institute.

Even though he was not exactly right, he was the closest, so he won the two Tiger tickets. He put a lot of time and effort into his response of "money lender." For those of you who didn't read the article, Bob's question was, "What is the world's 2nd oldest profession?" Greg concluded that the 2nd oldest-collector-was actually the 3rd because someone would have to lend money in order for it to be collected. Good thinking!

Although in those times, it had nothing to do with lending-the 2nd oldest profession is a tax collector, and their terms were tough-"Pay the taxes or die!" Congrats to Greg for all his effort and we hope he enjoys the Tiger game!

Tina Walther
Sales Consultant

A Knowledgeable Witness is Needed at Trial

No matter how open and shut the case may appear, most debtors have the ability to file some type of answer.

In a typical case of goods or services sold to a debtor, a representative from the client's credit department familiar with the books and records will need to testify at trial. If the salesman is available and the client's record keeping system made him knowledgeable, he or she may suffice-if it was also one of his/her responsibilities to monitor the debtor's payments.

It is the client's job to prove its case through testimony and convince the Court that the debtor owes the money! The credit manager and/or other knowledgeable witness(es) must meet the traditional burdens of establishing the claim and/or rebutting the debtor's defense or counterclaim.

It is not enough "to know" that the debtor owes money, but facts must be proved with competent firsthand information. We can NOT merely submit our client's affidavit to the Court. The reason being that the debtor can NOT cross examine a piece of paper.

Records must be authenticated through actual testimony and identified in Court by the witness who prepared them or handles them in the ordinary course of business.

Sometimes documentation is not available. This method of operation is acceptable and may be considered a realistic business practice in the industry. If this is considered "a practice of the trade," the oral testimony can be used to supply such information.

The person made available to testify for the creditor will only be able to state facts known from personal knowledge or based upon review of proper business records.

We discourage a client from sending the newest employee because he or she is most dispensable to be out of the office for the date of the trial.

Kenneth J. Mayers
Attorney at Law Mayers & Associates
South Orange, NJ

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Ann Arbor Credit Bureau, Inc.
311 N. Main   Ann Arbor, Michigan   48104
800.710.4821     734.665.6173
info@a2cb.com