A lot of people think that paying any amount owed on a debt acts as a good-faith effort and that creditors are obligated to work with you if you pay a nominal sum of, say, $5. This isn’t true. There’s no such thing as getting an A for effort when it comes to delinquent debt.
“The rationalization behind this theory is that some payment is better than no payment,” says Kimberly Cole, an education outreach coordinator at Novadebt. If you’ve worked out an agreement with a creditor to pay $5 a month, you’re in the clear, but there’s no automatic agreement that kicks in if you just send in whatever you want, she warns. “My clients are often shocked when I advise them that the collection activity will continue without an arrangement.”
Cole says borrowers who get in over their heads need to reach out to the creditor and work out a payment plan both parties agree to — and get it in writing.