We frequently get asked about accepting payments people send in, and if they are stuck in a “contract” if they accept the payment. I am reminded of the time I was speaking with a consumer and she demanded I accept her pigs and chickens as payment! She quoted the “blue sky law” and said whatever she brings in we have to take. I asked for eveidence of the blue sky law, and she told me to have my attorney look it up! I waited, but no pigs or chickens ever arrived at our doorstep. There are lots of urban legends about accepting payment plans and what that means to a creditor, so I’ll try to shed some light on what you “must” do.
The first question is; What is your office’s financial policy? If you have policies that indicate you will “accept payments”, then you may be on the losing side of the argument. If your policy allows for payments under certain circumstances, then you should be able to participate in the payment plan negotiations. Perhaps the best place to be is “Payment due at time of services”. This way, any payment plan your office negotiates is a courtesy on your part, and you are not agreeing ahead of time to any payment plan.
Next question; Are you receiving anything for the payment plan? Are you charging a finance fee or interest in exchange for the payment plan? If so, you may be receiving “consideration” in exchange for the payment plan. A true contract requires at least five tenants: offer, acceptance, consideration, lawful purpose, and legal parties. You as the creditor need to accept the payment plan and receive consideration for it to be a real and binding contract.
How many payments before it becomes a contract? This really doesn’t come into play. If you haven’t agreed to a payment plan, and your continued billing efforts are asking for the FULL BALANCE, there is no contract for payments. Sometimes, statements will have something printed on them like: “Your Payment is Due” or “Your payment amount of $50 is past due”. In these instances, a consumer could argue you are only asking for a payment amount. But if your statements say “Your Balance is Past Due” then they have a much tougher time arguing they had a contract for payments with your office.
It is important to have a well-worded office policy about payments and payment plans. Consulting a qualified attorney is worth the money to get the correct wording. And be consistent! The point-of-entry personnel need to state the policy the same as it is written the same as the billers the same as the collectors. And remember, if you are paid time of services, any arrangement you make is a courtesy!