When you cannot afford to pay off your debt with a creditor, your account may be turned over to a collections agency. If you work out a plan with the agency to pay off the debt, a representative may ask you to send a voided check to initiate the payment process. While this can be a legitimate process, you need to be careful.
Why a Voided Check?
A collection agency may ask for a voided check so it can set up an automated payment plan for you. The collection agency uses the account number and routing number on your check to debit the funds from your checking account on a periodic basis. The agency keeps the voided check as documentation for the payment plan. The check proves the company was authorized by you to take money out of your bank account if the question ever arises.
Contract in Writing
Although sending in a voided check can be a legitimate step in the process of paying off your debt, you need to get the terms of the agreement in writing first. If a collection agency tells you that you can make payments, you need to get this in a letter or contract before you send anything. Unscrupulous collection agencies sometimes charge more than they were supposed to, and you need a document to prove what the appropriate amount is.
Scams
Before you send a collection agency any money or a voided check, make sure you are dealing with a legitimate company. Scams may occur in which a company claims be a collection agency, when, in fact, it is not. If you send a voided check to one of these agencies, you risk having a large amount of money taken out of your account. Check with the Better Business Bureau to determine whether the company is legitimate.
Other Options
If you do not feel comfortable giving a voided check to a collection agency, you may have other payment options. For example, you could use a credit card or debit card to make a payment with the collection agency. You could also obtain a money order and send it to the collection agency. The collection agency may allow you to write a personal check and send that form of payment on a regular basis.
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