Collecting on a outstanding draw balance
I used to work for a large nationally know company but left to return to school to earn my MBA. While I was there I was the top producer for the region for 2+ years. When I left I had a relatively small debit balance of $3k. I was led to believe that the draw was a forgivable draw so I didn't think anything about it. About 6 months after I left I got a call saying I owed the money. Being back in school full time has put me on a budget, plus my former manager had said that the draw was forgivable. I explained my agreement with my manager and the comp specialist told me to write a letter. I did and heard nothing so I assumed the matter resolved (mistake I know but with school and internship and other stuff I put it out of mind). 14 months after that initial contact I have some guy from a "Wall Street Collection Agency" calling me about the balance. I explained the manager agreement, the letter and so on. My letter was never recieved so I have to redraft. I don't care about that but what my questions are:
1. Can they report this to the credit agencies? Is this really a debt that will affect my credit score?
2. The letter says they will settle for a lump sum, I am considering paying them off just to move on. Any idea what companies are willing to settle these debts for?
Had a similar issue when I left my previous firm. If they have your SS# (I do not know why they would not) it can hit your credit report. Depends on how far they want to take it. Try getting a freeze on your credit reports.
Be careful if it hits your credit report and look into the potential consequences of paying a "debt settlement", I have heard that is not good for your score. Take 30 minutes and do your homework.
Should review the agreement to see if the amount is forgivable or not, despite what the manager promised you prior to joining. The collection company earns a percentage or fixed fee based on the amount recovered. Offer what you can and go from there. Keep in mind that these people are often not attorneys so don't be misled in think you have to pay their attorneys fees, as one other such company tries to do.
Thank you for taking the time to advise me on this matter. I actually successfully argued my way out of the debit balance. My arguement was based on the draw agreement. The agreement stated that I would be paid 90 days worth of new commissions. All of my business we reassigned right away so I missed out on 90 days of commissions that were due to me. I argued that they had not held up their side of the agreement. The counter-arguement from the compensation people was that the manager could reassign at his/her discretion. I felt that was unequitable and that it penalized people for having good and efficient managers.
Legal sided with me and I got an e-mail from the compensation department saying my balance was wiped clean and that they would call off the collection guy.
I can not describe the satisfaction of this 'ruling'. I am thrilled and I really wanted to rub it in the collection guys face because he was being a bit if a jerk by telling me I had no chance and to just pay the money.
Thank you all and good luck with your endevors.