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Legal Debt Settlement Question For Lawyers.


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I hired a law firm in CA to perform debt settlement on some of my unsecured debt (******* ***** Law Offices). After getting a loan and making one payment (nearly $12,000 total) I received a copy of the following settlement letter from (Attorney), addressed to Citibank.

Dear Sir or Madam: The office represents [my name]. This letter is to advise that the above referenced debt was resolved on June 15, 2010, by an accord and satisfaction pursuant to ILLINOIS Uniform Commercial Code Section 3-311. If you check your file, you will find a letter was sent to Citibank, disputing the accuracy, propriety and legality of the interest charges and late fees that were added to the above account. The letter requested certain information be provided in an attempt to reconcile the disputed charges, and stated that if a response was not received, a settlement check with a restrictive endorsement would be sent as payment in full. When no response was received, a settlement check, with a restrictive endorsement stating that depositing the check would constitute full satisfaction of the disputed debt, was sent to Citibank. The check was deposited and cleared the bank June 15, 2010. Pursuant to your obligation under the Fair Credit Reporting Act, a demand is hereby made that you inform the credit reporting agencies that they should report this debt as settled.

I did a lot of research on this Attorney and he is a legit, bar member of the CA Bar. The contract I signed with the attorney's office grants me a full refund if this method is not successful. (I assume if I get sued by Citibank and lose). I just want to know from other lawyers their opinion of the law based upon the above referenced letter. (My citibank account still shows up online when I log on and shows me late and behind etc..)



Edited by mylumnad
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Thanks for the reply, I read over the IL UCC and it seems that it was followed in my case. The check was Cashed June 15, and it was not returned within 90 days ,Hence the Sept 15th "settlement letter" to Citibank. (From what I can tell it was used towards the overall balance). I guess I will wait and see what Citi does. I cannot imagine not getting sued, but I will wait and see.

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While I'm not a lawyer I recommend you;

See http://www.dcbabrief.org/vol180206art2.html

In part reads, ...


The First District Appellate Court upheld a long line of common-law precedent when it ruled that the cashing of a check marked "final payment" barred a claim for a larger amount based on accord and satisfaction.10 The Court began its analysis by defining an accord and satisfaction. "An accord and satisfaction is a contractual method of discharging debts or claims between the parties to such an agreement. In order for such an arrangement to exist, there must be: (1) a bona fide dispute as to the claims pending between the parties; (2) an unliquidated sum owed; (3) consideration, (4) a shared mutual intent to compromise the claims; and (5) execution of the agreement. The accord is the actual agreement between the parties, while the satisfaction is its execution or performance. Because the concept is grounded on contract law, courts focus on the intent of the parties when discerning whether an accord and satisfaction has been reached and subsequently executed."11

The Court went on to state that "Where there is an honest dispute as to the amount owed and due between the parties and the debtor tenders an amount with the explicit understanding that it is full payment of all demands, the creditor’s acceptance and negotiation of that amount constitutes an accord and satisfaction. However, the partial payment of a fixed and certain demand due and not in dispute does not constitute satisfaction of the entire debt even where the creditor agrees to receive partial payment for the whole debt and gives a receipt for the whole demand."12

The Court determined that the correspondence between the parties clearly demonstrated the existence of a bona fide dispute as to the claims pending between the parties and that an unliquidated sum was owed by La Crosse to MKL. Further, the tender of the check by La Crosse and its subsequent deposit by MKL constituted consideration and execution. Thus, the only remaining element was the shared mutual intent by the parties to compromise the claims between them.

Citing to Illinois precedent, the Court observed that "Intent can be inferred from conduct; the act of knowingly accepting and depositing a check upon which conditional language has been added indicates the existence of an accord and satisfaction. Where creditor takes and keeps a debtor’s reduced payment with actual or constructive knowledge of the condition, the creditor has accepted the debtor’s offer, and the original debt is settled for the reduced amount."13

Based on the foregoing, the Court found that La Crosse’s letter disputing the claim and the "FINAL PAYM" notation on the check clearly exhibited an explicit understanding on its part that the check constituted full payment of all sums owed to MKL. Since MKL did not refuse the check or issue a receipt stating that it constituted partial payment, MKL’s deposit of the check could only be construed as acceptance and negotiation.14

Edited by FL4answer58
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