Check Endorsement

Is it legal and binding to put on the back of a check "Endorsement and processing of this draft constitutes payment in full to xxxxxx, account xxxxx, without recourse?"

Reason I am asking is that I owe a small balance (less than $200) to a hospital and am making regular monthly payments to the hospital but a debt collection agency sends me a statement monthly (they are aware that I am making payments directly to the hospital but would prefer that I send to them). I live in Washington but the hospital is in Portland OR.

Thank you.

Comments for Check Endorsement

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Apr 13, 2010
 check endorsement to settle debt
by: Gerri

Thanks for submitting your debt collection question on our Q&A page.

The approach you are describing is one that is commonly promoted on the Internet as a way to settle your debts without actually having to negotiate with the creditor or the collector. Unfortunately, that approach doesn't necessarily work. For example, under Oregon state law:

The negotiation of an instrument marked "paid in full," "payment in full," "full payment of a claim" or words of similar meaning, or the negotiation of an instrument accompanied by a statement containing such words or words of similar meaning, does not establish an accord and satisfaction that binds the payee or prevents the collection of any remaining amount owed upon the underlying obligation unless the payee personally, or by an officer or employee with actual authority to settle claims, agrees in writing to accept the amount stated in the instrument as full payment of the obligation.

I am not sure whether Washington or Oregon state law would apply to this particular debt, but I think you are running the risk by trying to employ this approach. Even in states where it may be legal, if the creditor/collection doesn't notice the statement and continues to try to collect, you'll have your work cut out for you trying to convince them that you don't owe the balance. I am not sure it's worth it, especially for a small debt like yours.

Have you tried making a settlement offer to the medical provider? If you're having trouble coming up with the $200 to pay them off, they may be willing to accept a smaller amount if you can pull together a lump sum settlement of half the balance for example. You may also want to see if they participate with IOUSOS - a medical bill negotiation service.

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