Thank you for whoever takes the time to read this and I apologize in advance for any grammatical errors; this week has already been and continues to be very stressful. I am a (hopefully) graduating senior in college and I just received notice by phone from a collection agency I hope this is legit about a $600+ balance that I didn't know was accruing until now. I have limited background in finance so please bear with me. I read the sidebars about debt, collections, and would like additional help/input, if possible.
I attend college in PA but permanently live at home in NYC. For 3+ years now I have been signed up with my local gym (see reviews here) and a contract was signed for my monthly payments for membership with my debit card on file. They have given me free freeze periods for when I go back to school but occasionally I have been mis-charged during my freeze periods and have had to go through the trouble of proving my account was frozen from 100+ miles away. Earlier this year in January/February, I finally got fed up after I was mis-charged yet again and they refused a refund so I disputed it with my bank. I shoved them evidence of my freeze period and my bank refunded me my money and recommended that I get a new card, so I did.
My ignorant self thought this would be the end of my relationship and issues with the gym but of course a balance was accruing because I never gave 30 days cancellation notice by mail (even though they'd just claim to lose it, according to reviews). Also, I signed this contract years ago and don't remember them ever explaining any of these policies to me. Considering I just got my first credit card earlier this year and how excited I have been about carefully building my credit these past few months, you can imagine my disbelief and feeling of dismay when this collection agency called and told me about my debt.
I should have known better with my past experience with this gym but now I am told I am $6xx in debt. The CA told me this has not been reported to the credit bureau yet. I know it is too late and out of question to bother arguing with my gym (seriously, read the reviews for a laugh at my stupidity), although I did call and waste 30mins explaining to the person who picked up and said they'd get back to me tomorrow. I am not expecting a lot. I have never been given warning/notice about this from the gym and again, I am unsure of what the contract even says but don't doubt there is a lot in the fine print. The person from the CA told me on the spot that I could get this reduced to $400 at $100/month. She told me my actual balance was about $3xx with the other $2xx from late fees and my card being declined every month. My membership was about $45/month and should have been charging from July-October so I'm not sure about the exact balance. I requested an email of the notice that was sent to my home with the details and haven't had the chance/courage to ask my family to check for it yet.
Supposedly this hasn't been reported to the credit bureau (I believe that's what the lady on the phone called it) but it can ben reported at any time. I can probably work out a payment plan but don't want to push my luck in reducing the debt, unless I can. If I am going to pay for a service that I haven't been using, I want to pay as little as possible. I said that I would get back to the CA around Monday after this week of academic hell is over.
So I am stuck here wonder how should I move forward from this? Can my bank back me up at all? Can I claim negligence? How bad will this look for my credit? About how much time do I have before this will impact me, if at all? Is this a scam? Is the CA legit? How much can I possibly talk this outstanding balance down to from $6xx if the CA was willing to go down to $400, if at all? (The CA lady said we could further negotiate once I figure out how much I could possibly pay and at what kind of payments, I said I'd discuss with my parents. She mentioned a deposit.) Is lump payment or monthly payments better? Can I expect interest? Should I take down the CA/gym info? Should I do this on a throwaway account?
I would really appreciate any input before I tell my mom (she is going to kill me). Thank you for your time