fraternity debt

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Question:

My grandson was a member of a fraternity. They disbanded the chapter. The main chapter of the fraternity is trying to bill these last members for fraternity debt incurred long ago, i.e. these young men are all freshmen and this fraternity debt were incurred before they were even students at the university. They have made threats to these kids telling them to pay these exorbitant amounts or they will ruin their credit with third party debt collection.

Is this legal? None of these kids signed a promissory note or any document promising to pay these amounts. They only document they signed was a pledge of their annual dues.   Is this a standard practice?


Answer:

This situation is not entirely uncommon.  The chapter incurred a debt, and the national headquarters is trying to collect on the debt.  Often, the national headquarters will work out a payment plan with the chapter to ensure this fraternity debt is repaid and everyone moves on.

However, when a chapter folds the story changes.  Most often the national fraternity chalks it up to a lost cause and moves on with the fraternity debt left unpaid.  That makes the extent that this national fraternity is going to to collect is a little out of the ordinary.

The legality of this scenario is a little tricky.  As such, I consulted a lawyer for advice.

If this fraternity debt was incurred by others, then the national fraternity has no grounds to collect from the youngest members.  The only exception to this would be if the national fraternity can produce a document stating that the younger members agree to pay the debts incurred by the older members.  This probably doesn’t exist.

That being said, the national fraternity still can send the account to a collection agency.  However, that does not mean that the younger members are liable to pay these bills.

The younger member can simply explain the situation to collection agency and explain that they will not be paying the bill.  If the collection agency does not remove the charge, the person has two options:

First, they can write a letter to the credit agencies explaining why the charge is not a valid one.  This option exists on all instances where something appears on your credit rating.  This would appear on your credit report and would explain why you have this outstanding charge.

Two, you can take the national fraternity to small claims court.  This process is a little tricky due to jurisdiction issues, but is definitely an option.  You would essentially sue the national fraternity to remove the charge that they sent to the collection agency.  You would also sue for any charges or damages incurred by you having to take them to small claims court.

I would imagine that in most instances, the threat of appearing in small claims court will be enough for the national fraternity to give up trying to collect.  It will probably be more expensive for them to fight the battle in court than what they are trying to collect.

If I were in your shoes, I would have my lawyer write a letter to the national fraternity explaining that these debts are not yours and you will not pay them.  If they take you to a collection agency, you will sue them to remove the charges in small claims court.  If you don’t know a lawyer or don’t want to pay one, I would write the letter myself.  Note you do not need a lawyer to go to take a case to small claims court.

This is a pretty crummy situation your grandson is in.  I am sure he doesn’t appreciate the threatening tactics you described.  Hopefully the above gives you some solid advice to ensure he is treated fairly.






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