If I make a payment to a collection agency, they cash the check, can they keep the money and not apply it to loan?

Not to worry. You have a couple of options. If you intend to try to pay the debt then, yes, you should sign the stipulation. But realize that the stipulation will likely obligate you to make specific monthly payments to the creditor over a fixed amount of time. And, if you ever get to a point where you are unable to make such payments, the creditor may end up with a judgment against you. On the other hand, you could just allow the creditor to get the judgment against you. It will go on your credit report but from what you described I doubt that it will cause much other damage for you. From you have described, it appears that you are what we lawyers like to term "Judgment Proof". It means that even if the creditor is able to get a judgment against you, you do not have sufficient extra income or money for them to ever be able to collect that judgment. Moreover, even if they did try to collect it, you may still have the option of filing for bankruptcy and discharging the entire debt. I hope this helps. Good luck.

Have they actually filed and served a lawsuit, or are they just threatening. If they sue you, the worst thing that could happen is that they will obtain a civil judgment against you. A civil judgment is not a court order that you pay money. The judgment only allows them to garnish your wages, if they know the identity of your employer, but only in an amount that does not impair your ability to buy "necessities of life." They can lien your real estate (but you would have a homestead exemption of at least $75,000). There is a long list of exemptions in the California Code of Civil Procedure, basically covering all personal and household items, equity in a vehicle up to a specified amount, government benefits, etc, etc. Tell them that if they will not confirm your agreement with them in writing, they should return your $100. Then, stop talking to them. Do not believe anything that a debt collector tells you over the phone. Do not give out any financial information. You can send them a letter asking that they not call you. In summary, you should not spend you time worrying. The collector has the problem. You have no money to send them, so send them nothing.

Based on the circumstances you describe, it doesn't sound as though there is a high likelihood that the creditor would be able to collect if a judgment was obtained. In fact, from your situation, it doesn't sound efficient for them to have sued and incurred the filing fees. You may want to speak with a debt settlement attorney or a bankruptcy attorney. If they proceed to judgment, it may simply be suitable for framing.

What stipulation? What settlement? How much do you owe? Do you agree to this debt? Yes, you may be judgement proof, but you cannot sign a "stipulation" you did not receive , so you cant "settle" this. Yes, they can keep the money and still go to court, but you need to talk to them. TALK to them-and keep notes. But don't send any more money until they send you this "stipulation."