The Process of Settling Debt with a Collection Agency

  1. Call the collection agency and speak with an agent. Make sure that you have the contact details of the agency, that they are a legitimate group, and also do not forget to get the agent details (name, direct number, time of call, etc.)
  2. Verify the money you owe and check for the following:
  • Proof that the creditor assigned the debt to the collection agency
  • Itemized and accurate payment history from the beginning (if you are unsure of the amount you owe)
  • A signed copy of the original debt agreement or credit card application (if you don’t believe that you owe the debt)
  • If it turns out that you do not owe money, inform the collection agency that they are violating the FDCPA by contacting you and that they should immediately remove that collection listing from your credit report, or else you are going to sue.
  • · If it turns out that you owe the money, you may be able to contact the creditors and request for them to pull out your account from the collection agencies. This is rare.
  • · In the event that your creditor refuses to pull back the account from the collection agency, it is time to negotiate with the collection agency.
  • If at that time you can afford to pay a lump sum payment to the creditors then you can offer it as payment in full even if it is for less than the balance
  • If you don’t have enough money, inform your creditors of your inability to pay at the moment and request patience while you sort out your options.
  1. Write the department manager a letter containing your plan. Be specific and meticulous with the figures, dates, and amounts.
  2. If you can, you may already include a check with the letter that says “settlement in full” in the memo. Remember that everything must be in writing. Do not forget to ask for the receipt.
  1. Even if you are less than 90 days past due, most companies would be more than willing to accept payment for the original debt, waving off late charges and fees.
  2. Remember that time is on your side. The longer the debt is sitting there uncollected the easier it is to settle later.
  3. Take your time. Let them call you to push the deal to the next level rather than you appearing to be too eager.

Points to remember:

  • Always insist on a complete deletion of all the negative listing from your file (this may be difficult to achieve)
  • Make sure that the account shows “Paid” and notations such as “Charge-off,” “Repossession,” late notations, or “Collection,” are deleted.
  • Contact the original creditor and tell them the debt was “settled” via a collection agency and insist for them to update your account on their system.
  • It would be better if you can get the collection agency to communicate with the original creditor regarding the listing update.
  • If several agencies have contacted you, it means that your original creditor has hired the services of a secondary or even tertiary collection agency. This means that the second collection agency has paid even less for the debt than the first one, which mean that you can settle for less.
  • It will be best if the creditor is led to believe that you are experiencing a financial crisis and that you are teetering on the edge of bankruptcy.

Source by Debt Free Destiny

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