Millions of people want to improve their credit score. They don’t want to go through life with a credit report filled with creditors demanding their money and statements of bills going unpaid for years. Rather than live like this, some individuals think that it’s best to start paying the creditors they have listed on their credit report. This is a great idea but not everyone knows the best way to do this.
Because they don’t know how to deal with creditors and paying bills that have gone into collection, many people think to hire a credit repair agency to do it for them. This is a good way to do it but they don’t always work for everyone. These agencies can do a lot for those that have huge credit score problems but they aren’t always the best option. It is sometimes easier negotiating a payment without a third party.
When an account has been put into collections, many times the original creditor has written the account off their books and sold the debt to a third party. They don’t want anything to do with that account anymore and has given the responsibility of the debt to someone else. When a collector attempts to collect on a debt, they would like to collect the full debt that is owed. This doesn’t always work.
Many times, when an account has been in collections for a long period of time, these agencies are willing to accept a lower payment amount to close the account and report it as settled. Most people aren’t aware of this and are shocked when they hear that it’s possible. Rather than avoid a collection agency, it is often beneficial to negotiate a lower payment amount and settle the issue rather than allow it to continue on ignored.
How to Negotiate a Settlement
Negotiating a settlement with a collection agency isn’t as hard as people think it is. It may take a little time to come to an amount that is affordable to settle the debt but getting it paid and reported as paid in full is better than having it remain open and unpaid. The communications has to start with the collection agency. It’s best to have all communications begin in writing so that all parties are aware of the terms of the offer and there is written proof of the conversation.
Begin the conversation with a letter to the collection agency. It should acknowledge the debt and offer an explanation as to why it can’t be paid in full at this time. Rather than ignore the debt, offer an amount that can be paid if the account can be marked paid in full. Once the offer has been made, communicate that the payment will be sent immediately once they send an agreement to the offer.
Most collection agencies are willing to accept these offers because they know that people will ignore these debts for as long as they can. There are some agencies that are willing to write off a debt if they can collect at least half of the original amount. These negotiations can still earn collection agencies money and save consumers money. These agencies know some people will ignore a debt until they can no longer be collected on. It’s nothing personal but a matter of survival for some.
Once the agreement has been made and accepted by both parties, payment should be sent within the agreed timeframe. This is very important. The agreement should be in writing, therefore is a contract. Contracts are enforceable in court and some agencies won’t hesitate to sue for the full debt if that agreement is defaulted on. After the payment has been send, consumers should request a letter stating the debt has been paid in full and no more money is owed. A copy of this letter should be retained for financial records and a copy should be sent to the credit bureaus so that particular account can be updated to reflect the correct information.
Consumers that do this find that it’s an easy way to manage their credit report. It can be done with as many collection agencies as they want and they can negotiate the payments as low as they can get them. An account that has been negotiated and settled for a lower amount is better than having an unpaid account on a credit report for years.