How to Settle Debts with Debt Collectors?
Part 13-2: As part of series of articles (blogs) regarding Credit and Credit Score, here we go:
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How to Settle Debts with Collection Agencies?
Remember, when you want or need to settle your account with a collection agency, you need to be firm, negotiate well and settle the account once and forever. Don’t make partial payments since it could damage your credit score more, as shown on the next article “Do Not Pay Partial Payment Unless … ” .
How much to Settle Debts For?
How much you should settle for a debt depends on the age of the account in collections and how quickly you need the account settled. The more recent the account is in collections, the harder to negotiate for less than the full amount. The older the account, especially close to the statute of limitation, the easier to negotiate and sometimes you could settle the account for pennies on the dollar.
After you negotiate and agree to the settlement amount, you must get something in writing from the debt collector indicating that when you pay the agreed amount they will remove the negative information from your credit or update your credit, by indicating “paid in full”, “paid as agreed”, “settled” or something in that affect. Remember, as we stated earlier “paid in full” or removing the negative information completely from the credit file is the best option for you. “settled” still has negative impact on your score, but not as much as indicating your account is in Collection or unpaid, etc.
Do not pay before you get that agreement from the debt collector in writing (e.g., letter, email, fax, etc. on their official stationary with their name, position, collection agency name/number/address, etc)
HOW to overcome the problems with your credit history and credit score?
Knowledge, education, awareness, practice and discipline are the essential keys to being successful on any subject. The book, "Credit Score Tips and Tricks", provides you information, tools, techniques to educate yourself and manage your credit report & credit score, and therefore manage your finances effectively at no additional cost.
I have decided to bring and share with you, chapters or sections of the book, Credit Score Tips and Tricks, as series of articles here. This is the number 13-2 of such a series.
I also created and manage a GROUP in ActiveRain, Credit Reports and Credit Scores, Please feel free to join and share your thoughts and experiences.