If you have an old credit account that has been placed with a collection agency, you may be able to settle that debt for less than the balance.

How to settle debt with collection agencies

#1 If you are not sure you owe the debt, you have the right to request a DEBT VALIDATION from the debt collector.

According to the Fair Debt Collection Practices Act (FDCPA), every consumer has the right to make the company trying to collect a debt PROVE that you actually owe it.

You must write a letter and it should be something like this:

To whom it may concern:

Although I received a letter dated (date on the letter) from you demanding payment of the above debt, I do not think that I owe it and request that you VALIDATE THE DEBT according to the FDCPA, 15 USC 169g Sec. 809 (b).

Please provide the following:

• Produce copies or the original contract that you say I signed, showing the date and my signature.
  

• Provide a calculation that explains how you have arrived at the balance you say I owe.

• Provide proof that your agency is registered in my state or why you have an exclusion.
  

If you can provide the above documentation, I will need at least 30 days to determine if this information is correct and again, according to the FDCPA, all collection activity must cease.

Looking forward to clearing this matter,

Your signature

Print your name

Date

Send the letter by CERTIFIED MAIL to prove that the collection company received it.

#2 If the debt collector does provide proof that you owe the debt, you should negotiate a settlement for less than the amount owed.

This can be tricky as these collectors are professionally trained to do whatever it takes to get you to pay as much as possible!

#3 If you get a settlement offer, make sure you GET IT IN WRITING!

Regardless of what the debt collector says, they can and MUST provide you with a letter, fax or email of the terms you agreed. DO NOT, I REPEAT, DO NOT authorize any type of payment without the settlement agreement in writing.

Once the payment has cleared, you should get a letter from the collection agency stating that the account has been "settled as agreed".

Your proof of payment (canceled check, bank statement showing a check-by-phone transaction for the amount agreed) along with the SETTLEMENT AGREEMENT, will be enough to prove that you have paid this debt as agreed if it ever surfaces in the future.

If this seems overwhelming or if you have questions, we can help.  Simply give us a call or click on the link below for a FREE debt elimination summary.