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When you’re trying to conquer unpaid debts sent to collections, two of the biggest obstacles you face are coming up with enough money to pay off the debt and negotiating a payment plan or settlement you can afford. Once you’ve accomplished these tasks, you may still be wondering how you pay collections to a debt collection agency.

Familiarize yourself with the steps for how to pay collections before you take the plunge and submit your payment.

1. Verify the Debt

Before you make any payments or acknowledge ownership of the debt, make sure you actually owe the debt and that it’s not outside the statute of limitations. In this era of debt collection scams, also verify that the debt collection agency actually exists and you’re not being targeted by a scam. Ask for verification of the debt in writing and verify with your state attorney general’s office or the Better Business Bureau that the collection agency is legitimate.

You can also collect information to validate the debt by checking your credit report each year and monitoring your credit score for suspicious activities or inquiries for free at Credit.com.

2. Know Your Rights

“When dealing with debt collectors, many experts always look to the Fair Debt Collection Practices Act,” warns financial consultant Damon Day. “I agree it’s important to know what collectors can and can’t do.”

If your debt goes into collection, it’s imperative you know your debt validation rights:

  • Debt collectors must provide a written notice explaining the debt, including the amount, the name of the creditor and your right to dispute the debt.
  • Debt collectors may not harass, threaten, or mislead you.
  • Debt collectors cannot publish your personal information, use profane language, or repeatedly call you.
  • Debt collectors cannot contact other people about your debts more than once.
  • Unless specifically requested otherwise, debt collectors can only call between 8 a.m. and 9 p.m.
  • Debt collectors may not call you at work if you ask them not to.
  • If your attorney is handling your debts and you have told a collector to speak only to them, they cannot contact you directly.

Your debt collection rights also limit who collectors can talk to you about the debt. Debt collectors can speak to you, your spouse and your attorney, if you have one. They can’t discuss your debt with your family members, friends or employers and can only call them once to locate you. There is also a statute of limitations for how long collection agencies are able to pursue legal action against you.

3. Determine What You Can Afford to Pay

Starting a budget can help you understand what you can afford to pay each month. Go over your income and expenses to come up with a realistic amount you can pay over a specific time period.

4. Negotiate a Settlement

When you can’t afford to pay a balance in full, don’t be afraid to negotiate a settlement with a debt collector to reduce the amount you must repay. Successful negotiations may include these steps:

  • Explain your current money situation without getting too specific.
  • Start negotiations by offering a payment lower than what you are willing to pay.
  • Get a counteroffer from the collector and go through several rounds of offers before reaching an agreement.
  • Obtain all settlement details in writing before submitting any payment.

Your goal is to get the debt collector to agree to an amount less than or equal to what you decided you can afford to pay. However, some collectors may refuse to negotiate and will demand you pay the debt in full. Don’t let a debt collector bully you into paying an amount you can’t afford or that causes you to let your other financial obligations slide.

5. Make Your Payment

Once a debt collector sends you a written agreement with the total amount you’ve agreed to pay, review it carefully for accuracy before you take the final step of submitting your payment. When you make your payment, avoid giving your bank account or debit card information to the collection agency. Instead, pay with a money order or certified check, if possible.

6. Document Everything

Document your payment thoroughly, including sending it through certified mail with a signature required on the return receipt. Follow up with the collection agency to ensure your payment was credited to your account, and check your credit reports with the credit bureaus to confirm the debt is no longer being reported as outstanding.

How Do You Pay Off Medical Debt in Collections?

Paying off medical debt is similar to paying off any other type of debt, but there’s generally more room to negotiate the terms of repayment and a reduction of your debt. Some medical providers let you pay for “financial aid” or an in-house payment plan so you can keep the debt from going into collections and damaging your credit. Other ways to pay off your medical debt include the following:

  • Pursue payment plans offered by many medical providers.
  • Apply for medical credit cards for specific procedures.
  • Hire a medical bill advocate to negotiate on your behalf.
  • Apply for an income-driven hardship plan.
  • Seek nonprofit organizations that help pay off medical debt.

If you have a verifiable hardship, such as a disability that prevents you from working, you may also be able to pursue medical bill forgiveness. Your medical provider will need your tax returns and other written documentation that proves you have no means to pay your medical debt.

How Should You Pay a Collection Agency?

There are several options when it comes to how you should pay a collection agency, including paying with your bank account, credit card or debit card, or paying with a prepaid debit card, money order or cashier’s check. However, some payment methods are riskier than others, and most experts agree you should avoid giving your bank account or debit card information to a debt collector.

Bank Account Draft/ACH

Most debt collectors ask for your checking account information so they can take your payments right out of your account. It’s a convenient option that typically costs you nothing, but it’s not always a safe payment method. The general consensus is to avoid giving your bank account information to a debt collector, unless you’ve set up a separate account specifically for this purpose.

“Never pay this way,” says Mike Arman, a retired mortgage broker. “Auto debit is permission to access your account whenever they feel like it and then say ‘Oh, we made a mistake’—and do you think you’re getting any money back? They can also come back later for more, whether by ‘accident’ or design.”

Personal Check

Mailing a personal check is a cheap payment option, and you have the canceled check as proof of payment, but it’s not very fast. For this reason, it’s not usually at the top of the list for preferred payment methods by debt collectors. Plus, you’re giving your checking account information to the collector, which may be bad news for you. Avoid using a personal check, unless it comes from a separate account set up to pay the debt collector.

Alternatively, you can use your financial institution’s online bill pay service. Gregory B. Meyer Community Relations Manager at Meriwest Credit Union explains, “Your online banking sends them a check that’s basically guaranteed funds like a cashier’s check, but your personal info, like your account number, doesn’t show on it.”

Postdated Check

Under the Fair Debt Collection Practices Act, debt collectors aren’t supposed to deposit postdated checks before the date on the check—or even threaten to do so. If a collection agency accepts a postdated check that’s dated more than five days in the future, it’s also supposed to notify you in writing 3 to 10 business days before depositing it. However, not all debt collectors follow these rules, so it’s best to avoid postdated checks.

“Collectors will say that sending postdated checks is part of the terms. It’s not true and you can negotiate that,” says Leslie Tayne, a New York attorney who specializes in consumer debt resolution.

Debit Card

The general advice when it comes to debit cards is the same as paying with bank account drafts or ACH payments: avoid it. Debit cards access funds in your checking account, so it still gives the collector access to this account. If the amount charged to your debit card is wrong or if there are multiple withdrawals when you only agreed to one, you must fight the debt collector to get the money returned to your account. Although you’re generally protected against unauthorized withdrawals under the Electronic Funds Transfer Act, it may be difficult to prove the amount wasn’t approved since you gave the debt collector your debit card information.

Credit Card

Paying a debt collector with a credit card doesn’t make the debt go away. Instead, you create a new debt and additional finance charges, so most advisers will say to never use credit cards to pay debt collectors.

“Paying one debt off while racking up new debt is an oxymoron in itself,” warns Howard Dvorkin, founder of Consolidated Credit Counseling Services. “If a person truly finds themselves in a financial situation where they’re borrowing from Paul to pay Peter, they need to reach out for help.”

Prepaid Card

Any collection agency that accepts debit or credit cards can accept a prepaid card. You simply load money onto the card and give the collector your card number. The card isn’t tied to your bank account, so your personal information remains private. Most prepaid cards allow you to spend only what’s loaded onto the card, so you don’t have to worry about overdraft charges or the debt collector pulling more money from your account, as long as you only load what you plan to pay.

Prepaid cards solely used to pay a debt collector are a relatively safe alternative, but make sure to look for a low-fee card and keep a record of your payment. Also, watch out for debt collection scammers who instruct targets to load money onto a prepaid card then mail the card to them. This allows scammers to be paid with virtually untraceable funds, and refunds are impossible.

Law Office Check

If you have an attorney handling your case, one of the safest ways to pay collections is to have them do it for you. “Pay your attorney and have your attorney send them a law office check,” suggests Arman. “Even the dumbest bill collector knows better than to screw around with a check drawn on ‘The Law Office of . . . ‘. There’s also an unassailable audit trail, and the bill collector never gets ANY of your account information.”

Money Transfer

Debt collectors like money transfers from services like Western Union or MoneyGram or wire transfers directly from your bank or credit union account to the collector’s account because they get paid quickly. However, a money transfer can be expensive, and it’s difficult to confirm whether the debt collector received payment. It’s also a potentially risky payment method because money transfers are the preferred payment method for scammers, warns the Federal Trade Commission. It’s like sending cash, and you can’t get it back because there’s typically no way to reverse a transfer or trace the money.

Money Order

Money orders are relatively inexpensive and can be purchased at a post office, bank or credit union and most convenience stores and grocery stores. On the downside, it’s difficult to prove a collection agency cashed the money order you sent. It’s a cheap payment method that helps you maintain financial privacy, but make sure you keep your money order receipt and proof of delivery in case the collector says you didn’t pay. A similar alternative is a cashier’s check  These cost a bit more than money orders, but they’re easier to prove payment.

PayPal

While it’s uncommon for debt collectors to accept PayPal to collect on a debt, it’s possible a collector would allow this payment method. PayPal is likely safer than letting a debt collector take money from your bank account, but transfers could take several days and there may be fees involved the collector makes you pay.

Should You Pay Off Collections?

You should pay off collections to avoid hurting your credit score and having to deal with wage garnishments or bank account levies. An outstanding collection account lowers your FICO credit score and stays on your credit report for seven years from the date of delinquency. This can hurt you even if you’re not trying to borrow money. For example, if you’re seeking new employment, being considered for a promotion, trying to rent an apartment or applying for or renewing your insurance, a longstanding unpaid account on your credit report could make you appear untrustworthy and negatively impact all these situations.

Create a Debt Payment Plan

While debt collectors aren’t required to accept a payment plan, they can be a great way to get a debt paid off. Keep in mind that making any kind of payment arrangement with a debt collector can restart the statute of limitations on your debt, and this time limit varies by state. Create a payment plan that reflects what you can realistically pay by setting up a budget. Based on how much you can afford to pay, you can set up one of the following:

  • A short-term payment plan that lets you pay off the debt in a set number of months.
  • A lump-sum payment plan that’s scheduled for a specific date.
  • A partnership with a debt management company to arrange one monthly payment to be distributed amongst your creditors.

More Tips for How to Pay Collections

1. Don’t Cave to Pressure

Some debt collectors may tell you that you have to use the payment method they prefer and use high-pressure tactics, such as threatening to mark you down as “refusing to pay” if you won’t. It’s not illegal to refuse to use any payment method, so stand firm if you need time to figure out how to pay.

2. Keep Good Records

“Regardless of payment method, consumers should always keep documentation of their payment,” says Mark Schiffman, Director of Public Affairs for the credit and collection industry trade group ACA International. “Keep these records in a place you can access them easily and indefinitely. Debts sometimes resurface years later.”

3. Negotiate Fees

“Watch for fees related to payments,” says Tayne. “Find out if there’s a check by phone fee or other fees related to a particular payment method. If so, ask for it to be waived.”

4. Follow Up

“I cannot stress this more: make sure the payment was entered correctly or received,” says Tayne. “There are so many times when the person taking the payment makes a mistake, and the payment doesn’t go through. Make sure all payments are received, applied and the settlement is still valid.”

How Long Does It Take for a Paid Collection to Come Off Your Credit Report?

Even when you pay a collection account, it generally still doesn’t come off your credit report for seven years. However, with a little pushing, you may convince the debt collection agency to contact the three credit bureaus and remove the collection account earlier.

If you’re unsure of what’s on your report, sign up for Credit.com’s free Credit Report Card to track your credit. Receive the latest tips and advice from credit and money experts, an easy-to-understand breakdown of your credit report information and a free credit score and action plan.

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  • DMC

    I’d love to read this but you don’t have a view as a single page option. Fail.

    • RST

      I agree. Whenever I see that an article is broken into slides without a single page view available, I close the tab on my browser.

      • Kevin

        I can third this sentiment. I came here to read this article, as I thought it’d be interesting, but when I saw there was no single page option, I simply left this comment and closed the page without reading a word.

        Intentionally forcing your customers (readers) to jump through ridiculous hoops for a few extra cents in ad revenue is insulting, and I’ll be no part of it.

        • Steve

          Wow, it seems making a comment on here is more of a pain than just simply clicking a single link to go to the next slide at the bottom. But some people will complain about anything I suppose.

    • Jay

      The reason most sites use this type of navigation is to increase the number of hits on their site. I don’t find it takes more than a few extra seconds to read a review like this, and this one was especially worth it.

      • denko

        Anything at all to do with ANY credit bureau is BOGUS and NOT good for your financial health. If you just stay away from all cr/bureaus BALONEY and their B/SHT you will no doubt be better off. They all lie and distort the truth anyway.
        I no a person w100 Plus K a year, no bills, no real estate loans, no car loans never ever had ANY money problems of ANY kind but according to 3 CR/B they ain worth a POOP creditwise. Now then, tell me how GOOD/GREAT/WUNDRA-FUL the big three FOOLS are then?
        Yaah thats what we think too.

  • question

    I have a debt collector calling me, but won’t tell me what the debt is regarding. They ask me to verify my name and address, to verify I am who I say I am (when they call, and when I call them back).

    Should I provide this information to them, or should I stand ground and refuse to offer any personal information unless they can tell me what it is regarding?

    • http://www.Credit.com Gerri Detweiler

      It’s probably OK to give your name to them – they are probably trying to make sure they don’t discuss the debt with someone else, which would be illegal. But I wouldn’t provide them with any personal information (like Social Security number). Especially with the payday loan debt collection scam that’s sweeping the country, you want to be very careful.

      Insist that they send you something in writing. If the debt belongs to you, their notification should reach you. You can probably verify your zip and that should be enough to confirm they have the right address. (Unless you’ve moved recently.)

      You are entitled to written notification of the debt under federal law. Tell them you won’t discuss the debt until you receive the written notice to which you are entitled.

      I recently discussed this specific scenario on my radio show with attorney Michael Forbes. You can download the podcast here:

      http://gdetweiler.audioacrobat.com/download/TCR_Your-Rights-If-Debt-Collectors-Call.mp3

      Good luck!

    • dog lover

      In my personal experience, DO NOT give anyone any personal information over the phone.
      If they have your phone number and the numbr is listed in your name then they should already have this information.
      2—You know if you have debts that are outstanding, so they can, without breaching confidentiality laws give you at least the account of which they are inquiring about, without revealing the nature of the call. You then will know right away if you had a past relationship with the institution or company in question. If not then hang up immediately.

      • Wayne

        Thats fine and dandy, but so many will sit there on the phone and play the game of, “Well if you have my info then you tell me what it is”. If a debt collector were to do that without knowing who in fact answered the phone, then that would be the first step to a lawsuit. Debt collectors have no clue who answered the phone, anyone can say they are the person the call was intended for. Playing games like that is something people use to end the call to get away from paying on a debt. ( I would know, I’m a debt collector )

    • Wayne

      I’m a debt collector and we use verification like date of birth, address, and even the last four digits only of a social. We do this so we do not get sued for disclosing information to any other person claiming to be the debtor. It is very important to keep information confidential because noone should know other peoples business in matters like this, so that is why we ask for two types of verification.

    • P.J.

      Article was very informative. You all just kill me, (lol). Reading others comment’s is a good way to start your day with a laugh. Could you put a little cream and sugar in my coffee please? Thanks.

      • JK

        I second that P.J. Life is too short to be negative, rude and complain about the simplest things..let’s all be grateful for the little things such as this blog for instance..very informative and a good resource for people who are facing such situation.
        Instead of whining about going on page 2 or 3 or whatever..just lift your little finger and do it already.
        It takes the same if not more amount of time, effort and energy to complain, whine and be negative than just going to the next page! People! change starts from one’s self before we can change the world.
        I am not a lawyer nor a debt collector.
        I’m just an average normal citizen.
        Thanks .

  • Dennis

    I agree word for word with the person who said “I’d love to read this but you don’t have a view as a single page option. Fail.”

    Slideshows are a nuisance.

  • Sanjay

    I’d love to read this but you don’t have a view as a single page option.

  • Pingback: Good Debt Versus Bad Debt()

  • Michael

    Personally, I always use U.S.P.S. Money Orders. Primarily because you are not giving a collector any information regarding your bank relationship(s), i.e. name, account number(s) routing number(s). Of course, photocopy the money order and keep the stub safe.
    Moreover, do not admit to a collector that you even have a bank account. They will most certainly attempt to garnish it once they find out your institution.

  • diamondsmiles

    What’s the big deal with reading one page at a time? Are you all that impatient or so important? You obviously don’t want to read it that badly. It was interesting.

    • Nick

      Amen, seems like folks are getting lazier and lazier. I have absolutely no problem with going through a slideshow. It’s not too hard!

      • ShortTime

        On the contrary, I stay kind of busy. I think slide shows are typically designed to advertise. Some elements of this article may be of a tutorial nature but I don’t think I need to see pictures to grasp the concepts being presented. I used to read slide shows but after comparing it to the time I spent reading one-page articles, I refuse to do so.

        • denko

          ST, … those folks no thaa= Monkey see, monkey du! You are not a monkey, but there are TONZ of um in the usa, or meximerica here and that is one easy way to capitalize on the people from thaa zoo.

  • Jim Myers

    …I worked in the collection department of a major retailer for a decade. It was an honest company that followed the law as written for collection agencies even though it did not apply to the original company.
    …A tip that I wanted to leave is not to try to “buy time” by mailing in an unsigned check. We had a rubber stamp and would mark the check… words to the effect that we would guarantee any refunds if it turned out that the customer did not write the check. *Most* banks accepted this and we would get frantic phone calls from customers because their rent check just bounced…
    …One other warning… If we got a check returned to us for NSF and we figured that it was deliberate… we had a couple of options. We could deposit it again, but if it were again to prove NSF the bank would puch a hole in it and we could not deposit it again… we were left with what amounted to a promissory note.
    …The second option was (for a small fee) to place it with the bank for collection… which meant that the moment enough funds were in the account we would get payment… and again rent checks would bounce…
    …Above all, never write a check that you have reason to know has been written on an account that has been closed. In most states that is a crime and judges take it far more seriously than NSF…

    • Gerri Detweiler

      Good tips Jim! Thanks for weighing in.

  • Rhonda

    I loved reading this article. I just received an offer on a credit card that they will relieve half the debt if I pay the other half in three months. I will receive a 1099c on the hald relieve. Glad I read these payment senerios before I agree. I’m curious what the 1099c inmpact would be on my taxes and is there a penalty with the IRS. Also will this debt write off linger on my credit report.

    • bobbywo

      Rhonda:

      The 1099 that is sent to you will be for the amount not paid in your settlement–in your case half of the credit card’s total balance. So if you settled a $5000 credit card debt for $2500, you will receive a 1099 for the remaining $2500. All of this money is considered income and taxable at whatever your tax rate is. There is no “penalty”–this “income” is just taxable. Generally a credit card company will report this on your credit reports as “paid in full for less than amount due.” This is generally considered a negative mark on your credit, and can remain there for up to 7 years. Another note–do not accept a settlement agreement over the phone–ask for the settlement agreement in writing so that you may have a record that this was in fact the agreement. You don’t want to scrape together money only to have a creditor tell you months later that you still owe on a debt you thought was settled. They should also send you a letter acknowleding they have received your payment and noting that the debt has been settled.

  • http://www.myestateguide.com Mike Fisher

    By a phone with a voice disguiser and have some fun… also caller ID! We get calls that do not belong to us over and over. We have told them we have had our number for 5 years and no one by that name lives here. They say they will do something adn dont. So nothing else to do then say let me get them and push your voice disguiser and get a good laugh. Its just some poor sap trying to make a living and at least I am not cursing him or her out and losing it… LOL

    • bob

      this is just as bad as cursing them out. in fact worse. at least if you curse them out and hang up you dont waste their time. time is money. the time they waste dealing with you messing with them they could be talking to someone who actually wants to pay their bill and therefore they can make their goal so they can keep their job. its not their fault the number is wrong so why dont you do the right thing and tell them and if it doesnt get fixed then contact the right people if it doesnt get taken out. why do people always have to mess with people.

  • Anna

    If a creditor turned a debt over to collections and then a consumer filed for bankruptcy, can the debt still be collected on? Due to circumstances beyond my control, I had to file Chapter 7. I tried working out payment plans but most creditors were not willing to budge. I went to a credit conseling service and they were unsuccessful as well. Now, I have a collector calling about a debt that my credit report shows is closed and charged off. I told the collector that but they continue to call.

    • Felicia

      You need to tell that debtor that you filed for bankruptcy and it was discharged on such and such a date (if it has already been discharged) and send them a copy of that page. Then you need to contact the attorney who handled your bankruptcy becauce sometimes it might take a letter from them to make it stop. I believe in most states it is illegal for a debtor to have ANY contact with you once you have filed bankruptcy. So refer it to your attorney. That is part of the fee you pay them for filing.

      • Gerri Detweiler

        Felicia is right. If you included this debt in your bankruptcy the debt collector must leave you alone.

  • Charlie

    For those who are visually impaired and use screen readers, having to flip through page after page IS A HASSLE. There is =no= justified reason why this can’t be merged into one page of information. @Nick: lazy my ass. When you’re going blind (from glaucoma, diabetes, old age, or whatever), get back to me and we’ll compare notes about “lazy” …. Until then, shut your ignorant pie hole.

  • Charlie

    To the moderator: If you delete my message, then what you’re saying is: disabled people don’t deserve fair consideration. I’m documenting any changes (every 10 minutes) and will file suit if I believe you’re taking such actions.

    • Steve

      Apparently because you’re disabled means you can come on here and be a complete douche…WOW. Talk about someone needing to shut their ignorant pie hole.

  • donna

    Is it not illegal for a debt collector to contact my sisters with different last names or my brother or my my parents everyday and leave harrassing messages with them or on thier machine
    I would like to know how to stop this Its not fair to my family and I want to resolve this

    • Gerri Detweiler

      Have you found out if this is a real collection agency trying to collect a debt you owe? Or do you suspect this is one of the fake payday loan debt collectors?

      Generally, unless your relatives cosigned the debt, these frequent calls are likely illegal. (And if the debt collector knows how to find you then they definitely should not be calling your relatives.) If this is a real debt collection agency, then you should contact a consumer law attorney right away. If you think it’s one of the scams coming from overseas, then you should report them to the Consumer Financial Protection Bureau.

  • John Martin

    Watch out for Banks such as Discover Card. if you miss the payment a three times or more they will turn you into a law firm, who is nothing but a parasite debt collector. They will charge their own interest rate, jack up fraudelent fees, and then ask you to stop feeding your family and paythem. You can pay them for years to come, but the principal hardly moves. then they send you more and more letters using legal language to scare you. these parasites are poping up all over the place. The law does nothing to stop them. Minnesota is the worst State, when it comes to debt collectors. Attorney General’s office is swampt will residents calling in but very little has been done to curb their advances…

  • http://credt.com Chris Hitesman

    I hasve a sister who used to worl for a collection agency years ago but gave me a form for when a debt collecter called or sent me collection notices called the THE FAIR DEBT COLLECTION ACTcease and desist any and all attempts to collect the above debt. It is a Federal law that protects those that are not able to repay a debt. Is a provisions of Public Law 95 – 109; Section 805-XC I hope this will help those who have deby collectiors hounding to repay a debt. You will still have to make arrangements with the originaal company you owe the debt but by the time it goes to collections the debt has been written off but will re,ain on your credity report for 7-10 yrs. I know I am talking rom personal experience

  • http://credt.com Chris Hitesman

    in my previous comment I stated it was Public Law 95-109 Section 805-XC. It should read Public Lsaw 95-109, Section 805-C

  • DoughBoy

    Slides are a pain… Why is this done like this? To show different ads on each slide?

    • mrsshya

      Replying to a 4 yr old question…Because blogs get paid for clicks and they should be if the content, like this one, is useful

  • rick

    Charlie,
    one word…….RELAX!

  • Terrence Urbanis

    I sent for one of the annual free credit reports and the form I got back to fill out required more information than I had to give in the navy to get an ultra top secret clearance. I don’t think congress had this in mind when they passed the “freebie” law.
    Also, I let the phone use the “leave a message” option. These people are like the Nazis who wanted to know if your grandparents were Jewish. The people who lived in my apartment get a lot of calls but the amusing thing is when I playback the recordings and they say “press one” or “press two”, etc. Never hear on the phone who is calling for the individual and I don’t care to let them know they are being recorded. You are not authorized to give any person or company any of the above information.

  • Mary Riley

    I have AT&T as my internet provider, so you know it is slow and I hate to call them because I worked for a sub of AT&T and know Customer Assistance is the worst. So my new laptop is getting very slow service. That means it takes several minutes for these pages to download. I don’t want to be stretched out to 17 screens not to mention the rest. This is a waste of my time and has does not have anything of importance.

    so

  • no name

    In texas you can tell debt collecters to go where the sun don’t shine…They cannot collect unless you want them to…also, if it’s a very old debt and you make one payment, then it becomes a new debt and you are in deap poopoo…dtheonly ones that can legally collect in tx is the IRS, homemortgage holders, cars, ………the collecters can ruin your credit but which is bad anyhow………..lot easier to rebuild your credit than to pay those leaches off

    • Gerri Detweiler

      I am not sure where you are getting your information but it is not true that collectors cannot collect unless you want them to. While it’s true you can send them a cease and desist letter, they can still take legal action to collect.

      There is a statute of limitations, which is four years for most consumer debts in Texas, so it’s a good idea to find out if the statute of limitations has expired before you pay an old debt. You are correct in your warning that making a payment on an old debt can revive the statute of limitations.

      Overall, my personal philosophy is that you should try to pay off debts you’ve incurred if possible. But there are situations where that no longer is possible, and that is what our bankruptcy laws are for.

  • http://msn Judy Prange

    Thank you for your article. I found it very informative and useful. Those who didn’t read it because you didn’t have it all on one page, well, it’s their loss!

    • Gerri Detweiler

      Thanks for the kind words Judy. That’s what we are here for!

      • Lee Wik

        Gerrie, I’ve always had a pretty fair fico score (730 – 780 range). However, four years ago, I became permanently disabled (worked in the trades for 50 years) and since then, I’ve been hit with several events that have drained all my savings and put me so far in the hole, it almost seems hopeless. I’ve incurred debt that now exceeds $30,000. My one out is the equity in my home which should amount to approx. $400,000 (Mortgage=$145,000, estimated value=$550,000). My wife is also disabled and our combined income is around $3,000 a month. All my debts are legitimate and I believe in paying what I owe.
        The problem is, my credit is falling like a rock (I had a guy check it as he was offering to refinance my loan from 5.625 to 3.75 and he said it came back at 675). He has since stopped calling which tells me that the numbers are still dropping. I might add that I’ve got a couple of collection agencys after a small amount ($200.00 and $150.00). Sadly, due to an injury I had 5 weeks ago, I haven’t contacted them yet, although I plan to the next business day. Our monthly expenses eat up most of our income, but I could probably put aside a few hundred. Of course, that doesn’t begin to pay the juice on the credit cards alone. Do I have an out? (I’m afraid that if I wait any longer, I won’t be able to get those low points – oh also, one of the collection debts is bogus. My insurance plan has double billed me before and I have statements to back myself up). I’d appreciate any advice.

        • Gerri Detweiler

          Lee,

          I am sorry to hear about all the difficulties you are going through. I am not sure what you mean by an out…? It sounds to me like this would be a good time for you to meet with a couple of financial professionals to find out what options you have for stopping the credit problems from getting worse and then trying to get your credit back on track. You need someone to go over your situation in detail to help you figure out what your options are.

          I’d suggest you talk with a credit counseling firm and a bankruptcy attorney. You may also consider debt settlement if the major portion of your debt is unsecured debt like credit cards. I know you don’t even want to consider bankruptcy, but you need to find out what you own (including your home equity) is safe from creditors and what’s at risk if you continue to fall behind.

          As for the medical collection accounts, that’s a whole other can of worms. I wrote about that medical billing problems here.

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  • Vin

    Don’t EVER pay ant debts! Accept your mistakes and move on. Even if you pay, the money will just go into a money pit. Your credit will still be ruined. You will be no better off after 7 years than if you just stiffed them. By not paying, you can keep ALL your money and set it aside for when you will need it, since you won’t have any money if you pay them. Every dollar you pay creditor is one dollar less in your pocket. You made some mistakes. Don’t compound them NEVER PAY BACK!

    • ArtAlli

      That’s ridiculous. If the information is correct on your report, you owe someone money for services that you never paid. For example I had to rush my pug for emergency eye surgery. I was out of a job at the time and paid what I could, but eventually my funds ran dry. I feel absolutely horrible that the vet wasn’t compensated. She had even reduced the cost by 50% and I couldn’t afford it. Now it’s on my credit report, as it should be. Now I’m in a position to pay, and I will pay every dime. I owe it. There are situations where a company purposely deceives or tries to confuse you, such as a cell phone bill. The next thing you know you owe $500 and you don’t know how, and can’t pay it. It would be tempting to write that off, but again, it’s my fault for not reading the fine print. If you can’t afford something, don’t get it, or at least make a good hearted attempt at paying your bills. It’s just decent. Closed accounts stay on your report too, even if they were written off as a loss. Then I’m not sure if you can even pay it back at that point, and it’s still there for all to see.

  • JK

    People! Stop the negativity, the whining, the complaints! Geesh! Just go to the next page…it takes more time, effort and energy to whine than actually going to the next page…
    Just be grateful for this good, informative resource.
    And move on with your lives…by doing something positive like appreciating life itself.

  • http://QuestiontoGerri JK

    Hi Gerri,

    A debt collector faxed a debt settlement offer to my office fax that my co-workers saw.
    Is this breach of confidentiality law? What can i do? I feel so embarassed that my co-workers now know about my debt. Please advise. Thank you!

    • Gerri Detweiler

      JK – Yes it very well could be a violation of the federal Fair Debt Collection Practices Act. In that case, you would likely have no problem finding an attorney who would represent you for free. That’s because the attorney’s fees would be paid by the other party.

      Do you know if this is a legitimate debt collector? I say that because so many of our readers have been contacted by overseas scam debt collectors. If it’s the scammers who are trying to collect from you, then you are going to run into difficulties because they don’t care if they break the law.

      Have you done any research to find out whether this collection agency is a real collection agency?

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  • CSA

    What happens when you pay a bill collecter money and stop when you find out they arent licensed to do business in our state,you write to them to validate the debt and themselves BUT they fail to do so and its turned over to another collection agency 18 months later.Does that last payment start the statue of limitations for suit all over again? It’s 3 years for openended credit.

    • http://www.Credit.com Gerri

      What happens is you call a consumer law attorney who regularly represents consumers in lawsuits against collection agencies to find out what your rights are here. :) Normally the statute of limitations does start when you last paid on the debt but in this case you may have additional options.

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  • http://www.coralseamercantile.com.au Coral Mercintile

    Nice article. There are 7 things which debt collectors cannot do

    They cannot threat you
    They cannot harm you and your family
    They cannot pretend to be bailiffs
    They cannot mislead you about your debt
    They cannot pressurize your friends for the debt repayment
    They cannot tease you by calling again and again
    They cannot call you on your work without your permission

    Hope these things will help you in understanding of debt collectors

  • http://www.credit.com/ Credit.com Credit Experts

    Can you afford to pay it off? Paying it off won’t improve your credit score in most scoring models, but it will eliminate the threat of being sued and having a judgment against you. And a judgment will hurt your score even more than a collection.

  • disqus_aw4XhYWCj9

    Can someone help me.paid a old debt to a collector in ga.. Now I can’t get them to return calls to send a paper saying I paid in full..what do I do?

    • http://www.credit.com/ Credit.com Credit Experts

      Have you tried contacting them via certified mail? It’s possible that request will work. The other thing you’ll want to do is to check your free annual credit reports. There, the account should be reported as closed. If it is not, dispute it. Here’s more information:
      A Step-By-Step Guide to Disputing Credit Report Mistakes

      • disqus_aw4XhYWCj9

        They are trying to tell me during the payment procces of 3 payments it was pulled back to original debt collector. So the last payment wasn’t received… But my account shows ALL payment have been withdrawn. They have me # to other agency and I spoke with them … They have no idea who other people are.. Both are legit firms..I did the research before I agreed to pay on first firm. I have ALL reciets and payment agreement contract.

        • http://www.Credit.com/ Gerri Detweiler

          If I understand your question, you paid in full and your credit report doesn’t reflect that. Is that right? You need to dispute the incorrect information on your credit reports directly with the credit reporting agencies in order to protect your rights. It sounds like you are good about keeping documentation; do so after you file your dispute. Then if it’s not corrected you can either file a complaint with the CFPB or get a consumer law attorney involved, as you may have a case for credit damage. (And your attorney’s fees may be covered by the collector if they are breaking the law.)

  • Audrey Muzingo

    How can you send a payment via Paypal if the collector doesn’t offer it as a payment option? For normal payment of goods/services, you need the email address or mobile phone number of the “seller.” –Don’t see how you could just voluntarily send money to a debtor as if they were a person selling things.

    • http://www.Credit.com/ Gerri Detweiler

      You can send money with Paypal to anyone who has an email address or mobile phone number. But I wouldn’t recommend sending money to a debt collector until you verify that they accept payments that way. And always keep a record for your payments just in case.

  • Dedra Tate

    So which one is better for student loans? A consolidation company? Or pay directly to the debt collector?

    • http://www.Credit.com/ Gerri Detweiler

      What kind of loans do you have? Federal or private? If federal then you likely want to rehabilitate the loans to get them out of default. This article describes the process of rehabilitate student loans.

      If they are private loans then I think you will have a hard time finding anyone willing to refinance (consolidate) them unfortunately.

  • Joel Hawes

    i plan on paying debit, a one time transaction, lump sum to a student loan collector via telephone. ive requested the settlement be in a statement on their letterhead, saying i would be here on out paid in full. they said a verified mail cashiers check can take weeks to process, which may exceed the 90 days i havr once a settlement is made. if im vigilant withvmy records would you say id be safek? or chance it with the snail mailk?

    • http://www.Credit.com/ Gerri Detweiler

      I have no idea why a bank cashier’s check would take “weeks” to process. If you have the letter on letterhead, proof of payment and you document everything it sounds like you should be OK. Can you record the phone conversation, or if that’s not possible have a witness on the phone with you (let them know of course).

      • Jools

        Gerry, I was assisting clients to buy a house, the husband had a little glip from years ago on his credit he needed to clear up, he paid immediately by phone (he was in my office) and it has taken 3 months for the Satisfaction of payment to be recorded in the courthouse in another state, to have the debt legally removed from his credit. A total nightmare for the young couple. We had a receipt from the collection agency, but it has to be legally removed at the courthouse, and the lawyer for the agency kept losing the paperwork. Or the wrong paperwork would be notarized, and so on. Moral of the story is, if you want to buy a house, get your credit checked, before you write an offer. Once you receive the Letter of Satisfaction, then go ahead and buy…. not before….

  • z man

    Artalli ” Vin is Sooooo correct … most of the credit that’s extended to you is given with the hopes of getting you hooked in the repayment cycle ” you Pay and Borrow more cause your to broke to live on what’s left after you PAY ” before you know it you owe thousands and you’ve payed thousands . until you realize you have to stop STOP BORROWING , STOP SPENDING, AND MOST OF ALL STOP PAYING

  • Blip dude

    Ugh, I’ve definitely learned my lesson. I feel really bad, but I thought that my mistakes in the past would haunt me this bad. What was once is $2000 debt that I was managing is now up to $12,500. I don’t own my own home and I don’t own a car. This is mostly from me being an idiot using almost all my credit cards to keep my head above water will in college and looking for a job that was flexible. Now I’m really at the point where filling for bankruptcy at 28 may be my only choice. I want to take responsibility and pay what I owe, every penny of it. But at this point I feel like I’m being punished just for even trying to pay for my mistakes.

    • http://www.Credit.com/ Gerri Detweiler

      Not an easy decision I am sure. If you’re thinking of going down that route, I suggest you talk with both a counseling agency and a bankruptcy attorney. That way you’ll know what your options are. More info here. 6 Places to Get Free Help With Your Credit Problem

  • marilyn diaz

    I recently made a settlement for 400 i told them i can pay 50 today and possibly pay the another next week today my bank called me because the collection comp tried to collect all at once with out me authorizing it. Can i sue them?

    • http://www.Credit.com/ Gerri Detweiler

      You can certainly consult a consumer law attorney to see if they think you have a case. If you need help finding one visit the website of the National Association of Consumer Advocates. If the attorney can’t help you, then you can file a complaint with the CFPB.

  • Rose

    Even If Said yes to a payment plan offered by an attorney debt collector, can I still re- establish that Payment plan if I no longer agree with the amount the debt collector offered me? I only said yes because I understood that I was being sued so I got stressed out and was under pressure… However now that I have done my research I understand that I am not being sued or taken to court; the creditors just transferred my unpaid medical bill to this type of debt collector agency, even though it is a law firm all they are doing is collecting debt nothing else. Wish I would’ve been aware then. I need help, what should I say to the debt collector? I didn’t sign anything or gave him any personal information for payment, but when he gave me a monthly amount to pay I said yes because I was scared and intimidated. What should I do?
    Thank you in advance.

    • Jeanine Skowronski

      Hi, Rose,

      You may want to consult a consumer attorney to learn what your legal options are. You can find tips for negotiating with creditors here:

      Ten Tips for Negotiating With Creditors

      Thank you,

      Jeanine

  • http://www.credit.com/ Credit.com Credit Experts

    Asking for payment on a prepaid card is a telltale sign of a debt collection scam.

  • Jeanine Skowronski

    Before turning over any bank account information, ask the collector for written verification of the debt. They are required to provide this by law — and requesting it is a good first step to determining whether you are dealing with a legitimate debt collector. Your daughter can also try pulling her credit reports to see if the accounts are appearing on her reports. There should also be some sort of contact information on there for the firm, but if there isn’t, you can try searching online for the firm by it’s formal name and address. You can also consider consulting a consumer attorney to see if you have a claim or best recourse.

    Thanks,

    Jeanine

  • LizGizmo

    This article is full of HORRIBLE information. Disregard everything. I would go through every bad point but I don’t have two hours to do that.

  • C.

    It may be too late to ask…not sure if anyone is still responding. My question is, if I have about 6 different collectors showing up on my credit report, all for relatively small debts. How do I go about paying them all off, in whole, either together or individually? I ask because it’s a small enough amount altogether that I should have enough to pay it come tax time. I just haven’t seen anything online stating the best and fastest way to get this done.

    • Jeanine Skowronski

      There should be contact information for the collection agency that holds each debt on your credit report. If there isn’t, there should at least be a name that you could use to search for the company’s contact info online. Also, you could contact the original creditor to find out what agency they sold you debts to.

      You can find more here:

      http://blog.credit.com/2013/09/your-debt-collector/

      Thanks,

      Jeanine

  • Clark Willingham

    Hi Gerri, I was (am) paying a debt collection attorney monthly payments to pay off a debt. After paying the agreed amount faithfully agreed upon in the Consent of Judgement for 6 months, a new attorney is now contacting me for the same debt because the former firm in no longer in business. Is it legal for a new company to try and recover the same debt after a judgement & agreement was issued by the Magistrate Court?

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