Dealing with collection agencies.

June 1, 2009

Most collection agencies buy packages of loans that are in default for pennies on the dollar. They are bound by a different set of rules than the original creditor and there are differences in the way that you should negotiate with them. The first step is to have them validate the debt and you can read about how to do that and what it means in my post on Are You Being Hassled by a Collection Agency.

Some things to remember when negotiating with a collection agency:

  1. All correspondence should be Certified Mail, Return Receipt Requested. You will want proof to send to the Credit Reporting Agencies.
  2. Do Not talk to them on the phone. You need to have written proof of all negotiations, agreements on the phone are not binding.
  3. They are not allowed to charge you for validating the debt.
  4. They are not allowed to sue you unless they have validated the debt.
  5. They are not allowed to report a debt to a Credit Reporting Agency until they have validated the debt.
  6. They have 30 days from receipt of your request to provide proof of validation.

If they do not validate the debt within 30 days, you need to send them a request to remove the listing from the credit reporting agencies. Send them a copy of the original request for validation and a copy of the receipt along with a letter requesting that they remove the entry from the credit reporting agency. You can also dispute the entry with each credit reporting agency by sending them a letter with copies of your requests for validation. Most of the time the collection agency will remove the listing and you will be home free.

If they provide proof of validation, the next step is to begin negotiating settlement. This should also be done in writing and sent by Certified Mail Return Receipt Requested. Remember that the original creditor has written this debt off and sold it for pennies on the dollar. You can start your offers as low as 30% of the original amount. If you can pay your offer immediately upon reaching agreement you stand a better chance of settling for the low amount. If not you should request a reasonable repayment schedule.

This is something that we can help you with quite easily here at easy-consolidation.com

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