Debt collectors commonly agree to settle a debt by accepting a partial payment rather than going to court to try to collect the entire debt. If you have such a paid in full agreement with a creditor, send him a letter with your final payment stating that you have paid the debt in full. This letter proves that you settled the debt in case there is any question later.
Purpose
A paid in full letter informs your creditor that you have completely paid off your debt according to your debt settlement agreement. The creditor then must send you a written notice confirming that you have settled the account and no longer owe anything to the creditor. Once the creditor sends this letter, it releases you from any further liability for the debt even if you have not paid the full amount you originally owed.
Debtor's Responsibility
It is your responsibility to send the paid in full letter when you send your final payment, especially if you are following a debt settlement agreement rather than paying off a debt in full. If you do not send such a letter, the creditor can contact you again to collect the rest of the debt and you will not have any proof that you paid off the debt in full.
Fees and Interest Charges
The creditor cannot charge you fees and interest charges after you have sent your final payment and the paid in full letter. If the creditor attempts to do so, refer him to the paid in full letter. If he reports you to the credit bureaus or sends you a collection letter for the fees and interests, you can use your paid in full letter to dispute the debt.
Alternative
Rather than asking the creditor to send you written confirmation that you paid the debt in full, you can send your paid in full letter return receipt. If you do this, your receipt showing that the creditor received the letter serves as proof that you paid the debt in full. The creditor then cannot attempt to collect the rest of the debt from you even if he does not send you a written response to the letter.
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