How to Negotiate Charge Offs With a Collection Agency

If a creditor is unable to collect a debt from a consumer, the creditor may label the account as a charge-off. When a consumer becomes seriously delinquent on a debt, the creditor may send the past due account to a collection agency--and the collection agency will attempt to collect the debt. If you currently have a charged-off account with a collection agency, you should try to pay off your balance as soon as possible. Learn the proper way to negotiate charge-offs with a collection agency.

Instructions

1

Contact the collection agency to discuss your options. Be honest with the collection agency about your current financial situation. The collection agency may allow you to settle your charged-off balance for a fraction of what you owe; or you may be able to negotiate a reasonable payment plan with the agency. Be sure to find out if the collection agency will delete your delinquent account information from your credit report when your balance is paid in full.

2

Ask the collection agency for a confirmation letter. Once you have agreed to a settlement offer or payment plan, be sure to ask the collection agency representative to send you a letter stating the terms and conditions of the agreement. The letter should confirm your current balance, payment due dates and specific details about the payment arrangement.

3

Submit your payments in a timely manner. It is important that you follow the payment schedule and submit all of your payments by the appropriate due dates. Contact the collection agency if you are going to be late with a payment.

4

Make the final payment on your account. Once you submit your last scheduled payment to the collection agency, the agency will consider your account paid in full. Ask the collection agency to send you a letter confirming that you met the terms of the agreement and that you made all the required payments on your charged-off account.

5

Verify your account information with the credit bureaus. Give the collection agency at least 30 days to submit your payment details to the credit bureaus. You can obtain a free copy of your credit report from the three major credit bureaus (TransUnion, Experian and Equifax) by visiting AnnualCreditReport.com. Review your credit reports and make sure that your charged-off account information has been deleted or updated to Paid as agreed or Account closed, paid as agreed.