How To Settle With a Collection Agency

Collection agencies purchase debts from other creditors, such as hospitals, libraries and credit card companies, that cannot successfully collect. The company then pursues debtors for the unpaid balances of their former accounts. Collection agencies often offer consumers debt settlement agreements. Debt settlement is beneficial for you, since you can pay off the debt for less than you actually owe, and beneficial for the collection agency, since it turns a profit on a debt another creditor deemed "uncollectible."

Instructions

1

Contact the collection agency by phone. The telephone number for the collection agency is located on its debt collection letters. Collection agencies also list their contact information on your credit report.

2

Notify the debt collector you speak to that you are calling to negotiate a settlement of your account. Offer less than you can afford on the debt, as the debt collector is unlikely to accept your first offer. Negotiate with the collector until you both can agree on a settlement amount.

3

Request that the debt collector send you a formal debt settlement offer for the agreed upon amount via mail or fax or email attachment. You need this documentation for your records. Insist that the offer include the provision that, once settled, the company agrees not to sell the remaining balance to another collector.

4

Mail the collection agency a money order in the amount of the settlement. Do not provide the company with a personal check or allow it to draft any money directly from your bank account. Some unscrupulous collection agencies have been known to use consumers' banking information to withdraw the full amount owed from their bank accounts.

5

Call the collection agency after 30 days and request a zero balance statement. A zero balance statement protects you in the event the collection agency violates its original agreement and sells the remaining balance of the debt.