How to Avoid Paid But Not in Full

Collection accounts and old debts don't disappear. Even if a creditor stops collection attempts, these delinquent accounts stay on your credit report for seven years. But you can resolve these debts sooner and clean up your report. If you can't afford to pay a debt in full, you can negotiate a debt settlement. A debt settlement offers a practical solution to debt because you can pay off the balance for less than you owe. However, your creditor may report "paid, but not in full," or "settled" on your report, which can do further credit damage.

Instructions

1

Figure out what you can afford to send a collection agency or creditor to settle a debt. Rarely will collection agencies or creditors accept installment payments with a debt settlement. They typically ask for one lump sum payment.

2

Call the creditor that owns the debt to discuss a settlement. State your plans to satisfy a balance, and then offer your settlement amount. Offer less than what you can afford because the collection agency or creditor will likely negotiate a higher settlement.

3

Address how the creditor will report the pay off. Some creditors and collection agencies report debt settlements as "paid, but not in full" on credit reports. Settling a debt can have an impact on future loans and lenders may reject your application because you didn't fulfill your past obligations. Ask the creditor to report the account as "paid as agreed," "or "paid in full." Some creditors will grant your request in order to recover funds owed.

4

Mail your debt settlement payment once you receive the agreement in writing. If your creditor agrees to report the payment as "paid in full," get written confirmation before paying off the debt.