How to Eliminate Debt in Collection Accounts

Collection accounts are credit accounts that have been written off as bad debts. The original creditor may still have the account, or it may have been transferred or sold to a debt collection agency or attorney. MSN Money reports that creditors usually write off debts after they become six months past due. A write-off is an internal accounting term that allows the creditor to gain a tax break equal to about 35 percent of your final balance, according to MSN Money.

Instructions

1

Check the status of your account by contacting the creditor. Contact the creditor by calling the number on your billing statement. Ask the creditor if it still has possession of the account or if the account has been sold or transferred to an outside agency. Get a contact number for the outside agency, if the account has been transferred or sold. Ask the creditor -- or the debt collector currently handling the account -- for a payment arrangement. Offer to make monthly payments until the entire amount is eliminated, or offer to settle for a lump sum that is less than the full balance. MSN Money reports that some debt collectors will settle collections accounts for around half the balance.

2

Get the terms in writing before you begin making payments. The terms should include how much you have agreed to pay and the due dates. The agreement should also indicate that the account will be considered paid in full if you have agreed to pay the full amount in installments or settled if you negotiated an agreement to pay less than the full balance.

3

Make payments as agreed to eliminate your debt. Keep copies of all correspondence related to payments, including copies of certified checks.