Can I just send the collection agency a payment? or do they have to agree?
I just received a letter from a collection agency for an old credit card bill… the credit limit on the card was only $250 and when I moved the balance was abut $230 (with moving I forgot about the card). The collection agency is asking for $660 can I send the collection agency a debt settlement letter with a money order in the amount of $250 with a line stipulating that “cashing of this money order stands as payment in full which to be reported to all 3 credit bureaus within 30 days”
or do I have to negotiate with them and get them to agree on a payment amount. I figure as long as I write that sentence in the letter and on the money order and they cash it they are legally obligated to adhere to the terms.
Thanks
According to the Fair Debt Collection Practices Act (FDCPA) you have the right to dispute the debt. Do so in writing, send them a certified letter/return receipt requesting a Validation of Debt. Once you dispute the debt, then they will have to provide your proof of the debt. In the meantime they have to inform the Credit Reporting Bureaus of your dispute.
If the debt is valid then you should check the statutes in your state. Every state has a length of time where legal action can be taken against you for the debt. This means that if the debt is out of statute, the debt collector can no longer take you to court and sue, this does not mean that you no longer owe the debt. The debt is owed forever. Here is a link to check your statutes:
http://www.creditinfocenter.com/rebuild/statuteLimitations.shtml
If you simply want to pay off the debt, then you should know that if you make a settlement with the debt collector your account will simply be reported as paid collection, and this will not improve your credit history. A paid collection is viewed as better than unpaid, however if the debt is really old, like over two years, then it will actually lower your credit score because it will bring the account current. You will have to also get in writing that the debt collector will not sell the balance (the amount you saved) to a new debt collector, this is sometimes done, so you would just owe a new collector.
The only way to improve your credit history is to try to negotiate a “pay for deletion” agreement with the debt collector. In exchange for payment get them to agree to completely remove the negative account from your credit history.
If they agree make sure and get it in writing BEFORE you send them any money, and once you receive the agreement only pay them by money order. Never allow access to your bank accounts.
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