Settle Debts with Collection Agencies for
Pennies on the Dollar
by Lisa Phillips
Pennies on the Dollar
by Lisa Phillips
Related Topics:
The first thing you want to do before attempting to settle your debts with a collection agency is
request debt validation from the collection agency. Debt validation forces collection agencies
to prove you owe them a debt. Collection agencies must produce documentation, such as the
original creditor contract, that says you owe the actual debt.
request debt validation from the collection agency. Debt validation forces collection agencies
to prove you owe them a debt. Collection agencies must produce documentation, such as the
original creditor contract, that says you owe the actual debt.
If the collection agency cannot validate the debt they must
immediately delete the debt from your credit files and cease any
further collection efforts. If they continue reporting the debt they are
in violation of the FCRA, and you can sue for $1,000 in damages for
each violation of the Act. Read more about Debt Validation.
Debts are purchased for pennies on the dollar.
The first thing you should keep in mind when settling with a
collection agency is that most companies which purchase bad debts
pay pennies on the dollar for those debts. How much they pay
depends a lot on the age and type of debt. Recent debts can be
purchased by a collection agency for 6 to 7 cents on the dollar and
older accounts may be purchased for as little as 2 cents on the
dollar.
Check the statute of limitations.
Every State has a statute of limitations statute or the statute has
passed, you may choose not to settle. Once the statute of limitations
has passed, you can no longer be sued for the debt. A debt
collector can continue to attempt collection; however, there is no
legal recourse they can pursue. If a collection agency contacts you
after the statute of limitations has run never making a partial
payment on the debt could restart the statute of limitations.
Start your offer low.
Now that you know collection agencies purchase debts for pennies
on the dollar, it’s time for that savings to be passed onto you. Start
your offer at twenty-five percent (25%) or less.
Even at this low offer the collection agency will still be making a profit
from your debt. Be aware that collection agencies will almost always
add extra fees, costs and interest to the debt. Start your
negotiations from the original debt owed, not the new amount with
the extra fees, costs and interest.
immediately delete the debt from your credit files and cease any
further collection efforts. If they continue reporting the debt they are
in violation of the FCRA, and you can sue for $1,000 in damages for
each violation of the Act. Read more about Debt Validation.
Debts are purchased for pennies on the dollar.
The first thing you should keep in mind when settling with a
collection agency is that most companies which purchase bad debts
pay pennies on the dollar for those debts. How much they pay
depends a lot on the age and type of debt. Recent debts can be
purchased by a collection agency for 6 to 7 cents on the dollar and
older accounts may be purchased for as little as 2 cents on the
dollar.
Check the statute of limitations.
Every State has a statute of limitations statute or the statute has
passed, you may choose not to settle. Once the statute of limitations
has passed, you can no longer be sued for the debt. A debt
collector can continue to attempt collection; however, there is no
legal recourse they can pursue. If a collection agency contacts you
after the statute of limitations has run never making a partial
payment on the debt could restart the statute of limitations.
Start your offer low.
Now that you know collection agencies purchase debts for pennies
on the dollar, it’s time for that savings to be passed onto you. Start
your offer at twenty-five percent (25%) or less.
Even at this low offer the collection agency will still be making a profit
from your debt. Be aware that collection agencies will almost always
add extra fees, costs and interest to the debt. Start your
negotiations from the original debt owed, not the new amount with
the extra fees, costs and interest.
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All negotiations should be writing.
Unlike original creditors, who are a lot more ethical than collection agencies, never speak to a
collection agency over the telephone. Put all your negotiations in writing. Make sure your
correspondence includes the words “full payment on the debt” and “complete discharge of all
monies due”. Keep excellent records when negotiating with a collection agency and always
mail all correspondence certified, return receipt mail.
The older the debt, the lower your settlement offer.
Your debt may be on its second or even third round of collection agencies. You may have
been contacted by a few different collection agencies for the same debt. This is good news for
you. It indicates the original creditor and the first collection agency has given up on you. Now
you know for sure the second collection agency has paid even less for this debt. This is a
good position to be in to settle for pennies on the dollar.
Collections on behalf of the original creditor.
If the creditor has not yet written off the debt and hires a collection agency to collect the debt,
it may be more difficult to negotiate for pennies on the dollar. The collection agency has not
paid for the debt, they want to maximize their collection in order to get a percentage of what
they collect for the original creditor.
You should still offer to pay a lump sum at 25% of the original debt. Stick to your guns,
because once a collection agency realizes you are willing to pay something, they assume you
can be talked into paying more. Your first offer may be turned down; however, you should
continue to negotiate, in writing, at small increments.
Negotiate entire settlements. During your negotiations you want to make sure you
negotiate the entire balance in full. Some collection agencies will settle for less then turn
around and hire another collection agency to collect the difference. This is illegal in some
states. You may want to check with your State’s Attorney General in order to confirm whether
or not a collection agency can settle, then have another collection agency go after the balance.
Do you need debt relief NOW? Is your credit card debt out of control? CareOneSM Debt
Consolidation can help you. Get online debt relief now!
Page: 1 2 Next
Unlike original creditors, who are a lot more ethical than collection agencies, never speak to a
collection agency over the telephone. Put all your negotiations in writing. Make sure your
correspondence includes the words “full payment on the debt” and “complete discharge of all
monies due”. Keep excellent records when negotiating with a collection agency and always
mail all correspondence certified, return receipt mail.
The older the debt, the lower your settlement offer.
Your debt may be on its second or even third round of collection agencies. You may have
been contacted by a few different collection agencies for the same debt. This is good news for
you. It indicates the original creditor and the first collection agency has given up on you. Now
you know for sure the second collection agency has paid even less for this debt. This is a
good position to be in to settle for pennies on the dollar.
Collections on behalf of the original creditor.
If the creditor has not yet written off the debt and hires a collection agency to collect the debt,
it may be more difficult to negotiate for pennies on the dollar. The collection agency has not
paid for the debt, they want to maximize their collection in order to get a percentage of what
they collect for the original creditor.
You should still offer to pay a lump sum at 25% of the original debt. Stick to your guns,
because once a collection agency realizes you are willing to pay something, they assume you
can be talked into paying more. Your first offer may be turned down; however, you should
continue to negotiate, in writing, at small increments.
Negotiate entire settlements. During your negotiations you want to make sure you
negotiate the entire balance in full. Some collection agencies will settle for less then turn
around and hire another collection agency to collect the difference. This is illegal in some
states. You may want to check with your State’s Attorney General in order to confirm whether
or not a collection agency can settle, then have another collection agency go after the balance.
Do you need debt relief NOW? Is your credit card debt out of control? CareOneSM Debt
Consolidation can help you. Get online debt relief now!
Page: 1 2 Next
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