How to Pay Collection Accounts

The best way to pay debt collectors over defaulted accounts is to settle for less in a one-time, lump sum payment…where you negotiate the terms in writing first, then pay. What you need is a letter on their letterhead confirming that the debt will be "Paid in Full" once the agreed to amount is paid. Once you get this letter, it's safe to pay. Pay only with money orders or cashier's checks. Never give them your bank account numbers.  Assuming you have cash saved up, then offer to settle this account in full for 25% of the defaulted amount and go from there.  Photocopy everything and keep in your records forever as documentation that the debt was resolved.  

Making monthly payments to debt collectors should be avoided if at all possible because:
- They could take your monthly payments for 7 or so months then turn around and resell the account to another collection agency, which would restart the collection process all over again and you’d be powerless to challenge it
- Any monthly payments you make could go down a black hole of high interest and fees…so you might pay for 2 years and the balance will not go down.

If you must pay on a monthly payment plan, then make sure that you get account statement every other month from the collection agency to confirm that your balance owed is really going down and not just staying the same.

Dealing with debt collectors

As a general rule: You can't deal in "good faith" with debt collectors. There are too many bad apples in the debt collection field and you have to assume that any promise over the phone about any settlement deal is a lie unless the terms are backed up in writing.  

- Debt collectors have no direct legal power over you whatsoever. Don’t let them bully/scare you into giving them your checking account #’s.  You cannot be arrested over debt in the USA. Debt collectors do not have direct power to garnish wages or freeze checking accounts. They’d have to take you to court and win a judgment first.
- Debt collectors love to create a false sense of urgency. If they have waited months or years for your payment, then they can wait a week or two for any settlement agreement or payment to arrive. Any “deadline” like 5PM tomorrow is bogus.
- I generally advise to make your first call to debt collectors on an outside line like a pay phone. See how they respond to your offer to settle the debt. If they start screaming at you or acting belligerent, then it may be best to not renew contact with them.
- Debt collectors love to pretend that they are (or work for) attorneys. If they do this, ask for the full name of their attorney and their license number in the state bar association. If they refuse to give this info to you, then the legal threat is bogus
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