Debt Relief Options for Debts in collections

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Debt Relief Options for Debts in collections

At some point in your debt relief journey, you may receive a notice that your accounts have been sent to collections. Once this happens, your debt relief journey will look a bit different: Collections agencies are unique animals. Essentially, collections companies are third-party entities who collect on behalf of a creditor or buy delinquent accounts from the creditor. They may directly contact debtors to try to collect unpaid debts, or they may hire collection law firms to collect on the debt. 

If your account has been sent to collections, don’t worry: You can still try to settle it for less than you owe. Here’s how.

1. Complete the verification process

This means you need to make sure the debt is yours, and that it is accurate. In its first communication with you, a collections agency is legally required to give you the option to dispute the debt and request validation. If an agency is not able to validate the debt (which can work in your favor), you’re not obligated to pay the debt, and the delinquency must be omitted from your credit report. 

2. File a dispute with the three credit agencies

If the debt isn’t being validated by the collection agency or if the amount in demand isn’t what you owe on the debt, then you should file a dispute with the credit reporting agencies. They will investigate your dispute as they are required to by law and provide verification as needed. Meanwhile, the collections agency should also provide you with the information you requested, including the name and contact information of the original creditor. If it turns out the debt isn’t yours or the collections agency cannot validate it, it will be removed from your credit report.  

3. If you owe the debt, Pay it before it’s too late

Once a collection agency validates the debt that is owed, it’s best to work out an arrangement to payoff the debt. This is very important because collection agencies can and will hire attorneys to collect on unpaid debts. If your debt goes through the legal process for collections, it can cause you a lot of stress and additional legal fees can be added to the debt. 

4. Negotiate a Settlement

Contact the collection agency to work out a settlement. Often, collection agencies will work out a settlement agreement if a reasonable offer is presented to them.

If you are not sure what settlement offer to make or if you can’t afford to pay the settlement that is being offered by the collection agency contact us and let us put our 30 years of combined experience to work for you and help you get out of debt.