Get It In Writing Before You Write the Check
Remember to have the representative sign and return to you. You must hold out for your terms until the creditor gives you what you want. Once you’ve written that settlement check, your leverage disappears. So, get your terms in writing before you even open your checkbook.
Remember, you have the advantage, because you have something the creditor wants. This letter is a legally binding contract stating:
1. With whom you reached this verbal agreement.
2. The date the agreement was made.
3. The amount of the settlement
4. How the item will be reported on your credit report
To further illustrate the importance of getting an agreement in writing, this is typical of our medical billing system today. “I had elective surgery and told all involved persons that I opted for this surgery because I was going to be laid off (permanently) and would have time to recover. The hospital, doctors, office and med lab all assured me that my insurance would cover the procedure at 100%. I told them that it was imperative that this be so, since I would not have the funds once I was out of work.
The final outcome is that I am being sued for this money and have had threats to garnish my wages. I have hired an attorney and offered to pay in order to satisfy this “bad debt.” My attorney informed me that they had no legal right to submit this as a “bad debt’ when I was disputing the charges and threatened them with a slander lawsuit. I agreed to pay $300 if they would accept it as full payment and report it as a “disputed debt paid in full.
They agreed. I heard nothing from them since cashing my check and I am still paying an attorney to straighten this out.
Third-Party Collection Agencies: Once your account is 90 days or more delinquent, it is usually turned over to a collection agency. A collection agency is a company whose primary purpose for being in business is to collect debts for their clients. This can be an attorney, but most often is just an independent agent. You’ll be happy to know that you have more leverage with a collection agency than you do with the original creditor. There are simple, legal steps you can take to make contact from collection agencies illegal.
That’s right, you don’t have to subject yourself to continued harassment! The only time it is to your advantage to negotiate with a collection agency is when they are the ones who reported the item on your credit file. Then they have the power to remove it.
The good news is that collection agencies will almost always agree more readily to delete the negative listing than banks or credit cards. The only case where you should have a real problem with collection agencies is when they represent a larger, institutionalized creditor.
If, the item was reported by the original creditor, then the agency will not likely be able to change what they reported. In fact, some of the larger credit firms have agreements with bureaus not to agree to remove items from files as an inducement to settlement. However, as you will read in “Insider Methods To Change Or Delete a Credit Item”, there are ways around that. The bottom line is almost anything can be worked out if you offer the right solution to the right person.
On those occasions when it is to your advantage to negotiate with third-party collection agents (i.e. when they listed a negative entry on your credit file), you will find that collection agencies are the easiest to get to agree to deleting a negative item.
However, the key ingredient or concession that is a part of any settlement with a collection agency must be the complete removal of any reference to a collection agency on your credit file. Any negotiated settlement that does not include removal of the collection agency’s name and/or the fact that the account went to collections is virtually worthless if your goal is to salvage your credit.
The fact that you “Paid in Full” a collection agency (not the original creditor) is not impressive, except as it reflects on the ability of the collection agency to collect a debt. You never want a collection agency’s name to appear on your credit file. Pay one hundred percent if you have to, but negotiate their name off of your report.
If you are not able to come to an agreement, you may as a last attempt let them know you are going to invoke your rights under the law and stop them from contacting you further. A few states do allow collection agencies to file suit on behalf of the original creditor. In determining how firm you will be in your negotiations if you live in one of those states, the same considerations that apply to the original creditor also apply to the agency-the dollar amount, the type of debt, age, and the debtor laws of the state(s) in which you live and work. A short consultation with an attorney can clarify the position that your state holds.
Regis P Sauger http://www.yurcredit.com
Regis Sauger is a licensed Mortgage Broker in Florida, an author, lecturer on credit awareness. He have conducted seminars for underwriters, attorneys, mortgage lenders, realtors and the general public.
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