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How to settle a collection account

Using a reputable credit repair company is often the best way to settle a collection account.  First off, you should not try to settle the collection account until after the collection company has verified the debt in accordance with FDCPA (Fair Debt Collection Practices Act) standards.  You would be amazed at just how few times this actually happens.  If you are not sure exactly what these standards are then you should invoke the help of a credit repair company or a credit repair service.

In settling the collection account – don’t call until the last week of the month.  Most collection companies are nothing more than large “call centers”.  Understand their business structure.  Each call center has a manager and a monthly quota for collections.  Toward the final days of the month, if their quota has not yet been met, they will be more aggressive with their settlements because THEY have an agenda – to reach their quota!

Now let’s talk about negotiating that debt.  If the account has already gone through a proper debt validation then you will already know how the debt breaks down.  This is important because you want to know how much of the debt is the original principle and how much is interest, late fees, and collection charges.  This information will help you gauge where to start with your offer.

Rule number 1 – start low.  You can always increase your offer but it is certainly hard to reduce it.  Number two, do not admit you have the money.  I have found that it is better to say you will borrow the money from a family member or friend.  Also lump sum settlements are the way to go.  Lump sum settlements will get you the best reduction in the amount.  Monthly payment amounts will often simply get countered with paying the monthly payments until the debt is paid off in full.  This is where having a reputable credit repair company will help you.   A reputable credit repair company has probably dealt with this collection company before.  They may well know how much that collection agency has a history of settling for.

Ask for the deletion from the credit reporting agencies.  There is an art here.  First, negotiate the settlement amount, THEN ask for the deletion.  Don’t let the deletion enter the equation until an amount has been negotiated.  If you do they know they have leverage and will hold out for more money!  When you ask for the deletion be careful what you reasoning is.  You can’t just say delete it because I am paying it – well I suppose you can but that tactic will fail about 90% of the time.  Asking for a deletion based upon a FDCPA or a FCRA violation that was uncovered during the validation process will work well here.  Sorry, I am with-holding those trade secrets (after all I can’t give away all my secrets ;)).  It is important to note that settling the collection account itself will probably not change your FICO score.  The collection account will change on the credit report from a balance owing to a zero balance.  Since the balance owing column is widely recognized to not affect the score then the score will not change.  In order for the score to improve you will have to get the entire account deleted.

I saved the golden rule for last.  For those readers who stopped reading before the end – you will miss the most important tip.  NEVER NEVER NEVER EVER (have I said never yet) admit that the debt is yours.  Always speak hypothetically if you must refer to the ownership of the debt.  Allow me to give you three examples.  First, the simplistic approach, “hypothetically if this debt were mine, how much would I have to pay you to go away?”  Second, “I think this debt might belong to a relative, how much would it cost me to settle this debt on their behalf?”  Third, “I do not believe that this debt is mine, however, I am tired of being harassed by you, how much will it cost to make you stop?”  There are of course many other variations.  I would like to emphasize here that I am NOT asking you to lie.  That would be immoral and unethical of me.  Pick the one that fits your situation.

After reading my words I hope you will see the power of using a reputable credit repair company to help you.  Like anything else, employing a professional on your behalf will greatly increase your chances of reaching your goals!


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