Debt Collection Letter Action Plan

Debt Collection Letter May be Fake

Debt of Bones

Debt of Bones (Photo credit: Wikipedia)

That debt collection letter that has you so upset may or may not be real.  Don’t let your fear of having a collection wind up on your credit reports make you pay first and ask questions later.  There are a lot of creative scammers out there dreaming up ways to take your money.  Do you recognize the debt?  Demand verification in writing. The collector must verify within 5 days. The collector is not allowed to report the debt to the credit bureaus while the investigation is going on.  If the collector threatens dire consequences immediately such as jail, arrest, imminent suit there is a good chance he is not for real.  Check with the secretary of state to see if the debt collector’s corporation has paid it’s annual fee in your state.  Then check with the State Department of Business Regulation to see if they are currently registered there as a debt collector.  If they are not current on their registration get a letter from the DBR stating that.  They cannot then legally verify the debt after you challenge it with the credit reporting agency.

Does debt collection letter Reveal Age?

A real debt collection letter should be detailed and precise.  The amount, the date the debt was allegedly incurred and previous attempts to collect the debt should be included in the letter.  Once you have determined that the debt is legitimate you should check to make sure it is not too old to collect anyway.  Check your state’s statute of limitations on debts.  Do not make a partial payment prematurely.  Not only does a partial payment operate as an admission that you owe the debt listed in the debt collection letter…It can reset the statute of limitations!

When the Debt Collection Letter is for a Real Debt

OK.  The debt is real.  You really owe it.  The debt collector has been able to verify the debt. He has verified to your satisfaction that he is really legally authorized to collect the debt referred to in the debt collection letter.  Try to strike up a discounted deal you can live with.  It’s imperative to do this before the debt makes its way onto your credit report.  Payment plans are OK if that’s what you need.  Better still is to make an offer to settle for less than what you owe along with deleting the debt from any credit reports where it appears.  Bear in mind that debt collectors purchase these accounts for literally pennies on the dollar.  With credit or debit card at the ready offer to settle for a small percentage right now. The older the debt the more willing they will be to take less in settlement. Insist on an email acknowledging that this debt is fully satisfied and will be deleted in exchange for the amount agreed upon.  That debt collector gets commissions.  They are very aware of the value of money right now instead of money maybe somewhere down the road.

Settle Debts for Less than Face Value Before they are Reported!

There is a big difference between settling a debt at the initial stage compared to settling a debt on your credit report.  Debts settled for less than full value that have already been listed on your credit report will be listed as paid under a different code indicating that they have been settled with a compromise. It’s the fact that there was a collection more than the amount or if it was paid that hurts the most. This is why even a paid collection has a negative effect on your FICO score.  It is better paying it than leaving it unpaid particularly in the eyes of a mortgage lender.

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After practicing law for 37 years Edward F. St. Onge, Sr. now devotes all his time to helping consumers achieve a high credit score with amazing speed. Learn the counter-intuitive secrets to credit scoring through his down to earth instructions backed by extensive knowledge of the laws and trends. All of the latest tricks and techniques that they don't want you to know now at your disposal. At last a level playing field for the consumer!

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