Short answer
A verbal agreement is not a settlement. Get the deal documented in a settlement letter, check that the letter contains the items that protect you, and only then send money. Paying off a settlement without a written agreement is a mistake you will regret if the account resurfaces later.
Key points on this page
- No deal is a real deal until it is documented and then paid in line with the terms in the letter.
- A settlement letter should show the creditor or collector name, the date, your name, your account number, the amount accepted as settlement, the payment terms and due dates, and wording that the account is settled or satisfied in full. If any of that is missing, ask for a new letter.
- Never release payment information to a debt buyer, or to a collector working for a debt buyer, without documentation in hand.
- Some large banks will not release a letter until payment arrangements are set up in their system. That is sometimes acceptable with an original creditor, and only in limited cases with a collector working for one.
- Schedule the first payment far enough out for the letter to reach you, 10 days or longer. If it has not arrived 72 hours before the payment processes, demand a fax, and be ready to walk away with the funds out of the account.
- Keep a copy of every settlement letter, including the deals a professional negotiated on your behalf.
We just discussed how to negotiate debts successfully on our own, but that doesn’t close the deal…yet. Negotiating debt and paying the new agreement requires a settlement letter. In the wacky world of debt collection, debt buying, and credit reporting, paying off a debt you settle without having a documented agreement, is a mistake. And one you will regret later on if the credit card you thought was settled (other types of debt too) resurfaces in a way where a written agreement to accept less could show the account was resolved, instead of the headaches you may go through without one.
NOTE: This post is part of our Debt Settlement Guide. If you’ve missed any of the previous content, or would like to start at the beginning, please see the links at the bottom of this page.
Reaching the point where you have a verbal agreement to settle and pay off a debt for an amount you can afford is exciting, and a relief at the same time. You must be careful not to lose sight of what are still critical concerns before celebrating your success. This information will help you focus on crossing the debt settlement finish line with confidence – when your success is documented.
A Verbal Agreement is Not Enough
When you’re negotiating directly with creditors, your settlements are generally going to be reached verbally first. The verbal agreement will be for a set amount of money either paid all at once, or paid by making several installments over a set period of time, until the settlement agreement is met. It’s important that you understand the deal is not done until it is documented and fully funded, consistent with the terms and payment timelines laid out in a debt settlement letter.
Verbal communication with creditors and debt collectors are a necessary part of the debt negotiation process. How and when to communicate with creditors and debt collectors to negotiate with them is covered extensively throughout this site. Ongoing communications over the phone with your original creditors and debt collectors can progress until you have the money you need to settle.
You should not attempt to negotiate an account, or offer a settlement amount, until you have the targeted dollar amount you need to fund an agreement. It makes little sense to start negotiating a settlement amount if you don’t have the money to pay. Just making calls to “feel out the situation” wastes everyone’s time and could hurt your efforts later.
Your targeted settlement amounts will be different from one account to the next. If you’re working with someone in the network, you’ll be able to set realistic settlement percentage targets, timelines, and goals using real-time data about your creditors and the debt collectors involved.
If you are a DIY reader, be sure to participate in the comment sections of relevant page topics in order to get feedback about timing and targeting for your debts you are looking to settle. The comment section at the bottom of this page is the perfect place to post questions about a settlement letter you have received, or what you could do if you’re having a hard time getting one sent to you.
Reviewing Your Debt Settlement Letters
Reaching a settlement agreement can take one phone call, or it may take several calls over a period of days, weeks, or even months. When a deal is struck, you know that no deal is a real deal until it is documented, and then paid in accordance with the agreement.
Debt settlement letters with original creditors and debt collectors are typically a standard form that will consist of the following:
- The creditor and/or debt collectors name.
- The date the letter was drafted.
- Your name.
- Your account number.
- Outstanding balance owed on the account (this is sometimes missing and is not a deal breaker).
- Amount that is being agreed to as settlement and satisfaction of the debt (less than the full amount owed).
- Terms and amounts of payments to be made – if you are settling the account over a period of time – instead of with one lump sum.
- Date your payments must be received by in order to have met the settlement agreement.
- The settlement letter must reference that the account being satisfied in full i.e. “settled”, “settlement of this account”, “accepted as settlement in full”, “paid in full”.
The letter will have other general information, such as disclosures about settling debt. Creditors and collectors put this information in to cover themselves. The bulleted items above are what you want to see in a settlement letter to cover yourself.
Settling with a third-party debt collector means you must get the above details documented before remitting any payment towards the agreement. If the above bulleted items are missing from your settlement letter, you should request a different letter be sent to you that meets the above specifications.
Watch this quick video about debt settlement letters:
Setting Up an Agreement Without a Letter
Some of the large banks will not release a settlement letter to you until your payment arrangements are set up in their computer system. They will request that you give them specific electronic or ACH payment information over the phone first. Should you agree to this? Yes, in some instances.
If you’re experiencing a creditor or collection agency holding back sending you a settlement letter, be sure to post about that in the comments below to get feedback about how each one of your creditors deals with this prior to settling, or negotiating your agreement and setting dates for payment. This way, you know what to expect beforehand, or can navigate the negotiation and settlement process of a specific account with more confidence.
Schedule your first (or only) payment for a future day that gives enough time for the settlement letter to reach you by mail. 10 days or longer would be best.
- Make payments on the settlement from your bank account that you set up specifically for saving and funding the agreements.
- If you do not receive the settlement letter within 72 hours of when your payment is scheduled for processing, you can call and demand the letter be faxed to you, or the funds will not be available in the account.
- You should be prepared to walk away from a deal if you do not have documentation in hand before the payment date. As a caution, be certain you don’t have the funds in your set-aside account on the date you set up a payment – if you are walking away from a deal.
Providing information and setting payment dates in advance of having received a settlement letter is usually only an option I consider when dealing with original creditors, and in some limited instances, debt collectors working for your original creditor.
Do not release payment information to debt buyers, or debt collectors working for debt buyers, without documentation in hand.
There are some instances where I will recommend you record a phone conversation about agreeing to settle a debt. I always encourage you to tell the debt collector that you are recording the call and why (they refuse to send you the agreement in writing before payment is set up).
Receiving Debt Settlement Letters Via Fax
Technology has provided many conveniences and cost savings when communicating important details that require documentation. Documents can be emailed with the click of a mouse. It may surprise you to learn that banks and collectors do not readily take advantage of technology advancements. You will find that many internal recovery specialists (bank employee debt collectors), and outside debt collectors working for collection companies, are not allowed to email anything to you. One way to work around the delays of getting settlement letters mailed to you is to get them faxed to you.
If you do not have access to a fax already, you can set up a virtual fax service. This would give you a 10 digit fax number that others can send documents to, and you can receive the faxed documents as attachments to an email, or receive an email notice a fax has been sent to you to log in and download, or print.
One of the services I recommend to receiving debt settlement letters via fax is eFax.com. The cost of an efax account, or similar virtual fax services is low. Setting up a way to receive faxed settlement letters is worth the cost when dealing with time-sensitive communication and funding of settlement agreements you’ve made. Getting the settlement letter faxed the same day is especially handy if you follow some of the “end of month”, or “end of collection agency contract” strategies that I lay out on this site, and other personal finance sites.
Working with a debt settlement company, or a professional negotiator, should not mean you let your guard down about getting settlement agreements documented and in your hands. Just because someone else is handling the heavy lifting doesn’t mean you should not be concerned about having copies of all settlement letters. Be sure to get a copy of all debts that have been negotiated and funded from any professional you work with as each of your debts are being settled.
With business trends for electronic data storage, and the fact that computer systems can crash, physical documents this important should always be in you possession.
Conclusion:
Negotiating and agreeing on an amount you will settle a debt for is primarily going to be done over the phone. Once you have a verbal agreement, it must be followed up with documentation. The settlement letter should meet certain requirements before you remit payment in full, or make a partial payment. If you do not receive a settlement letter, or a letter does not include what is standard information to protect you, it’s okay to walk away from the deal. You can receive settlement letters via fax and mail (sometimes even email). No settlement letter means you don’t have a deal. Keep all settlement letters in a safe place with all of your other important documents.
Almost done. The final step in our Debt Settlement Guide is paying debt collectors after the negotiations are done.
If you have questions about your settlement agreements, please comment below for dedicated feedback, or call 800-939-8357, ext. 2 to reach me directly.
This Debt Settlement Guide includes:
An Expert Guide to Credit Card Debt Settlement
How and Why Banks Settle Credit Card Debt with You
Types of Accounts to Include in Your Debt Settlement Plan
Why Settling Credit Card Debt is Like a Race
How to Settle Credit Card Debt Quickly
How to Talk to a Debt Collector
How to Negotiate Credit Card Debt Successfully Yourself
7 Largest Credit Card Banks and How They Settle Debt
Get Debt Settlement Letters and Agreements from Collectors (you are here)
Paying Debt Collectors After You Negotiated a Settlement
Michael,
I am on the quest of wanting to pay off my debts that I owe. I have been doing a ton of research on where exactly to start or how to start the process. I have some other accounts that I paid in full and the still affect my credit since they were late. My question to you is what is the first thing that I should do before contacting the companies. I do not want to settle all of them I want to pay off in full all of the smaller ones and settle 1 large one that I have for $4,000. Everything else is below $600 so I will pay those all in full. But what are the first steps I should take when I contact them should I request anything by mail or fax stating that I am paying in full or should I send them something stating my intentions to pay them in full?
Post a comment with the following details and I can better offer feedback:
Who account is with?
When account was last paid?
Balance owed as of today?
I received a collections letter from General Revenue Corp back in May stating that I owed a debt $2765.75 from a university that I had attended. Long story short – I had no idea I owed the money to the university. My ex-wife handled all our finances throughout our marriage. During our divorce, she hid several bills from me (so she couldn’t be held liable for our actual debt)…one of which was the bill for the university. Upon getting the letter from GRC, I contacted the university to validate the bill. They had explained to me that the bill had been sent off to collections (GRC) and there was nothing more the university could do for me, directly, to settle the debt. Post divorce has left me in great financial difficulty and I am diligently trying to settle all my debts and get back on the right track. However, this unforeseen collections debt has thrown me quite a curve ball. Therefore, I responded to GRC’s letter in writing with a settlement proposal. I offered to pay a lump-sum payment of 60% of the balance due ($1659.49) within 30 days upon receipt of a signed approval of the proposal and the agreement to have the account listed as “paid in full” to all credit reporting agencies. I sent this letter to GRC on June 26, 2014. To this day, Aug. 2, 2014, I have not heard back from GRC. I have not even received any phone calls…however, I did mention in my letter that any further correspondence must be in writing. Is it typical for a slow response from collection agencies when attempting to negotiate a settlement? I am worried that they are going to just disregard my offer and attempt to sue me. At this time, I have not contacted a lawyer over the matter for obvious reasons…I simply can’t afford it. Do I need to allow GRC more time to review my offer? Should I send them a second letter? I hate just sitting here feeling helpless when all I want to do is put this behind me.
Depending on how your letter was worded, you may never hear back from them. Too many of these letters are interpreted as a cease communication letter by collection companies. Now that more than 5 weeks has gone by you may want to call and follow up on this. Is there a reason you wrote to them as opposed to calling?
What type of student loan was this?
Mr. Bovee,
In my letter to GRC, I made it pretty clear that I was open to communication via “in writing” regarding the negotiations.
As for the debt in question…the debt is not an actual “student loan”. It is an actual bill from the university, itself. I had registered for classes to attend a fall semester and was all set to go. Just prior to the start of the semester, everything blew up with my marriage/divorce. Therefore, I was unable to attend class. I needed to focus all of my attention on the the divorce. So, I had dropped out of my classes prior to the start of the semester…before the “drop/add” date…in which, there was not supposed to be any penalty. My goal was to attend the following spring semester once the divorce was settled and could then focus on attending classes. All of my student loans that were granted for that semester had been returned to their respective lenders. However, despite having dropped all of my classes prior to the penalty date, the university still charged me for a full semester. Their claim was that I did not sign an official “withdraw from the university” form. I did not know I needed to do this being that it was my intention to attend classes the following semester and I was never told otherwise. I was under the impression that withdrawing from the classes (not the university, itself) was sufficient. Then, of course, with my ex-wife withholding the bills from the university from me during the divorce process…I never knew I had been charged for that semester until the bill was sent on to collections.
My reasoning for the letter instead of calling is mainly due to having dealt with a collection agency several years ago. I had a bill I regrettably let slip and I took full responsibility for my error. I called the agency once I receive a notice from them in the mail. Despite my willingness to pay what I had owed – they were unwilling to work with me. I can’t remember how much the bill was at that time but it was something just over $2000. I could not afford to pay off the bill in a lump sum to settle immediately nor could I afford to make the monthly payments they wanted to charge me for a pay-off within 12 months at a higher balance (this included the $2000+ initial balance, plus a high interest rate, and a high collection fee). I told them what I could afford monthly with hopes of some sort of compromise. They wanted no part of it. They continued to bully me, pressing hard for their pay-off plan, and threatened to sue me if I did not comply with their offer. I didn’t know what else to do. I couldn’t afford a lawyer so I eventually caved in just to get them off my back. I had to sell off some personal items and borrow money from family in order to pay it off. A very bad experience, to say the least. One I would like to never go through again. Another reason for writing the letter versus calling is that I prefer to have everything in writing (as I stated in my letter to them) as documented proof.
I wish I could offer some other feedback about conducting this type of thing in writing only. Yes, you can get done what you need to, and use only non verbal communication. But it is rare these days. And your wait time for a response suggests to me that your attempt at correspondence has hit a policy snag.
Letters do not often reach the collections floor type personnel for response. They reach the legal department.
If it were me, I would call at this point. You could send a second letter too.
Hi, i’ve been trying to find out if in the process of debt collection, original creditors owe a duty to debtor to give some sort of reminders either through phone calls or mails before forwarding the matter to the debt collection agencies. i also read about writing a letter within 30 days disputing a debt claim. i was just wondering how one can prove his disputes, does he need a lawyer? or can he deal directly with the collection agency to prove his disputes
What are your disputes?
For how long did you miss payments to your creditors before you started hearing from debt collectors?
I sent NFCU a settlement offer letter stating that I would pay them $1400 to settle the $4600 debt that my husband accrued prior to our union. We the original letter and the settlement agreement contract signed by an authorized representative of NFCU that accepted the terms I proposed. My only question is, they marked out where I stipulated that the payment would only be paid if they agreed to report the account as “Paid in Full” and they wrote in “Settled.” In the settlement agreement where the authorized representative signed, they wrote, “(reporting as settled) will still release you from all obligations to pay the remaining amount.” My goal in this settlement is to repair my husband’s credit, not to get out of paying the debt. Will accepting this offer and making the payment with the amended settlement agreement help his score at all? Or will it only make the account show a “0” balance, but still report as “Settled” on his credit reports? I would like to have the trade line deleted from his report all-together. Is this even a possibility?
Whether you get his credit report to show paid in full, or settle with a zero balance, you are getting this deal done because the accounts went into some type of delinquency. The account will show many months late, and even that it is charged off by NFCU on his credit reports. That negative reporting is here to stay for 7 to 7.5 years. There is really no legitimate way to get accurate, complete, and current information off your credit reports.
Getting NFCU to update the account as paid is often all you need, so whether settled for less, or paid in full, the zero balance update is the trigger you want for credit purposes.
Hello Michael,
I accidentally stumbled on your site and want to first thank you for all the people you have helped by providing free advice on this site. You are a good man because as you know, these stress from these type of debt issues effects the physical & mental health of a person. So here’s my situation and questions. In 2007, I quit the Corp world and became a 1099 wage earner trying to earn a living my being an entrepreneur. Many of the startup companies I worked with went out of business and I was forced again and again to start over trying to build my income back up. In early 2011 I went completely broke and I stopped making payments to Capitol One on two different credit cards . Each card had about a $10,000 balance. I stopped making these payments about 3 years ago and had a judgement placed on me for just one of the cards by a law firm in NYC as I never bothered to go to court. This judgement was probably about a year ago or more. I finally started to make money again in middle of 2012 and than tragedy struck. In November 2012, I was in a horrific accident that almost killed and I spent the last 19 recovering which included multiple surgeries, physical rehab, and too many medical problems to list. Five months ago I applied for Social Security Disability and thank God I was approved last. Because I was a 1099 employee, I had no workers compensation, so my only income now is a monthly check for $2,235. I also received a retroactive check for $23,000 for the months I first became disabled. Besides the two credit card companies, I had to move out rental and break a lease and owe $6,000 to that rental company. Plus a few misc items for a total of about $28,000. So here are my questions and I can not begin to thank you enough for any advice you are about to give me. I was told that Social security disability is not garnishable from unsecured debt like the Capital One card. Because there is a judgment on me on one card for a total of $11,500, does that make it secured debt? I want to call up the attorneys in NYC and try to clear up not only the card with the judgment, but the other card as well with the creditors. I know that bankruptcy is an option, and in my neck of the woods, the cost for hiring a bankruptcy attorney is $1,700 to $2,000 which is a lot cheaper than paying off the creditors. Knowing that I can prove to the creditors that I am disabled and will not work again, what would be a reasonable amount to offer this Attorney’s who have the judgement on me? I would like to offer them $1,500 and also make the same offer for the the other card that had no judgment. Same with the rental company. My budget is $6,000 for $28,000 in debt. It actually must be quite higher due to interest and penalties. I would feel better paying $6,000, than paying $2,000 for a bankruptcy. When I call the attorney’s in NYC, I will let them know I am disabled and can no longer work. Is it realistic that they will accept my $1,500 offer knowing I am now disabled which I can easily prove my sending them my letter of approval?f Does it make sense to tell them that if theydo not accept this offer, my only option is bankruptcy? I also owe the IRS about $50,000 but they know my situation and have put me in non collectable status. And my last question which you may or may not know is this. I still have not deposited the $23,000 check because of fear of having the money garnished. I was told disability can not be garnished for unsecured debt as long as I setup an account with no money going in but direct deposit from the government. The reason I received a paper check for the back payments is I didn’t have a bank account at the time because I was literally penniless. I recently turned my car lease in and was not able to make the last three payment so that is another issue that will go to collections. My credit is so bad that I don’t care about my credit score anymore. I am just thankful to be alive. I want to sleep at night knowing my money will not be garnished as long as I get the one card with the judgment taken care of. Also, do you know if in fact I can deposit that large check into a bank without having to worry about it being garnished? Going forward, everything will be direct deposit. Sorry for the long post, but the suffering I have gone through in mind, body & spirit these past 19 months has been a tortuous existence and the stress of being broke and owing so much money to creditors and IRS has taking it’s toll on my health and recovery from my accident.
God Bless and Stay healthy. Bob
Bob – You are awesome for getting this far! Here is the rub on the debts:
File chapter 7 bankruptcy. At least that is what I would do. Capital One is not going to settle with you as low as you need them to. Even if they did, the math supports chapter 7, not negotiating settlements. And when you add the fact that IRS debts can be discharged in a chapter 7 if the tax years involved, timing of returns being filed, and your inability to pay meet certain requirements, BK is even more the option to look to.
Check out this post about exemptions from judgment collection: https://consumerrecoverynetwork.com/question/social-security-pension-state-exemption-debt-collector-garnishment/ – I think I answered New York exemptions in the comments, but if not, post a question related to New York in the comments of that page and I will post a complete response for you and other readers too.
Hi Michael.
I had an unpaid T- Mobile bill of $205.00 few years ago. It was sold to Midland Funding. I started to get calls from them. On one of those calls, we worked out a deal with them. The deal was I would have to pay only $145. And I think it was in 3 settlements. ( was long time ago). I paid the first $62. And that was it, I couldn’t pay anything at that time. I didn’t notify Midland of that. About 2 months ago, I paid my bill in full to T-Mobile. I faxed the paperwork to TransUnion so that they can fix it on my report, but they said I’d have to fax it to Midland. Do you think if I fax the paid bill to Midland it would be easy for them to communicate that info to TransUnion? Will they give me a hard time about it? Do I have to pay anything to Midland?
Thank you,
NS
I do not think they would give you a hard time about it. I would call Midland and talk to them about all that transpired first, rather than facing them blind.
What is it you have to fax to them?
No, you should not have to pay anything more than you already have (if I understood your comment correctly).
Michael, I have to fax them the paid bill that I got from T – Mobile as proof that I in fact paid the bill in full. TransUnion told me to fax it to Midland agency since TransUnion gets their info from Midland
Got it. If it were me, I would call and talk to a rep at Midland, and find out whose attention you will be faxing it to etc.
Thank you so much. I’m gonna take your advice and call them)))
I am SO glad to have this site!
My gosh thank you so much for trying to help people without sticking it to them.
Midland Funding LLC has filed a summons in civil action
against me for a Citibank credit card (actually it was a Home Depot card sponsored by Citibank)
To this point, we have reached a verbal settlement amount (on 6/30/14)
(from the help of your site)
I told them I need the settlement letter.
Of course they wanted me to post them a payment right then.
(Just like you said)
I agreed to pay them in one lump sum
and I will pay them over $700 on a $1200 balance.
BUT
I told them I cannot do a thing until I get that settlement letter.
It is July 12th now
and I still have not received their settlement agreement .
I have called them twice to see where it is at and they keep
telling me to give it more time.
(I am really worried because the clock is ticking
…I had the 28 days to serve a written answer to the plaintiffs attorney
(Which is apparently a lawyers office in Ohio)
Kimberly Klemenok in Westlake Ohio.
And then 3 days after that, I needed to file a copy of “that answer”
with the clerk of courts.
I feel like they are trying to get me to wait long enough
so it looks like to the courts, I never
answered them.
On my recent talk with them they did say
they would fax it if I don’t get the written by Monday July 14th.
HERE IS MY QUESTIONS
(again I am so grateful for your help…you’ll be in my prayers for months!) 🙂
1. IF I receive the settlement letter from Midland (fax or mail)
what do I do about documenting that with the court?
Should I mail them an explanation and send receipts of the settlement letter and
my payment?
2 Can I just mail that to the Clerk of Courts office AND
that attorney that is on the summons? or do I have to go into the courthouse?
(I am partially disabled so I hope I can mail – our courthouse is a pain in the neck
to get to) 🙁
I just want to make sure the judgment isn’t honored and who ever needs to
know that I’ve fixed this – knows.
3. Should I just call the attorney that is listed on the summons and deal with them?
I just don’t know what to do from here.
With my health, I am so limited on getting around. I can – but it isn’t easy.
Also, this all has me a nervous wreck.
I tried to get this fixed before it went this route but
its like the people who call from these collections agencies don’t get it
that you are broke. 🙁
(one more thing, I plan to pay them using one of those
prepaid credit cards you can buy at stores. I don’t want to give
them my information from my bank or my debit card that I use all the time
as I am afraid they will go in there AFTER the debt is paid or take more
than agreed upon. I’ve been screwed over by these companies in the past
when trying to do the right thing – so is the prepaid debit/credit card okay?
Or should I trust them by giving them my routing number and bank account number?
Or use another debit card that I have?
I wish you knew how appreciated this is.
God bless you, Vicki
If you have the written settlement agreement from Midland Funding, and the payment you negotiated was made on time, you can expect the attorney for Midland to handle things with the court, but look for this aspect to be spelled out fairly clearly in the agreement you are waiting for.
There should not be a judgment entered at all. If there is already a scheduled date for you to appear in court (does not sound like it from what you shared), I would encourage you to still show for it. Not that anyone is trying to pull one over on you, but I have seen enough mistakes happen on collection files, and even at the late stage you are in, to just suggest you follow through, than try to unwind other peoples mistakes.
You can call the attorney for Midland, but since tomorrow is the day you call and ask for the negotiated agreement to be faxed to you, which means you have the deal in your hands without mail delay, I would see how that works out first.
Use your bank account or the other debt card attached to your bank account that you have. I typically advise setting up a set aside account for remitting payments you negotiate and settle, but you may not have time to do that. Using your own accounts gives you anytime access to proof you paid. You want that. And while I understand the reasons for your hesitation, if the agreement says you pay a certain amount by a certain day, if any more money were taken than what is outlined, you can file complaints with the CFPB (which legitimate debt collectors do not want), or it may even be possible to sue the debt collector.
Post an update with how this all pans out.
Bless your heart – thank you so much.
I did receive the settlement letter in the mail today and will pay them the amount tomorrow.
Whew – glad THAT is over.
I’m sure you have some kind of jewel on the other side! LOL
To help people like this .. have a great week. Vicki
I called Hunt and Henriques to settle a debt with a lump sum payment. We agreed that after I received the settlement letter I would pay them with a post office money order next day express mail. The letter I received says I agreed to a payment arrangement and the date they are expecting my payment by. It says nothing about the amount we agreed to or that the debt would be settled upon payment. The letter is even titled next payment due. I know I need the right letter before I send the payment. Do you know this companies reputation?
Hunt and Henriques is hit and miss in my experience. The experience you just outlined is a big miss. In this instance, I would call and get the letter reissued. I would also record the call and tell them you are doing so, and why.
Is the deal you negotiated a good one?
Who is Hunt and Henriques collecting for?
They are collecting on behalf of citibank. Not only did I not owe the money but they got a default judgment and upon bad advice I didn’t file to have the judgment vacated. I successfully stopped a wage garnishment by hunt and henriques a year ago and my finances have not increased since then. If I tell them I am recording the call can they hang up on me? I got an ok deal but not great. I learned yesterday that 5 people got let go from my job a couple days ago. Can I use that info to try to get a better settlement?
I suppose they could hang up on you, but if you handle it correctly, they shouldn’t. Let me know if they do.
On the judgment. How much money are we talking about here? was it an attorney that told you not to attempt to vacate? Is Citibank Hunt and Henriques client, or was if a debt buyer like Unifund,or someone else? How long ago was the judgment entered? Are you in California like the attorneys? Would you like to talk to an attorney with a lot of experience vacating these debt collection judgments (no matter the age)?
Yes I am in California. The judgment was entered in 2010. Yes it is citibank. Yes it was an attorney that told me about the vacate. Basically the debt is for less than 5k and I emailed and called several attorneys that I looked up who said the debt is so low just pay it or they only do debt over 10k and one said that I only had a year to get it vacated so the odds were low. I was unemployed and when I finally got a job I had federal student loans that were on hardship forbearance that needed to be paid so I got the wage garnishment stopped. I would love any help I can get. I’ve been trying to get this over with for years.
There are attorneys that have success vacating judgments older than a year. If you talk to someone who does not specialize in debt collection issues, or who has not had experience reaching further than a plain reading of their states law, such as in California, they may have the impression that 1 year is a limitation, but it isn’t necessarily.
I sent you an attorney firm to consult with (they offer free initial consult), that has experience vacating judgments new and old. You have to weigh the costs of taking this route and compare that to what you are able to settle the debt for, time factors, vacating is not a gimme, where settlement puts an end to it etc.
Hi. I apologize but could you resend me the info on that attorney? I received the actual settlement letter from hunt & henriques and sent the payment next day express on the 8th of this month. A couple days ago I checked and not only have they not filed a satisfaction of judgment but the filed a writ of execution. I want to send them a letter of demand to file satisfaction and release liens but I read online I should file an ex parte motion to squash the writ and potentially a motion to compel satisfaction of judgment.
I resent the email with attorney contact info just now.
Hi Michael,
I negotiated a settlement offer with Allegiance bank for my Lowes Credit Card Account; however, they will not send me a settlement letter with the agreed amount/terms until all of the settlement amount has been paid. Is this a wise move with these collectors?
Thank you!
If you cannot get a written settlement agreement, get everything outlined verbally and record the call, or calls. Tell them you are recording and why. Keep all recordings in a safe place, and make sure you have proof of all timely payments accessible too. Keep good notes about the time and date of all calls, who you spoke with, the number you called into and/or were transferred to.
If additional collection efforts, or inaccurate credit reporting were to occur later, you will use the recordings and other proofs in a complaint with your state regulator, the CFPB, and perhaps elsewhere.
It is wise to resolve debts when you can afford to. And wiser still to have some method to prove you took care of your debt if the bank or collector later makes a mistake.
Thank you for the response! Do you recommend paying over the phone or sending in a cashier’s check through certified mail once the verbal agreement has been recorded?
Thanks again,
Ben
Allegiance banks is a Texas regional bank? I wonder if you could walk into a branch and pay over the counter and get a receipt?
Hi Michael,
I am in over my head with online payday loans. I live in Louisiana. I initally took out the loans to help financially and began paying them back timely. Crisis hit and I was not able to pay them back in the amounts requested. I contacted the companies and they gave me terms that I could not afford and the funds are not available. The companies still ran the amounts on my bank account thus creating more debt for me since the funds were not available. I have tried to contact the companies to offer payments that are affordable and on a different bank account. Although they stated they cant refuse a payment, what im offering is not good enough and my account will eventually be sent to collections. I dont know how to resolve this issue. I dont want to run from my responsibilities and pay my deby but I need them to work with me. HELP!
Is it just payday loans you are struggling to repay, or are there other unsecured debts too? What are the totals for all debts?
Hi michael. I have 5 payday loans. I owe check into cash $355.27, advance America $270.10, moneykey $385.00, cash net $210.00 and ace $300.00. I also have one personal loan that I’ve fallen behind on. That balance is $2300.00
Michelle – Post all that you have going on with these payday loans, your state, the amount you can afford to pay, other debts you have etc., over on this page about payday loans. You will likely get more than just my feedback that way.
I had a credit card through JCPenney. When I looked at one of my bills, I noticed some purchases that had not been authorized by me. When I contacted JCPenney, they looked into the matter and sent me a letter stating that the fraudulent charges had been removed from my account. My account number was then changed for my safety. I then became very behind on payments. I was contacted by Howard Schiff and have had 3 scheduled mediations with their lawyers. At the first meeting, I pulled out my fraud letter which was a big shock to the lawyer. The mediator asked that we try to work this out and meet in court 3 months later. I was also asked to call one of their attornies and, after trying several times and basically being refused a phone call to him by his secretaries, I gave up on that. Over a year went by and we met again. Well, the lawyer didn’t show up. We scheduled another mediation a month later, and again the lawyer did not show up. The mediator and I did, however, speak with the lawyer over the phone and he wanted me to fill out the affidavit of fraud form. I had received several of those over the past year and refuse to fill them out due to the fact that JCPenney had cleared that amount (still unknown) from my account. The mediator advised me to complete the fraud affidavit and provide the debt collector with yet another letter of the fraud from JCPenney. Shouldn’t the lawyer already have that info from JCPenney? This case will go to trial. Do you think I should fill out that paperwork? Thanks.
Based on what you shared, the fraud paperwork would only help your position.
Given the fact that you are already in the courts with this, you should run all of this by an attorney with debt defense experience. Post the name of a large city near you. I will email contact details to any I find.
Rochester, NH, Dover, NH, and Portsmouth, NH, are all nearby cities. Unfortunately, I have had to deal with this entirely on my own as I cannot afford an attorney. Needless to say, I appreciate any advice and recommendations you can offer to me. Thank you.
I sent you an email with contact info to a couple of attorneys I found with the experience you need.
Hi. I was going to contact one of the people whose information you sent me but then I received a letter in the mail on Monday stating the plaintiff had dismissed the case. Thank you for your help.
If a debt settlement letter was not provided with the following (how do I get one 5 years later and I don’t even remember all the creditors. Thanks, Alison:
◾The creditor and/or debt collectors name.
◾The date the letter was drafted.
◾Your name.
◾Your account number.
◾Outstanding balance owed on the account (this is sometimes missing and is not a deal breaker).
◾Amount that is being agreed to as settlement and satisfaction of the debt (less than the full amount owed).
◾Date your payments must be received by in order to have met the settlement agreement.
◾The settlement letter must reference that the account being satisfied in full i.e. “settled”, “settlement of this account”, “accepted as settlement in full”, “paid in full”.
Do you mean you paid the settlements you made 5 years ago?
Did you do the negotiating and reach the agreements yourself, or did you hire someone?
Hi there Michael..(you are so great in your efforts);
Yes, we hired a lawyer to take care of our debt settlement. And all is supposedly completed and finalized. Nothing was given to us in writing – nothing. But, we did correspond with the banks at times on 3 way calls so I know they were legitimate calls. Like with Capital One or some other major large banking corp or minor. But, bottom line, no paperwork from our lawyer was sent over to us to show us that the work was done and finalized. She is asking for more $$ for the retaining fee of debt settlement procedure with her being the lawyer. Which in certain cases, they didn’t even carry out the job correctly; I got on the phone with the Credit Card company – lets say Citibank and I negotiated the fee, when the lawyer did nothing. Thanks for your input. Best regards, Faith..
Any settlements you have a hand in negotiating from her, get the details spelled out in writing on the creditor/collector/attorney collector letterhead, or record the negotiations – letting them know you are recording and why – and keep in a safe place.
As for past settlements done through the debt settlement attorney you hired, when were they completed? Do those accounts show resolved on your credit reports? Look there first and post what you see. I will have more feedback then.
Hi there Michael,
I came up upon this website when i reading around about credit issues and other related topics and gotta say I have learned a lot and still want to learn more.
First of gotta say thanks for all contributions, advice and time you take to read (short or long comments) and act upon… really says a lot.
Well here I am, wanted to see if I am on the right track of trying to get a debt settle from MCM for Tmobile as it may not be new to you ad other about this debt collecting agency… here is some details about this account: amount $600
Lending Institution – Age – Comment – Date Last Reported
MIDLANDMCM – 1 year and 6 months – Opened in 09/2012. – 02/2014
Hope it makes sense i did’t make a table…
I tried calling primary holder Tmob to discuss all the extra charges but they only had that number to call… so I just want to take care of it and have them report it as taken care off to the CRAgenies…
Here is what i went by and hope I did okay…
I called them at first to try to negotiate for $100 but wasn’t able to get a deal… after i read more on how long some of these agencies are willing to go down and accept i realized it was maybe too crazy to ask that but it didn’t worked after calls and calls…
Finally well after more calls back and forth, the guy went down to $347.72 and said if that’s done that’d be it… Just want this taken care of without all the craziness it can generate. it still is reporated as an open account…
Well i asked for settlement letter sent to me first stating all we talked about, dates and modality of payment i would use, i said by certified check or personal check and would wait for the letter first to come to me and we will proceed from there.
I have the money but would rather wait for all this to come up in hand and then pay.
Now i would like to see it out of my CR which i would imagine the guy said they will send a letter to the agencies stating account paid/settle for less the account showing… is that what it’s suppose to say or once i get the letter and ready to pay, What can i request from them so that this will end. Will that have an impact +/- on credit report once taken care off? After paying it, how long should I expect it reported or should i contact the Agencies after all this with all the proofs and have them dispute it?
Thank you very much for your time and i am willing to email you as well if more details are needed.
Once you get your settlement letter and send payment (make sure you pay in time to meet any date on the settlement letter for funds receive by), Midland Credit will update the credit reporting agencies that the account is resolved and a zero balance owed. It can take a month or two for that to happen. You can sometimes get that done more rapidly (you need a home loan pushed through), but otherwise be patient. Check your credit reports after several weeks and verify that they followed through with what they are supposed to.
Your credit report and credit scores are not a measure of this one account. If that were the case, your credit is not going to improve much until you make improvements to other elements of your credit profile. Do you have other collections on your credit besides this one?
Thanks for the reply…
Ok i will go on and proceed to pay Midland once i receive the settlement letter which I have not yet received… I didnt quite get what you meant by “i need a home loan pushed through”… as to check when they update the acocunt in CR…
I do not have accounts in collections but rather account closed from Toyota (story behing it: till today i cant get someone to explain clearly what happened… car was reported stolen to the police who impounded the car one morning…, officer told me. Then says i wont get anything other info but just answer to questions as to where/when/who i got the car from… (of course from the toyota dealership…) long story short before i was even cleared out from judge, i was using the car for my job, deliveries work related errands and all… so no more income coming in i couldnt continue paying which i explained to toyota creditor who themselves couldn’t even tell me what was going on…… long story short they ended seizing the car, so i cant get further info till judge clears it, toyota wanting money and still cant explain wheres that is coming from, nor dealer himself saying everything was okay… Finally lost it all… no wanting to be linked to anything kinda bad thing related to this, they sold car and expenses are on me, payments were fine till that event… which i asked to be settled real low…and whoever bought it wouldnt accept. now it says closed account… thats my next thing to clear out… that just put me in real bad shape since then, but had to stand back up… and keep rolling. Amount is $2300… would there be a chance to get that settle down to $500 – $1000? am guessing it would also be reported as “settled paid lesser of full amount”?
last payment in feb 2012 and reported as well… state of TX
Sorry, reading comments in chronology and see that you answered part of my question. Please answer the remaining questions too.
The reference to home loans being pushed through would be if an unresolved debt was holding up a mortgage from being funded. There are things mortgage brokers can help with, like rapid re-score, in order to move things along a bit more quickly so that a loan can close.
When was the last payment you made on the car? When was it sold at auction? Who was the past company you heard from in order to collect on that debt?
Hi, I made a settle with Capital One Auto to have my vehicle paid off within a year in the month of March. I have made the payments; however, Capital one does not want to send me a letter of Confirmation. What should I do in this situation.
Isaac – Can you offer more details of what you set up with Capital One and when? Was it this past March you set up payments? Did you end up with a new payment agreement, or amendment to the prior loan agreement? Were you simply looking to pay off a loan earlier than scheduled and want to be sure the payments and balance are being credited correctly?
I have a 17k debt with MCM and I want to make a one time Lump settlement. I have a few questions.
1. What is a good settlement amount?
I want to get a settled in full letter before hand but hearing MCM will not provide that until a payment is set up. I do not want to give them my account info but wanted to pay quickly.
2. Should I pay via credit card or debit card?
3. Will MCM send me a settled in full letter without any “tricky wording” in it?
I want to have the negative marks erased or cleaned up from my CR
4. What specifically should i state i want detailed in my settlement letter before i send a single payment?
Settlement amounts you can negotiate with Midland Credit will vary. The more collectable you look to them, the more likely they will target higher rate offers with you. Do you have many other collection accounts on your credit reports? Do you have accounts other than a home or car loan being kept current and showing as much on your credit?
You should not encounter anything out of the ordinary with your payment arrangements or settlement agreement with MCM. If you are concerned about something going off track, record your phone conversations when negotiating. Tell them upfront you are recording and why (if they will not realease a settlement agreement in writing before payment).
The settlement agreement wording MCM uses should look like all of the standard letters for the same purpose. And there are no tricks to the contents of the letters.
You should not expect to have negative marks erased from your credit. Cleaned up however, as in updated to show paid and zero balance owed, is standard updates that result from settling with companies like MCM.
Realistic expectations for a settlement letter are what I cover in the original article above. Anything much outside of the norm (people ask for some things they will never get included), and you are not really going to accomplish much.
Hi Michael,
Great information here. I too have a debt issue to resolve. I have a $15k private student loan that was rushed to a charge off status from Key Bank in 2010. I’ve recently come up with $6500 and made them a settlement offer which they have accepted. Part of my offer included a request for a letter from them with only the words ‘paid as agreed’ as being reported to the credit bureaus. The letter arrived and instead of my requested phrase they included ‘ “paid in full, was a charge off” and will denote that the account was paid in full for less than the balance due.’ This is not exactly what I requested as a part of the agreement.
I’m almost certain they recorded the telephone conversation. If I decide to use my savings in another way to improve my credit (paying down revolving credit card percentage to 10%) can they use the recorded verbal conversation to initiate and win a lawsuit?
Using that recording in a lawsuit is not all that likely, at least not from my experience.
I like the direction you are going in with using your available cash flow to get the best result. What state are yo in?
I’m in Ohio. At first I was convinced that paying the charged off loan debt was the best credit repair option, but now that Keybank has not sent the settlement letter as I requested I’ve started exploring other uses for my cash flow. Also it sounds that a charge off settlement can wreak havoc on a credit score. But on the other hand, the last thing I want to do miss out on the settlement offer and/or have a suit filed based on a verbal telephone agreement. Just a little torn and it seems you offer great advice and experience to the weary debtor!!!
You may be right about the best use of funds being paying down debts until your credit utilization looks better. That does not have to be 10%. The benefit you get from settling the account you have an agreement negotiated with already, is that one can still sue you. I am not saying it will happen, but it still could, and the costs to resolve the debt by settling will often increase as a result.
Settling rarely involves negotiating anything like the credit reporting changes that you requested. What they sent is pretty standard. The freshness update to an already negative collection trade line might knock your credit score down for a couple months, but not terribly, and not the case with all scoring models.
If it were me, and making payments on my other debts that are current is not a struggle, I would settle the older debt and eliminate the risk of being sued. I would then put together a debt roll up strategy to pay down the other bills quickly.
Do you have any information or advice on settling debt with Dynia and associates? Are they reputable and legit? I have a BofA cc that has been placed with this company. I have googled the company on the internet and found conflicting information. Thanks!
Dynia and Associates LLC is a legitimate debt collector that has been around a while. They are A+ members of the BBB and belong to NARCA (National Association or Retail Collection Attorneys).
What percentage of the debt Dynia is trying to collect can you come up with as a settlement offer?
Hi Michael
I had two credit cards with Macys that were transferred to a collection agency(law firm). We agreed on a settlement plan and just completed the last payment. My question to you what is the documentation that I should ask for as a proof of payments to send it out to credit Bureau to improve my credit. Do I also need any documentation from Macys, the original creditor
Please advice
Thanks
sal
Were you sued by the attorney for the Macy’s credit cards? If so, they would typically file a satisfaction of debt with the court.
If you negotiated the payment agreement before it got to court, was there any letter outlining the payment agreement on the Macy’s debt? If so, you can use that letter, and the proof of your payments, as part of a dispute with the credit bureaus.
I do suggest waiting about 60 days to see the credit reports get updated as part of the normal work flow that collection companies have. The attorney collecting does not send any info to the credit bureaus, but the company that hired him does. Their systems, when working like they should, will often be how the credit bureaus get furnished updates about accounts being paid. Who was the attorney collecting for?
I have a letter of release from my debt. The organization made an error and confimed my payment and sent me a letter of release. Will this letter of release hold up in court even though my bank and their office made an error. Their company “confirmed and acknowledged” it and sent a letter of release
Thansk
I am not sure of the details, so hard to respond to your question with anything other than general feedback.
Mistakes happen. Someone on their end made one. Mistakes are often excusable. I would not rely on someones mistake if the intent was to pay a settlement. You and they know the money transaction had a hangup. I am sure the court would see that too.
Finally, the settlement company negotiate with AMEX and came out with settlement proposal for me to review. They received a verbal commitment from AMEX to settle the account and they sent me the timeline of payment . The balance was 14,317.29 and settled for 9,307.00 and to pay for 12 months. The total savings is 5,010.29. The first payment will be on May 26, 2014. Is the settlement offer fairly calculated on my part? Do I missed something? The person I spoke from the settlement company will send me via email or mail the settlement letter to be signed and providing me a copy. My questions are: What important details I should know before I sign the documents? Is the letter of settlement should be from the creditor or from the settlement company? I have a scheduled non jury court date May 29, 2014 do I need to go or will they contact me not to go due to settlement payments are made in to place ? After the payments completed, do I need to ask a follow-up letter from AMEX that the debt resolved and paid? Thank you for the previous response you made for me . I need your more advice on my situation.
Delma – I cannot best advise you without a host of details, and even then, you really should run the settlement document, that is likely stipulating to a judgment (given the pending court date), by your own attorney to make sure you understand what you are agreeing to, and how you could be impacted if unable to follow through with payments.
Post an update about whether you are stipulating/consenting to a judgment when you get the agreement to settle with payments.