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
Micheal Bovee
First American Acceptance Co
Law Office Hayt,Hayt & Landau,LLC
My husband requesed that the letter stae be satisfied paid in full,and we thought we receive a letter worded a different way.we just want to know how that is going to be reported to the IRS. we dont know if the firat american acceptance co. is a debtit buyer because it was a wachovia /wellsfargo credit card
First American Acceptance CO is a debt buyer.
Paid in full compared to full satisfaction is roughly the same thing. It protects you from someone later saying there is still a portion that is collectable.
Creditors and debt owners should be notifying the IRS about any forgiven debt that exceeds 600 hundred dollars. But I know they do not always do that, and certainly the following January after the settlement is paid.
Hello Micheal Bovee.
We received a settlement letter this morning by fax.In the letter it states that ,this will confirm that we will ACCEPT $XXXXXX IN FUL SATISFACTION OF YOUR OBLIGATION ON THIS ACCOUNT,PROVIDED THAT PAYMENT IS RECEIVED IN THIS OFFICE BY THE DATE SHOWN ABOVE. FOLLOWING OUR RECEIPT OF THE SETTLEMENT FUNDS AS PROVIDED HEREIN,WE WILL ISSUE ANY AND ALL REQUISTE CLOSING DOCUMENTS.
I appologise for the caps,didnt realze it was locked.But i need your advise on this matter asap.if this letter is good or not wored as we had requested last friday
The wording you shared is fairly standard. What is the name of the debt collector you are settling with?
What is it you meant in your comment about requesting last Friday?
I recently (and unsuccessfully) tried to settle a debt with Midland Credit Management (MCM). This company had already sued and successfully garnished my wages for another account (these are the only collection accounts I’ve had). This garnishment will end with my next paycheck.
I have repeatedly written the company, requesting debt validation, with no response. In August I sent them a letter via certified/registered mail, agreeing to pay the settlement account (offered by them), if they agreed to remove all information around the debt from my credit report (essentially a pay-for-delete). They refused.
I crossed my fingers and sent them another letter, this time including a money order for the requested settlement amount, stating the following:
“Upon receipt of this correspondence and payment, please verify in writing that this debt has been reported to the major credit bureaus as “disputed” by myself, the consumer. In addition, please return a copy of the enclosed Agreement to Compromise Debt, signed by an authorized agent of your company.”
Yesterday I received a letter, with my returned check, stating “please be advised that MCM does not accept the conditions set forth in your recent correspondence, therefore I am returning your cashier’s check.”
I am concerned about a few things. The first being that they will just sue me again. I am also concerned that they will come after me for more money after I’ve paid the agreed-upon amount. In the settlement offer they sent, it says on the one hand that upon receiving payment, they will consider the account paid, then they state that the account may still be reported as unpaid on my credit report.
I am trying to resolve this last debt and start to rebuild my credit, and I don’t want to fall into limbo with this company. I am not sure what my next steps should be.
You are making unrealistic conditions on settling with Midland Credit. Why have you gone about your efforts the way that you have? Was it something you read about?
Midland Credit Management will update your credit report with any new information after you meet the agreement. It can take 30 days, and I recommend waiting 60 days to check your credit reports. If they do not follow through, you dispute it with your proof. But they are generally pretty good about it.
Midland will not try to get you to pay more or sell off the unpaid portion to another debt collector.
1. Midland Credit Management is a debt collector under the same umbrella of companies like debt buyer Midland Funding, and their parent Encore Capital Group. They, and companies like them, are currently under the highest amount of regulatory scrutiny they ever have been.
2. Midland is not generally a reseller of debt.
If something were to happen with your file after the settlement, it would either be a mistake, and easily fixed, or the result of something weird happening to your file because of these validations and accord and satisfaction, or restricted endorsements you have tried.
Hi Michael, I have an 8 year old title loan debt and I recently called the title loan company to ask for a settlement offer. The clerk looked up my account and said she would discuss it with her supervisor and call me back. She called back and said her supervisor said she would agree to a $500 settlement to give me my title back (I was told my original $500 loan was now $1900 with interest). I agreed and asked if I could get that mailed to me in writing as I’m living in another state and can not walk in to trade the $500 for my title. The clerk told me No, she doesn’t know anything about sending letters in writing and they don’t have any form like that. She would only give me her supervisor’s first name and no number because she said it was her job to settle with me after her supervisor made the offer. My question is what should I do now? I want my title back and I know I’m dealing with a shady company!
What is the name of the title loan company?
What state are they in, and what state are you in now?
The date of the first check is the 20th of this month. I last paid the original in July. Should I stop payment on checks? I have nothing on paper from them about this agreement. I have no lump sum to pull together. They won’t tell me how much I’m going to pay all together I spoke to them only after they called me almost hourly during work. Its really concerning.thanks.
Also it’s Allied Interstate Inc.
Saw this post after the one I just replied with. I will have better feedback once I know the answers to the other questions.
Hi Michael,
I have an outstanding $1,500.00 balance at a large retail store. A third party collection agency contacted me by mail and phone. I agreed to make 6 pre-dated check payments that would cover about $500.00. I feel so stupid. They now have my checking account number. I asked how much my payments will be after the six months and they said they couldn’t tell me. They didn’t know. I know it’s a real collection agency but I’m freaking out that I will have to pay outrageous fees and waaaay more than I owe. What should I do? Any advice would be very much appreciated.
How long has it been since your original creditor payments stopped?
What is the name of the collection agency?
How much could you pull together quickly in order to settle for less than what you owe, as opposed to making monthly payments?
What is the date for the first payment to be drafted from your bank?
Hi Michael,
I have been searching online looking for an answer regarding credit card debts and debt collector since hiring a lawyer is very impossible for me to get with the high cost of consultation fees. Anyway I hope you can help me with my problem. I have 3 accounts with MCM and I asked them validate the debt which they did. Knowing that the cost of the 3 accounts will total almost $2,500 and I can’t afford to make a full payment so I sent them a settlement letter that I can only afford to pay a certain amount on those account. Its been awhile but I havent recieve any reply from them. What should I do?
Please help and Im looking forward to hear from you
Thank you
MJ
How much are you offering Midland Credit Management in your settlement letter?
My only question now that I have settled with CareCredit (yuk lol) is how does a settlement affect my credit score? And let me just say this was a hassle I literally had to stop making payments and let it almost get charged off before they were willing to do anything. The lady told me that I inquired about settlement a few times and because I was in good standing they couldn’t do anything but I know my income and expenses were changing and didn’t want delinquent on my account but I had to take the hit just to get them to work with me. I mean when I paid early it never counted towards the future payment which I thought it did so that was one problem. I always got hit with a late fee even if I was a day late. I got my account caught up through tax season but then was told I had to make another payment within weeks. But anyway all has been resolved and just waiting on the letter to come to me. Which they tried to say will take 72 hours but I stated that because they wanted to money and needed the money before the 200 day charge off then I would assume that they would send the letter to me before then as well. The specialist was very helpful and went and asked the lady if she could get it out today. But the customer service people at Carecredit are horrible I was literally on hold for 20.03 seconds until I put them on hold and called back. Word of advice to anyone STAY AWAY FROM CARE CREDIT!!!! if you need medical procedure just work it out with the physician office.
Is the Care Credit account you are settling the only collection, or negative item on your credit reports?
How many other open and positive accounts do you have reporting today?
What are your credit scores as of today (without the settlement having updated to them yet)?
Hi Michael,
My name is Brittany. I have two medical bills that went into collections 11/2013. I just found out about them when I checked my credit about 6 months ago. I have been going back and forth with the debt collector CAC Financial. I finally got them to tell me who the original creditor was so that I could get the name of the doctor’s. I was trying to see if the doctor’s would refile the claims to my new insurance (medicaid). The debt collectors did send me a letter 8/29/14 saying I owed the debt and to respond within 30 days. I sent a letter 9/11/2014 after speaking with a representative who said I needed to pay the whole debt by 9/22/2014 in order to get the accounts deleted from my credit reports. I wanted it in writing so I sent them a letter saying that I would pay based upon the conversation with the representative along with a written letter from them stating the agreement. I just received a letter on Saturday (past the 22nd) saying I am disputing the debt and that they will notify the credit bureau that I am doing so. I called the representative again and at first she said there was no record of the conversation agreement and that they do not send out written agreements. Then she said there was a note saying they would delete in by the 22nd but the 22nd had past. I told her Ii didn’t pay it because I was waiting on their written agreement to me. I am not sure how to continue. I want to pay the debt, but I want to actually have proof that I am paying it and proof that they are agreeing to what they say. How should I proceed? These are medical bills. I am still trying to see if Ii can get the doctor’s to refile the claims in the meantime, but if that doesn’t work I would like to know your advice. I am in the state of Florida.
Also does it hurt people’s credit to have accounts in collections for a long time? Or does time not matter?
First: the provider cannot file Medicaid retro-actively. If you did not have Medicaid at the time of the claim then that care is not covered. The second reason they cannot file is because even if you did have Medicaid there is a time limit to file the claim and once that expires the government won’t pay. That time limit is 180 days so you missed it by several months.
The older the debt the less it hurts on your credit reports. If the provider or the collection agency will not send a written agreement that does not prevent you from drawing up your own. You simply include all the terms such as they agree to delete the trade lines from all 3 credit reports within 14 business days of being paid and you agree to pay via money order within 14 business days of receiving their signed settlement agreement back. You enclose 2 signed copies of it and ask that they return one.
Keep in mind you cannot force a provider to do PFD. Some will not no matter what. If you choose not to pay them without PFD the debt will remain on your credit reports until 2020 and it is possible that they could still sue you as most statute of limitations on this kind of debt is at least 4 years.
please help a debt recovery agency has contacted me about a settlement and I told them what I could afford and so on they said they would phone back which they did and told me that it had been agreed and now they have phoned me stating that they made a mistake and in fact it was not agreed it had been rejected is there anything I can do about this ?? if they made the mistake shorly they hav to honer the agreement ??
Who is the collection agency? Who are they collecting for? How long ago was it that you last paid on the debt? What state are you in? What was the amount you offered as settlement, and what is the total amount they say you owe?
Those answers will help me to better answer what to consider next.
Michael,
I am about to close on refinancing my house and discovered a lien on it via a debt collection company that represents Capital One. I called and negotiated a settlement of $6,588.00, but never told them I was refinancing. They sent me a settlement offer letter via fax, with terms and agreement with the stated amount. However, today they’ve stated that the letter is null and void because they can see where the title company has done a search and they now want the full amount of $10,000. My question to you is: is the settlement letter a legal and binding document? If I make the payment before the due date that we agreed on, do they have to honor it? I have a strong feeling that it is, because during the conversation this morning with the collector, when I stated that this is a binding document and he legally has to take the money that we initially agreed upon, he got extremely quiet for about ten seconds and hung the phone up. Can you give me quick advice, since I’ll need to make payment by Friday. Thanks!
This type of thing would have to ultimately be decided by the court. And if there are similar cases that have been decided in your state already, you could use the outcome of those prior scenarios to help you make this decision.
What state are you in?
I’m in Louisiana and would think that the settle offer is a binding agreement.
I would want to run this by an attorney of your own, with what you have pending.
I sent you an email with three different attorneys who know collections and settlements in Louisiana front to back. Call one of them and ask for some feedback.
Michael,
Thanks for your help with my issue. I walked into their office on Friday, which was Couch, Colville, & Britt, LLC. I had the settlement letter in hand, along with a cerified check, which stated $6,588.00 on a $10,116.64 balance. They tried to argue with me on that the settlement offer was void and that I owed the total amount, since I didn’t relate to them that I was refinancing my house. It was obvious they wanted more money once they knew I was refinancing. However, when I mentioned I would contact the licensing board, along with Consumer Protection, they immediately took the check and released the lien on my house. I’m sure my settlement letter would have stood up in any court. I now have a settlement in full letter, along with a satisfaction of judgement letter. I close on my loan tomorrow. Thanks!
Congratulation Alvin!
Dear Michael,
Thank you very much for your incredibly informative website, and for all the help you give to consumers. I live in Virginia and had a Judgment of $20,200 entered in a hearing which I attended/contested on July 24, 2014. I subsequently filed a timely appeal in the General District Court in order to buy time to continue to pursue my credit identity theft/credit fraud concerns. The credit card was through Bank of America (BoA), and the last payment of $500 was made in August 2012 (after spending hours on your site learning I realize that I shouldn’t have made this payment in response to letters/calls from BoA). BoA/FIA Card Serivices charged off the account one month later on September 29, 2014. Portfolio Recovery Associates (PRA) now has the debt and brought the suit through the Virginia Law Firm of Glasser & Glasser. In preparing to defend my claim under the Fair Credit Reporting Act (FCRA), I contacted BoA directly and asked them for the original signed credit application from March 2004 and for the monthly statements, so I would be able to see where all the charges came from. BoA responded by sending a copy of the online application made with my personal information (i.e. SSN, DOB, my Mother’s Maiden Name etc…) but with no signature to prove that I applied for the card. In a separate form letter from BoA, also including the disclaimer that this was “the best documentation possible” BoA enclosed copies of the monthly statements from November 2011 forward, but none from 2004-2011. So I called BoA again, got referred to the Fraud Unit, and again asked for copies of the monthly statements from 2004-2011 generally, but more specifically, for any statement that contained Balance Transfers (BT) onto the card, since I never made a balance transfer onto this card, or onto any other credit card. I learned of the BTs when I reviewed line-by-line the copies of the post-2011 statements BoA sent. However, by 2011, the BT(s) were already made, and I need to know:
1) Is it my right under the FCRA to have copies of ALL the statements, especially those that show a BT since more than half of the judgment stems from one or more BTs?
2) Do I have a right (under FCRA) to demand that any further collection efforts under the Judgment be stalled until BoA provides the relevant documentation (statements from 2004-2011). When I made this request in the General District Court, the Judge said that “he didn’t have a copy of the FCRA on his bench – and asked me if I had one with me?” I didn’t have a copy with me, since I read it on the FTC’s Identity Theft website when I filed an Identity Theft Affadavit. So the Judge and then ruled in favor of PRA.
Thank you so much for any information or assistance you can provide.
Your questions are best answered by an experienced debt collections defense consumer law attorney in your state. Post the name of a nearby city and I will email you contact information to any I know of that are closest.
I am not aware of anything that entitles you to all of your credit card statements from the beginning of your account. If something like that can be pushed for in your case, it would most likely not pertain to a right found in the Fair Credit Reporting Act.
You will want to talk with that attorney about your options to stall any collections, or to address the judgment that appears to have been entered against you. There are options, and some are limited by time, so do not waste any consulting with an experienced attorney of your own.
Dear Michael,
Thank you for your response–I live in Vienna, Virginia right outside Washington DC. I look forward to hearing the names of experienced debt collections defense consumer law attorneys in my area.
You may be interested to learn that when I filed a fraud alert with the 3 Credit Bureaus, their acknowledgment letters stated that, under the FCRA, “You have the right to obtain documents relating to the fraudulent transactions made or accounts opened using your personal information. A creditor or other business must give you copied of applications and other business records relating to transactions and accounts that resulted from the theft of your identity, if you ask for them in writing. ” Having read this information from Experian, I asserted my right with BoA, and informed the General District Court Judge of BoA’s failure to provide me with this information.
Thank you again for your continuing assistance.
I sent you an email with contact details to 4 experienced consumer collection law attorneys in your area. All of them are likely to offer a no cost initial consultation.
Please do post updates with how you progress.
Hi there..Michael..great work and thanks for the support – nothing beats its.
We did all our settlements via phone with a lawyer ‘supposedly assisting us’. However, this lawyer did nothing to get any documentation. We may ‘owe’ $$ depending on the pre-negotiating agreement of the legal fees, but in return – we got nothing..not a letter, not a write off amount paid in full. Bottom-line, nothing. Everything – all about, everything, 6 credit cards have been paid off in full without any documentation as you suggest and highly recommend. Also, I even had to play a role and settle some of one of my accounts because the lawyer or his assistant was not taking a role in negotiation. Any suggestions? thanks much, Faith
Have you looked at your credit reports to see if the accounts that were settled are showing that fact? Are you see debt collectors reporting with balances still owed that you know are not?
Was the debt settlement attorney service you signed on with part of a nationwide sales and servicing effort, or was this a local attorney you worked with? If part of a national service, sometimes the settlement work is done by non attorneys in offices not related to the attorney directly. The documentation may be stored in a CMS that you can get your hands on still.
Post about what you find on your credit reports for the settled accounts in question and lets go from there.
Hi Michael,
I live in Texas and have a charged off account that is now with Cache and is represented by Joe Pezzuto Attorney. I sent them a letter asking for a verification letter and one year later they finally sent it to me. From my past experience, I asked if I could have the settlement in writing, but they refused. They said that I will get a letter once I pay it off. That’s one of the main reason why I requested a verification of my account because this agency was giving me a red flag. What other measures can I take? Have you heard any “success” story from this agency?
There are many success stories settling with the Joe Pezzuto law firm.
If they will not send the letter outlining what you negotiated, and they agreed to, call them back and record it. Start the call by telling them you are recording and why. Go over all the pertinent details of the agreement. Save the recording along with the written agreement they later send to you.
Once you are done, and get the letter from them in the mail, post an update here.
What happens if they use the scare tactic? If I call, would I now be under radar and I’m afraid they won’t take my settlement offer and will make me pay for the full amount (which I can’t afford right now). What would happen next?
I read your first comment to mean you spoke with a collector at Pezzuto’s office recently. Did you speak to a debt collector at that office prior to sending your debt validation letter? Was that conversation what causes concern with calling now, or was it a conversation with a different debt collector (not that most of them are not abrupt and a bit pushy)?
What is the amount of the debt now?
When was it you last made a payment on this account?
So basically, i have had 4 charge off accounts. The three of the agencies that I have worked with were particularly nice and never had a problem. Now, with the Joe Pezzuto’s office I was expecting the same thing. I wanted to make monthly payments, but they were so rude to me. They said they don’t do monthly payments and that it was an attorney’s office. I was so shocked and didn’t know what to do so I told them I would call back. So the same lady I talked to said she can lower the settlement, but it was for that day only. I told her I would call her back because I was still new at this. This happen probably around last November of 2013. I wanted to pay for it, but then I asked if I could have it it writing and she said no and that I can only receive it once I paid the debt. Then I thought that was odd because the other agencies were very nice about sending me agreements and I didn’t think it was a problem to ask. Therefore, I didn’t like the way the agency was handling things so I mailed them a letter saying I wanted my debt to be validated and then I just received it yesterday. I admit I am afraid to call them. They are the epitome of what you would think of as a collecting agency. My debt with them is currently around $1600 (give or take). And my last payment to this account with the original lender was in 3/2012. Since the call of November 2013…I haven’t talked to them. I just wanted to ask you for advice so I can prepare myself when I do make the call (which will probably be in a couple of days).
Okay, thanks for the back story.
I would suggest having at least 50% of the balance at the ready before you call to negotiate. You may end up a bit higher if your credit reports are updated to show all of the other collections are now paid, or if you look more collectable for other reasons.
You will go about negotiating the same way you did the other accounts. You now know you may need thicker skin to negotiated with Joe Pezzuto’s collection crew. They are going to try to collect the most, but you will want to wear them down with comments like “I cannot possibly afford that”, or “a payment plan when I live pay check to pay check is not something I can commit to”.
You do not have to get the deal done in one phone call. It is okay to hang up with the debt collector, letting them know you will make a few calls and see if you can pull together some additional money, or something like that.
When it comes time to tell them you need something in writing – if they are just not going to release the letter – let them know you are going to record the important details of what you are agreeing to, and then record.
Please do post an update as you make progress. I may be able to offer some additional feedback along the way. I especially want to know about the difficulty in getting documentation.
One more thing….I’m afraid on top of them not sending me the letter and that they will make me pay right on the spot with a debit card. Is this a normal procedure? I’m just remembering from my last encounter with these people and she said that I had to pay that day or else she is taking the offer off the table. I just want to have like a proof of a check or cashier’s check being sent to them. I guess my bank statement can also be proof as well?
Abby – You would benefit from some coaching to complete your settlements. Call in and consult with a specialist about that at 800-939-8357. The consult is free, and the coaching is very affordable if you want one on one support.
Let me know what you decide to do after that, and I can continue to offer feedback here in the comments.
sorry I did not post this as a reply, I messed up, and don’t know how to fix it
I removed your prior post.
Michael,
Thanks for your help with theinformation you provide. I live in Tn, where I was sued on behalf of MBNA over a credit card debt. The judgement and lien filed against is 19k. I have heard nothing for 7 years, since judgement filed in 2007. Last week I began to recieve mail that a new law firm took over case, and among others I recieved a list in interrogatories from lawyer repping Sacor Financial. I called Sacor, and made a offer of $3500 to settle acct. BTW, my only income is SSI Disability, and disabilty income from a private insurance policy I had thru my employer. I permanently disabled in a 2002 auto accident, which is what started my financial problems. I also have heart disease, and had open heart surgery last year, and now have a aortic aneurysm, pending surgery. Im 46 y/o male. Anyway, sorry, when I made the offer, the man at Sacor, said he would have to submit a hardship letter, and he would need my SSID award letter, AND a most recent bank statement. This judgement is against me alone, and my bank account is joint with wife, and she says NO WAY to bank statements. I agree. The Sacor rep asked where the 3500 was coming from, I explained that my mother was lending a large portion of it, which is true. I think this is why he asked for statements. If I tell him NO to the bank statement, I fear the talks will tank. SACOR claims with interest and penalties, my orig. 19k judgment is now over 30k. I HAVE NEVER, heard from anyone in reference to this debt since 2007, when prior to the judgement, I tried very hard to work a settlement with them. I actually offered 9k, 50% payment in one sum, back then, and was told no. We have no other income, other than my disabilty, and other than my home, have no assets, other than a 1500 dollar old truck, and our furniture. The bank accounts he wants statements to have way too much personal info, as I pay everything with that acct. Sorry for the long post. Thank you again.
If you are uncollectable you have time on your side. The home you own may be what they are thinking they will get paid from at some point, as Tennessee does not have great exemptions there. How much do you owe on the home if any? Is there a judgment lien filed with the county? What would you estimate your equity position to be?
Tennessee has a combined 10k judgment creditor exemption that can wrap the value of a car, household goods, and a bank account together. I am with you regarding not sharing bank statements. If for some reason that is something you decide to do in order to clear settlement hurdle, think about how they would look at your statements and the wild card judgment creditor exemptions before you do.
Settlements at the rate you are asking for are rare, and the judgment in place would make success rarer still. That said, when I do see that much of a reduction negotiated, it is with long term fixed income and health situations. Who was the named plaintiff and attorney collection firm originally? Who is the collection attorney firm now?
“That is precisely the process I encourage most for making payments on settlements – using a special account set up just for this purpose. Keep copies of settlement agreements and print out payment proofs in anticipation of needing them, and keep them in a safe place.”.
Question: what happens if a debt settlement lawyer on your behalf doesn’t do what your recommendations are: (i.e. letters of settlement, agreed payment, etc.)? Thanks so much for your continued support
Michael,
I have a Credit Card that was charged off nearly 5 years ago. This Visa account was picked up by a 3rd party collection agency who sent me a thorough debt validation letter about 8 months ago. The account now after interest is around 6,500 dollars and the collector told me the original creditor would not accept anything less than the original 3,600 in principal. Unfortunately I made payments for about 6 months around 2 years ago which probably reset the statue of limitations. Would this be a good settlement if I could get a deal in writing? Your suggestions are appreciated.
Post the name of the original creditor and debt collector you are dealing with and I would be better able to reply with a different target to aim for in negotiating the debt.
Generally speaking, a good settlement is one you can afford. No sense leaving money on the table though.
The OC is Eastman Credit Union and the 3rd party collector is CU Recovery. The card was opened in TN and I currently live in MI. They seem pretty reputable for a CA but the only thing I question is that this account has been handled by CU for years and don’t OC’s usually take accounts back after a few months of unsuccessful attempts?
That is a pretty good offer from a credit union. I typically target 50% negotiated settlements with smaller local and regional credit unions like yours. The bigger ones can go lower on some accounts, some of the time. It is not impossible to get lower deals, but they are fewer and further between these days, compared to policies just a couple years ago.
Large national credit card issuers tend to do contingency collections with an agency every 3 to 6 months, like you refer to. Credit unions do not have the volume to churn, and may use assignment collections with more longevity built in to the relationships.
Thank you Michael. Also after I receive a debt settlement letter would a debit card be a safe method of payment provided I open a separate checking account specifically for collections? It seems like I would be able to print and save proper documentation of the transaction from the banks website.
That is precisely the process I encourage most for making payments on settlements – using a special account set up just for this purpose. Keep copies of settlement agreements and print out payment proofs in anticipation of needing them, and keep them in a safe place.
Michael,
I received an Agreement to Compromise Debt letter from a collection agency relative to a few old medical bills totaling $6K. All of the bullet points mentioned in your piece are contained in the letter notably “full and complete payment for all outstanding charges”. My concern is this agreement can still be used to lower my credit rating so is there any benefit in settling? Although the Agency claims, once paid in full, they will communicate with the credit bureaus and have any references removed. Please note that the debt is considered time-barred so they they have no legal recourse in collecting it.
How old is the debt? Look on your credit reports for the date the collections are scheduled to drop from your credit.
It is not common to get a written agreement to delete collections from credit reports. If they do not follow through, but you do, you have different actions you can take.