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
My daughter filed for Bankruptcy. In the process of filing her car loan was given to Consumer Portfolio Services Collection Agency. The car was included in the bankruptcy and my daughter no longer wants it. I called CPS and we reached a verbal settlement agreement. They said the agreement was noted on the account but I have no access to those notes. I secured the funds, then asked them for a written settlement agreement which they refused to provide. When I asked why they told me they don’t do that because of the Bankruptcy and once I sent the funds the title would be released. This sounds very shady and maybe even illegal to me. What should I do?
Get them to send a letter or record the phone call telling them you are and why. Also take notes of the date, time, and person you spoke with.
Consumer Portfolio Services is no stranger to bad debt collection behavior. They appear to be still working off a prior FTC enforcement action. This obviously means you should be careful dealing with them, but can also mean they would prefer to stay out of trouble.
If I need the title, I would proceed with recordings etc., and if things did not go as agreed, I would tell them you will look at your legal rights, and file complaints with the CFPB.
Ask to talk with a supervisor too (maybe even first). Some of the prior issues with Consumer Portfolio Services were apparently based on loose (read terrible) oversight of the collectors.
Great news – I have someone who is going to loan me the full amount I owe. What is my next step? How do I keep a default judgment from happening now? My time is up on Monday, April 13. Also, I now have access to a fax machine.
Call them and let them know you have someone willing to help. They will pay if you get a letter outlining the dismissal. You need it faxed. If they do not send you the letter outlining the dismissal for payment, and were it me, I would file an answer to the complaint denying you owe the amount stated. That will avoid a default judgment and give you the time you need to get everything documented.
I really do not trust Blatt, Hasenmiller, Leibsker & Moore because of the bait and switch I am concerned they were running on you. Even though you will be able to pay this, I would really appreciate it if you could still share the information I asked about in my previous comment. You can email it to me if you like.
Hi Michael,
On the phone I told them I could borrow $1500 to settle and they wanted me to do it over the phone. I asked them to send me a letter agreeing this would settle the debt. She said the amount of $1500 does not settle the debt, but she could send me a letter that would show a payment. I only sent them the one email explaining my situation. I’ve only spoken to them on the phone two or three times. The first lady said they could not settle because I’m being sued. The second one was more open to settling after learning of my situation. She had to go to her supervisor to get the $1500 settlement approved.
I agree this letter they sent me does not show a settlement.
Also, how do I reply to the lawsuit? I thought I was doing that by writing and calling them. April 13 will be the 20 days I have to reply. I sure don’t want a default judgment.
Thank you so much for your help.
Lisa
It sounds like the last collector with Blatt, Hasenmiller, Leibsker & Moore that you spoke with gave you the clear impression that you would be settling the debt for that amount, but then documentation wires got crossed, or they meant to deceive you from the beginning. I have a really big problem with bait and switch intent, if that is what it turns out to be.
I would suggest calling and speaking with the same woman if possible, and speak to the letter referring to a payment only, and not the settlement that was agreed to. See if they will fax you a corrected letter. If you do not have a fax, you can get an efax number in a couple of minutes that will deliver faxes to your email address. I do not want you to wait for mail.
If they refuse, I believe they were deceitful to begin with. Please do me a favor and peg the date and time of when you spoke with the woman who agreed to settle the account for 1500.00. Also jot down her name, phone number and extension if you have it, as well as notes about what each of you said to one another.
I would jump on all of this today if possible.
Answering the complaint in court is much more formal than what you sent in an email or spoke about. You have to file with the court. Your answer can be as simple as denying that the amount alleged as due is inaccurate (not a stretch as the amount sued for will often not resemble the amount you last owed). You should speak to an attorney about how to do that. I know you said you cannot afford one, but try to locate a low income legal aid office that can help you file an answer in order to prevent default judgment.
But first, post an update with the outcome after speaking with Blatt, Hasenmiller, Leibsker & Moore, and let me know if you have been able to jot down the notes with dates and times of prior conversations.
I received a summons last week (3-24-15) that I was being sued by Capital One. I received this from attorneys for Capital One and here's the letter I sent them, which explains my situation. I was able to work out a settlement. They approved $1500. I want to make sure they can't come back and sue me for the rest of it and/or receive a judgment on my credit report, which I'd like to eventually repair over time. My credit report currently reads that this Capital One account has been "Charged Off". I don't have the money to hire an attorney, but I don't want to get "screwed" by them either. Here's the letter I sent them and I'll put my question to you in the box below:
"Hello,
I was delivered a Summons yesterday on March 24, 2015 regarding my Capital One balance. I do not deny this balance is mine and am very interested in reaching a settlement.
I never intended to default on my payments to Capital One. The following is a very brief synopsis of my situation;
I became very ill in January 2011. I was rushed to the emergency room at (Hospital) unable to breathe and within the hour was sent to the ICU where I was intubated and found to have the H1N1 virus and severe pneumonia in 4 of the 5 lobes of my lungs. I spent 36 days in an induced coma and was not expected to live. In fact, two women in my age group did die of this H1N1 virus in one of the (Hospitals). I received a tracheotomy, was on kidney dialysis, ventilator, feeding tube and much more. My second use of a RotoProne bed ultimately saved my life by giving me the oxygen I needed.
I then received physical therapy as my muscles had completely atrophied. I could not move, meaning I had to regain strength to do absolutely everything. To feed myself, to sit up, to walk eventually. Upon finally being released, I had a caregiver and spent all my time in a wheelchair when I wasn’t in bed.
Two months later I had so much trouble moving and breathing that I went back to the same hospital and spent 2 more weeks. It was finally determined that my heart was failing by operating at only 20% capacity. I was told the H1N1 virus left me with cardiomyopathy or congestive heart failure. In 2015 I am still under the care of cardiologist, (name of doctor) and take meds for this condition. I am also under the care of a mental health therapist for chronic depression.
Prior to these events at age 45, I was completely healthy and able to pay my bills. Unfortunately, these life changing events have altered everything.
As a result, I receive Medicaid insurance, am unemployed, I do not own a car, nor any real estate. I am not married, have no children, and stay with an older gentleman at the moment.
I would have paid this balance to Capital One if at all possible. As you can see I did make payments for as long as I could.
I would like to work out a settlement. I believe I can borrow 'some' money from family and friends to settle this debt. I am not a deadbeat, I have fallen on tough times which was not under my control, but I am willing to pay what I can.
I am unsure as to which attorney to address, so I am sending this email message to all the attorneys listed on the Summons I received on Tuesday, March 24, 2015 from Blatt, Hasenmiller, Leibsker & Moore. I am also faxing and mailing a copy as well.
I look forward to speaking with you."
Thank you so much for any light you can shed on my situation. I'm so thankful for this opportunity you have given me and others during this 'scary' time. Lisa
Do I need to get this settlement agreement in writing? What do I specifically need it to say to keep from being sued in the future for the remaining balance and/or receiving a judgment on my credit report? Anything else of importance?
Use the outline in the above article an make sure those elements are met in the settlement agreement. If you like, I can look it over for you. Post an update when you get it and lets go from there.
You are an inspiration Lisa!
I received your email with the attached letter from Blatt, Hasenmiller, Leibsker & Moore. The letter they sent in no way resembles an agreement to settle. The letter only references the 1500 dollars as a payment. It is obvious this letter is a template that they use often enough, and they should have one for agreeing to settle a debt too.
You have a time sensitive issue here, where you need to reply to the lawsuit in order to prevent default judgment. The payment date they gave of April 30th is not the right amount of time to deal with this (filing with the court to prevent default).
Before I call this what it is on first impression, can you post a reply and tell me what the conversations, letters, and emails with the firm contained as to settling this for less than the balance owed?
Hi Michael,
Thank you for your phenomenal forum here! Very educational. I received a verbal agreement to settle a debt yesterday for 60% of the original debt. Originally $5000. It was a tuition bill. They agreed to a “hardship settlement” of 3000. I am hoping to improve my credit as best as possible, so am hoping to negotiate the best credit reporting outcome. However, I do not understand all the various ways they can write this on my credit report. In my negotiating with them I believe I should understand this continuum. From best to worst for me would be as follows: removed from credit, paid in full, paid as agreed. Is this correct?
Additionally, if I get verbal confirmation and am recording the phone conversation, and cannot get written confirmation should I go through with the agreement. A credit adviser told me that these collection agencies are very resistant sometimes to sending a written confirmation. I would imagine they might be especially resistant to sending a written confirmation saying they will remove the debt from my account. Is it legal to agree to remove a debt from your account for a settlement less than the original amount? If so, why would a collection agency not agree to it?
Thank you,
Abbey
How does student loan appear on your credit reports now? When was it you last made a payment on it?
You should do what you can to get the details in writing. One way I know people have used to do that that is to tell them you are borrowing most of the money from a family member, and the only way they will give you the money – so you can pay them – is if you have a letter in hand outlining the deal, and that the payment resolves the debt.
Record the call yourself if they do not release a letter. Tell them you are recording and why.
Getting collectors to delete, or do anything other than update the collection on your credit report as resolved and a zero balance due, is not something I see in writing all that much. It can happen, and is more than likely to be something you hear verbally. It is not illegal for them to remove it per say, but it is not a common practice, as it could impair the furnisher/credit bureau relationship. Your payment is not worth that to most creditors and collectors.
Thank you very much!!!
It appears on my Equifax credit report as follows “Creditor Classification: Educational….Status D – Unpaid….Date of First Delinquency: 10/2011.” I’m not sure how to tell what the last payment on it was. I send a previous debt collection agency (in Cali) a payment of 4,000, however for some reason they did not accept it. And sent it back and said when we spoke on the phone that they never received my check, but I sent it certified mail, so I know they did. Now a company in NY has been calling me. I think the last time I paid it was in 2011, but it’s quite possible that it was later than that. Is there a way to tell from my equifax report?
Why should I tell them I am recording the call? I live in New York State, so I don’t have to (right?). What is the benefit to letting them know?
If I can’t get the debt collection agency to delete it from my report, what’s my next best option in terms of how they report it to the credit bureau? What are the words I should look for in the letter they send me (e.g. “Satisfied in full”)?
I tell people to let collectors know they are recording because I cannot know the state all site readers live in (state law governs whether you can record phone conversations without telling the other party on the line), and also because it should have no impact on getting the deal done.
There really is no “next best” option for credit reporting. You really would only expect the credit report furnisher to meet their legal obligation to report only accurate, current, and complete information. In this case, that there is a zero balance owed. All the satisfied in full, pays as agreed, settled for less stuff is window dressing when the real negative damage is that your loan went into default, credit card charged off, car got repossessed, etc. In other words, the damage is backwards looking and the fact there is a balance still owed. You can fix the balance owed part. The other stuff is really not all that meaningful.
Hi Sir Michael,
I live in florida and i received a Motion for Final Judgment by default. So I hired an attorney to settle an agreement for my Student Loan. From $24,000 that debt collector was asking from me, my attorney got it lower down for $10,000 but unfortunately it was a verbal settlement. It has been 2 weeks and we have not received the written settlement yet. I am worried why its taking a while for them to send the written agreement. What should i do?. I asked my attorney and he told me he left them a couple of voicemail already and no one has called him back yet. I just want to resolve this problem because i can’t concentrate in school anymore. Can the plaintiff changed their mind regarding the verbal agreement? Thank you so much in advance.
Sure they can. The agreement has not progressed past a conversation at this point. Continue to follow up every few days is what I would do, escalating the request to supervisors and managers in some cases.
Did you pay your attorney fees already, or are they tied to the settlement getting funded?
Yes sir, i paid him $1,500 already for a retainer fee
He should not mind taking your anxious calls about getting this closed out.
It is not unusual for things like this to not move at the pace we would like, but it is also okay to be nervous about this taking too long too.
Post an update if you have not gotten this all sealed up in the next couple weeks.
Okay Sir, will do. Thank you. Im just so worried that i can’t even sleep at night anymore
Michael,
I negotiated a $6500 deal for a credit card debt of $10,250 last Friday. I was being sued for the money. I asked they send me a settlement letter first that showed the debt was “paid in full”. The collector said they would send a letter, but that it would say “Negotiated Settlement”. Should I push for certain verbiage in the letter? Thank you!!
There is little to no benefit to negotiating for paid in full or settled/paid less in your agreements. The end result is the same. You get your credit reports updated to show there is no longer any balance owed. The credit damage from the account charging off is done once debts reach this point.
Did this account reach judgment? If not, I would be far more concerned with making sure any court action is dismissed or the lawsuit dropped as a result of my settlement. Is there anything in there about that?
Im waiting for the note tomorrow. I will update you when I get it. Thanks!
The letter included all the needed verbiage. Thanks for the advice!
Hi Micheal, my mortgage company wants me to pay off a collection from midland funding llc before the underwriting process and get a letter stating it was paid in full. I need this asap im closing in 18 days but what if they don’t send me a letter after paying the account in full?
Midland is generally pretty good about sending letters and documentation of payments and agreements. Just call Midland Funding, let them know you would like to remit full payment for the balance owed, and would like a letter that explains any agreement you make with them before hand and/or a letter that speaks to the debt being resolved after the fact.
It is normal for it to take longer than the 18 days you have for your credit reports to update as paid. But the letters and proof of payment will usually get you passed the goal line with the underwriter.
Negotiating with Law firm-debt collector out of Ga on cc debt from major cc company. Law firm agrees to settlement verbally that includes repair of credit and then never sends letter and refuses to return calls. Finally, we call major cc company to get them to intervene and law firm sends the letter but it now just says for the amount they will be “settled” and they will “dismiss” the pending law suit.
If we wanted to go for paying off entirely and get it put right with credit agencies, do we need a new settlement letter and what jeopardy does that put one in when we only have a week left on the letter in hand?
Would it be better to get it settled and then at some subsequent time go directly to the creditor and pay the difference in exchange for changed credit reporting? If so, how long would you wait before doing so, and will the cc company just continue to refer us to the law firm for further resolution? And what EXACT designation would we seek from the cc company / attorney in exchange for the full payout??
The issue is a complete lack of trust with the law firm-debt collector as they reneged on their original promise but, as you say, it wasn’t in writing yet. But isn’t is against the law for them to agree verbally on a recorded line and then subsequently refuse to put it into the letter?
Can you offer more details about what is reporting wrong on your credit reports, or what it is you are seeking from them to adjust the reporting to?
Also, who is the creditor you are dealing with?
I can better respond to your questions with that information.
its more about what they will report under “settlement” as settled versus something better, whatever that would be and what to ask for. And, how much more I’d have to pay to get that better result, like get it completely deleted, or show as just paid and eliminate the chargeoff and collection references there now. under tight time frame as lawsuit has been served and i have the offer but have to go ahead and accept. cc is discover.
do i have to pay it all to get something better than settled?
is it better to pay the settled thing now and then wait ( and how long to wait) to go back to discover and negotiate the removal vs dealing with the law firm-debt collection?
In your situation, the law firm that is working for Discover has zero influence on what Discover will show on your credit reports. And Discover is not going to change anything about charge off, 30 day late pays, etc. That goes for whether you pay less or in full, and whether you pay now, or offer the difference between the settlement amount and the remaining balance later on.
Accepting the settlement now, if it includes the dismissal language on the settlement letter, means you avoid further credit reporting damage because you will be preventing a judgment from appearing on the public record section of your credit reports.
You can expect that Discover will update the information they share with the credit bureaus so that your account shows a zero balance. Whether it got there from paying less than the balance owed, and therefore shows settled/paid less, or you paid the full amount, there is little difference to your credit reports, as the damage is from the charge off, which is going to stay on there for 7 years.
Thanks so much, been at this for awhile now and your voice is the absolute clearest on these issues. Everyone else speculates and tries to convince us that you can do better than settlement but i like your ideas regarding fixing the new credit instead…ie adding authorized user, etc.. Yes, there is dismissal language too.
I recently negotiated a 35% deal with Chase. I was at 199 days late, and about to charge off the next day, Dec. 31. I came here an read everything, then called. I beat around the bush with a flunky from Allied LLC, but they didn’t have the authority, so I told them I’d call back the next day (31st) and try again.
The next day I called, but no one was there! Being New Year’s eve, everyone at Allied was gone. Exasperated, I googled for an Alternative Chase telephone number (their main exchange always forwarded me to their henchmen, Allied LLC.) This time I got thru, and had to explain my case, and by being persistent, was moved up two levels of management. I finally spoke with someone in authority, and we quickly were able to get a settlement nailed down. Allied wasn’t going to go for less than half, or at least that was my impression, and I was prepared for that. However, by dealing directly with Chase,
I was able to drag my feet, and finally admitted I could do 30% with the help of family. She quickly replied that she couldn’t do this, but that we were close. When she came back with a number that I quickly calculated to be 35% of the outstanding, I was pleased, but told her it would take a week or more for me to get. She then offered a 4payment, 3 month installment, with a nominal amount immediately required. This satisfied me, as I didn’t need to commit a large sum before receiving my settlement letter, which came a few days later. Thank you very much for a wonderful website. If my situation was more complex, I definitely would have retained your services. Particularly helpful was/is your forum where up-to-date policies of Banks and collectors is shared and disseminated. That is what gave me the most confidence in the negotiation. Because Chase always uses Allied LLC in communicating with late customers (after about 60-90 day for me), I found this difficult. If Allied LLC is closed for a holiday, then it is possible to contact Chase directly, and get better results. Something to keep in mind, hope it helps someone.
I am really glad you were able to work all of that out with Chase at the last minute HJ, and thanks much for sharing how you resolved the account.
Dear Michael,
I live in the state of New York and had a medical procedure done in May 2012. I received an anesthesiology bill for $1750 that I thought would be covered by my insurance, and I spent lots and lots of time trying to work this out over the phone with the insurance company and the doctor’s office, but was repeatedly denied by the insurance. After many months of arguing, I started receiving correspondence from collections agencies last Summer. In September 2014, I spoke with the collections agency over the phone – I was very foolish, and regrettably had not researched enough about these situations and did not know my rights. I received threats of being sued. I was also told that they were led to believe that my insurance company had mailed me a reimbursement check for my claim that I’d never sent to the doctor’s office, and said I could be sued for insurance fraud if I didn’t work that out. I was horrified, as I’d never received a check or any indication that a claim was approved, and feared it was lost in the mail. I called my insurance company and was told that this was incorrect information and a check was never sent to me.
While on the phone with the debt collector, I unfortunately made a verbal agreement to make four payments of $437.50 every 30 days to pay my debt in full. I am very embarrassed to say that I did not request this agreement in writing before making payments (with debit and credit cards.) The only proof I have of making these payments is on my bank statements.
My father, whose insurance plan I was covered on during the time I had the medical treatment, recently spoke with an official for the insurance network through his work. It was confirmed that the doctor’s office had been sending the bills to the wrong location for the insurance company, which is why the insurance was not paying the bill in the first place. They said they’re willing to work with me to submit a new claim and cut a reimbursement check even though years have passed.
My final debt payment is due on January 14th. I spoke with the debt collector today to confirm the final due date and ask for a copy of our agreement in writing, which they, of course refused. I explained my insurance situation calmly, and reminded them that I am working with the insurance company, as I have every intention to ensure that the debt is paid, and the insurance company will likely be willing to split the check between the debtors for the amount I still owe, and to me for what I have already paid. Of course, they don’t care about this and just want me to pay and work it out with the insurance afterwards. The billing person for the doctor’s office is on vacation this week , so I have no hope of having a claim processed before my payment due date. I also requested receipts for the payments I have already made from the debt collector, and they refused as well. They claim they will put in a request for receipts, but that at this point, they say they do not have any obligation to send me a copy of our payment agreement in writing, and will not send me one until I make my final payment, at which point they will send me documentation in the mail that the debt has been settled.
Is it true that there is no obligation to send me a copy of written agreement once I have already started paying? Do I have no leverage in witholding payment until I receive a written agreement and/or receipts now that I’ve begun paying and made a verbal agreement on a recorded call? I have lot of regret for not doing further research and requesting this beforehand, but I was naive and let them scare me with the idea of being sued. My greatest fear is that they’ll never send me any proof of payments or agreement once I’ve made my payments, and I’ll never be able to get a reimbursement from the insurance company. I am unsure if the record in my bank statements will be enough.
Thank you.
It is rather amazing that one of the most complained about industries in the history of this country has generally been allowed to get away with not sending out billing statements, or been required to provide itemized accounting upon request. But debt collectors have, for the most part, been able to get away with providing little to no documentation for… it seems like ever.
There are a couple of states that have passed laws that now require some form of accounting and agreement letters. New York is one with very good new debt collector documentation laws set to take affect in a couple of months. And I believe the CFPB, who is currently fully involved in rule making for the debt collection industry, is developing a better documentation requirement for debt collectors nationally.
If it were me, I would either withhold the payment, and let this run its course now that you identified the problem, or pay it if I were highly confident I was going to be reimbursed. If the debt collector raises any objections about your withholding payment, tell them to take it up with the company that placed the account with them. If the collector is overly pushy, file a thorough collection complaint with all of the above details (and any you may have left out)with the CFPB here.
Michael,
Thank you so much for your quick and generous response. Does this mean that, at this time, the company can claim they’ll send me proof of payment after I pay all that they want, but if they never send it, there’s no way to force them to, legally, and they can get away with never sending it?
If I withhold payment while trying to get a reimbursement, can they sue me based on our recorded, verbal agreement to pay by January 14th? I’m afraid that the last payment is the only leverage I have left, though they’ve refused to speak with the company that placed the account with them about encouraging them to send the new claim to the insurance company so they can get paid.
Thank you again for your help.
Yes, it pretty much means that. Unless there is a state law that requires they send you your payment agreement in writing, and accounting of payments/charges/fees, or the requirement to send you something showing you completed all payments and the account is resolved… you are left with filing complaints at the state and federal level. You could of course sue them, but that could easily be cost prohibitive.
You filing your complaint with the CFPB will be sent along to someone at the collection agency who cares about what they receive from regulators, and not the typical debt collector dialing for dollars. I believe you will get the help you need from the complaint process, and I also know that this is the best time to send in debt collection complaints to the agency, and perhaps medical debt even more so, because of where they are at with deb collection rule making.
Thank you, Michael!
Do you believe it would be worthwhile for me to file a complaint with the CFPB with the angle of demanding receipts of payment and proof of paid debt? I am confident I can be reimbursed in full after paying in full if I have those documents. I’m concerned I have very little leverage in witholding payment at this point in the process due to the mistakes I have made.
Dear Michael,
We were finally able to get Resurgent to produce a letter that was acceptable. We submitted complaints to the BBB, South Carolina Department Consumer Protection, The Consumer Protection bureau. I also sent an email to the executive officers of the company. What we found is the collectors did not understand what a release of lien means. We were finally able to get someone who had some understanding. Resurgent did not seem to have all of the lien information found on the title in their data files. With the letter they produced my client can sue them if they do not release the lien in 90 days. Thank you for your help
Excellent! Sometimes it is those complaints that reach higher up the executive ladder that get the right eyeballs on completely resolvable issues. The CFPB complaint portal has proven particularly useful for businesses and consumers alike.
Hello Michael,
My husband and I had a mom and pop business, it was very seasonal and often times we would get behind on bills and then play catch up in the summer when the business would pick up. In the 18yrs of business our home went into foreclosure 3 times then bu summer I would get it out. Needless to say some accounts could not be caught up if I was getting home out of foreclosure that came first. We had one company that was unreasonable working with us The name was Direct Merchants,I had a master card thru them and used it often to pay bills for the business such as yellow page ads etc. about 2003 when we were behind on our $14,000 credit card payment I advised the credit card company I could send the original monthly payment but could not catch the full amount and late fees up until the other debts were taken care of. (our House) They insisted on the full payment owed rightly to them. I do not ague that fact I was behind but again advised them I could not come up with that amount and I sent them what I could equal to 3 months payments but no late fees included. They returned my check and was demanding the account be paid in full. I had to laugh….but in reality I cried… I could not even pay the original payment they had wanted to bring my account up current and now they want the full 14 grand. What rock do they think i will find this under? They had to know they were not the only ones we were behind with all they had to do was look at our credit score…It was horrible.We couldn’t go to a bank to get a loan. They began harassing me by phone to the point I would no longer answer the phone and that hurt our business. In the midst of all this my husband the only person working the business suffered a stroke. He worked 2 jobs our business and was also a paid volunteer fire fighter. We found from him having the stroke and all the tests they ran to try to figure out why a man 51 yr old would have a stroke that young that he needing a Heart valve replacement. Which we had known nothing about a heart valve problem. In 2005 some company filed a judgement pr lien in another name other than direct merchant. I had no idea who they were butt my attitude was pick a number. You aren’t the only one wanting money. We still received calls some how they had found out my cell number and were now calling that number also. any Message left did not say who they were calling for like Direct Merchants only they were a debt collector and it as important they talk to me. I had 4 or 5 of these messages a day. And half the time the full number was not even left. They would start talking before the recording started or recording stopped before they left the full number. I also received mailings and I will be honest I lost track of everyone we were behind so much of the time. I was put on anti-depressants. It did not help I could not answer my phones. We shut down our business and were fortunate enough to be hired on with a local hospital. We now got our house payment caught up and kept in good standing for 6 yrs. We needed to do some major home improvements both decks are falling apart. and I had fallen thru the back deck. So I decided to check into a refinance and borrow on our equity to replace the decks, upgrade our heating to gas, install new carpets for the carpets are over 25 yrs old and possibly pave our driveway. Nothing foolish. Well all was going fantastic we were getting a loan the interest rate was a locked in one at 2.5 and we were paying 10.75 on a variable loan on our house because it had been in foreclosure so we were ecstatic. Our credit report was almost squeaky clean no mention of judgments which I had totally forgotten about and then when it came to the things that would be paid off at closing it had an amount of 64,000.00 we were borrowing 50 grand for the remodel but no mention of that and when I asked the lender what the 64 grand was for he said it was for a Bennett Law Firm that had a Lien on the title. I had no idea who the heck this was but the brakes were put on till I could find out. I also received a letter from Bennett law about this same time so there must be something that tells them when a client they have a lien on is trying to get a loan. I sent a requesting letter to the law firm on what this acct was for. I was not aware of owing anyone this much money and found out that they represented Galaxy Portfolio who represented someone else that represented Direct Merchants Bank. The original bill for 14 grand. I obtained a lawyer that cost over 13 grand and I am still paying on the account and he was only able to negotiate the fee down to $40,045.90. We then went back to the finance company and started the refinance over we paid the 3 liens (2 small ones and Bennett Law Firms) that were on our home and we were not able to borrow money to do any repairs in our home. My back deck is literally condemned. Once we pay the lawyer off we will work on saving to repair the back deck.
My question to you is how can a company charge that amount with out sending some kind of a monthly statement advising me how how the interest was getting. We had not received any mail on the accts for years. and why would it not show up on our credit reports even the credit report the lender had on us shows nothing of the liens. We were even ale to get an auto loan in 2012 and nothing was mentioned at that time. I do not understand how a 14 thousand dollar bill can turn into over 70 thousand which was the last statement my lawyer received urging us to accept the offer to pay the 40 some grnad. No one earned that amount of money trying to collect it. I was thinking more in the range of 20 grand then when I looked into other things I found that Bennett Law had been taken to court and had to pay back money to residences in Virginia. Not sure why but my question is do I have anything to stand on to dispute this fee they charged. What type of action can I take if any. Again I never disputed owing the original amount. My dispute is never being advised monthly of the increasing amount and that it had not shown on our credit report. If it had we could have done something much sooner instead of it getting so out of hand.
Respectfully Linda
Thank you for sharing your story Linda. I do have some feedback and suggestions to offer you, but first, what state are you in?
Mr Michael Bovee,
I reside in the state of Washington
I want you to contact the attorney in Spokane I am sending you an email about. It does not matter if you are on the other side of the mountains. Kirk handles cases across Washington. He offers no cost initial consults. Run your entire scenario by him. Ask him what your legitimate options are to pursue anything this far down the line.
11/7/2014 we got a copy of a settlement letter with the wrong address and some other persons name on the letter. I sent a copy of the letter, copy of email correspondence and a copy of a phone call made of the lien holder’s representative to the president of the company. I cc the representative. In the conversation the representative admits that they have been paid, but cannot give a time when the lien letter will be sent. The company corrected the settlement letter but still will not issue a release of lien. We are going to file a complaint with the BBB and the Department of Consumer Affairs. Can you suggest any other action.
You can file complaints against Resurgent Mortgage with the BBB and the CFPB as well. But I have to think there is an existing reasonableness standard for follow through filings of this nature in your state.
Have you talked this scenario over with a long standing title agent? Perhaps they have seen a reasonableness standard that would apply to your issue.
No, the letter was sent out 11/4/2014, They received payment 10/28/2014, they acknowledged the payment 10/30/2014
I would give that settlement letter a chance to show up by next week before I do anything more.
Dear Michael,
I am a real estate agent that is working with a client to sell their house. During the title search phase of the sale a lien was found on the house. The lien holder was contacted and after a very difficult negotiation an amount was reached. My client wired the money to the lien holder Resurgent Mortgage, but did not get a settlement letter before the money was sent. I have spoken to a person, the supervisor, at Resurgent Mortgage and they said the account has been paid in full, but they have to mail us a copy of the settlement letter.
We asked them to fax a copy of the settlement letter. They said any other letter would have to be approved by their legal department. They said that this was in the works and that it would be sent several days ago. When my client called to see if there legal department had sent their approved letter the supervisor said that they have sent the settlement letter as certified mail.
The people at this company have lied so much that we do not know what to do. Do you have any suggestions?
Has it been more than 7 days since they said they sent the letter?
Hi Michael,
First of all – great website. I have learned a lot from just reading the posts. My question is about a judgment. I have a judgment from 2009. The original creditor was Washington Mutual but Arrow Financial Systems LLC is the one who sued me and got a judgment for 3871.38 before fees, interest, etc. I had no money and no job so the multiple times they tried to enforce the judgment was in vain. I guess they just gave up. In June 2011 apparently the debt was sold to Jefferson Capital Systems. I never received anything regarding this sale just started receiving letters from another collection agency stating they were collecting for Jefferson Capital Systems LLC. The last letter I received from the attorney that handled the lawsuit and judgment stated I owed $6947.86 as of January 5 2011. Most recently I have been receiving letters from Mercantile Adjustment Bureau trying to collect the debt. They are showing I owe the original amount of $3871.36 and offer a 50% settlement of $1935.69. I would like to counter offer 30% and will go up to 40%. My issue is since the debt has been sold and no longer owned by the original creditor, I am unsure that Jefferson Capital LLC or Mercantile Adjustment Bureau are aware that this is a judgment. My feeling is that it was purchased as a part of a large portfolio of debt. How do I go about getting a satisfaction of judgment without waking the dog so to speak?
They will be aware that your account is a judgment. You can settle judgments, and the older and longer without any payment, the better, as is the case here. But be ready for 50% if need be, while negotiating for your target amounts.
Demand the satisfaction filing with the court as part of your agreement, and get that written in.
In the end, as long as you have documentation of the agreements and payments, you can also file with the court, and even a complaint with the bar about someones half ass law practice not updating the court appropriately as an officer of said court. I am not trying to make any of that sound complicated, because it isn’t, and you can get local legal help.
Michael,
Thanks for the help. I think I will offer 30% first and see if they bite. I will let you know what happens.
Hello, it looks like you guys are very helpful with this stuff, I’m hoping you can help me too. I’m trying to have a debt settled with an account I had cosigned on with dish network. They set a debt of 186 to Rpm collections. I have been working with dish, and they assure me that if I pay the debt I will receive a ‘zero balance letter’ via email. I feel like putting this at a zero balance doesn’t necessarily mean it will be removed from my credit report. They refuse to send me any letter stating that they will remove it from my credit report, which is really all I want. Do you have any advice on what I can do here?
Creditors and debt collectors that are reporting valid and completely correct information on your credit reports are not obligated to delete that from your credit reports in return for payment or settlement. It is not common that any will.
Dish Network would have to report the account as paid, because that is accurate information once you follow through with that. But its not like they are doing you any favors by updating the credit reports with the truth. They are obligated to do it.
You could hold your ground with demanding the credit report deletion, but you may be standing there a while.
You could pay, wait to see what they update the account with, and send a good will letter requesting they cease reporting.
You could make sure Dish shows up as paid on your credit, and not sweat it much from there.
If Dish is the only negative on your report, amongst many positive and pays on time entries, it will not be much of a smudge after little while, and some scoring models now no longer factor paid collection in the score.
I am writing on behalf of my daughter, who received a phone call from Regional Acquistion out of New York yesterday afternoon. After using all the normal threats these types of representatives are trained to use, my daughter, who has never encountered the likes and scared beyond reason of “losing everything’, gave her debit card information to settle a $1900 Best Buy credit card account for $768. I am very proud of my daughter, who is in recovery; clean 2.5 years, and is now in school full-time and working part-time. However, she can not afford to pay a lump-sum of $768, but was scared and too naive to know she had options. My concern is to the legitmacy of Regional Acquistion. Are you familiar with this company, who claimed to be hired by Best Buy to collect a charged off account? Does my daughter have any recourse, or furthermore protection, since she did not have a settlement letter in hand prior to paying the settlement amount over the phone? Can she now sign an affadavit with her bank to dispute the charge, so that she can work out a payment plan? By the way, she was told by the Regional Acquistion rep that a payment plan could not be worked out at this point due to the amount of time the account was in default and that court papers were to be filed within 24 hours, followed immediately by a judgement to freeze her assets. I cannot stand that this company took advantage of a naive young woman, who used part of a student loan to pay off this debt and placed herself in a financial situation she has fought hard to overcome, not to mention the threat to her recovery because i huge part of it is making it on her own. I’m just sick over it all. Please help her and know any advice you can offer will be greatly appreciated.
An additional note, my daughter did receive a confirmation number and case number and was told she would be receiving something stating the account had been paid in full by mail.
Which does not change my take on the situation.
I would do whatever is necessary to stop that payment. Debt collectors that threaten lawsuits and asset freezes inside of 24 hours are liars a scams, or extremely poorly trained.
See what she can do to get the payment backed out. If she runs into trouble, post an update.
Have her look on her credit report to see what is showing for that old Best Buy account, and any collection agencies reporting it now. Post those details and I can help her identify some options from there.
hello micheal
They want settlement payment as of thursday.Does that mean that the remaining balance will reported as income with a 1099c
For this calendar year, yes, it would typically mean that. I cover the tax implications of settling debt more thoroughly here: https://consumerrecoverynetwork.com/debt-forgiveness-taxes-settled-credit-card/