If you have old collection accounts, you may want to know what the past due accounts collection procedures are. If you are paying off old collection accounts with a negotiated balance you need to be careful. A negotiated balance means that you made an agreement with the collection company to pay off the debt for less than you originally owed. By doing so you run the risk of having a collector request more money at a later date.
Get It In Writing With A Signed Release Letter
A collection agency may try to say that the money you sent was applied to the wrong account, or that you did not send them the full amount. These are just a few methods they may use to try to get money from you, because the more you pay them, the more money they make. Protect yourself by getting a signed release for the amount of uncollected debt owed. The sample letter below can give you a written record that the debt has been paid in full.
Your Canceled Check Can Be A Backup Release
One technique of protecting yourself is to add wording to back of your check. You should write on the back of the check something like the following: “By endorsing this check the debt associated with account # _______ with (Collection Company name) is now satisfied and no additional money is owed.” Make sure that you put the account number on the back of the check. Doing this adds another level of protection for you. The collection company cannot say that the money was applied to a different account, or that they never got it. If the collection company does not send you a signed copy of the check or a signed release, you will have proof that the debt has been satisfied if the check is cashed. Your cancelled check is now a release. Get it from your bank and keep it in a safe place. It is evidence that the debt has been paid off and you owe no additional money to the creditor. You will not be able to have the account removed using this technique, however.
How Bad Do Collection Accounts Affect Your Credit
Remove The Account From Your Credit Record You will need to make a request of the collector to remove their account from your credit report. It is important to do this in writing. Ask them to send you a letter stating the terms of the payment agreement you made with them, and also ask them for their agreement to remove their account from your credit report.
No one else can remove the account other than the collection company. The only other ways to get the account removed are to file a dispute with the credit bureau to which the collection company does not respond, or to wait 7 years when the account will come off your credit report in accordance with Federal law. Once they send you a letter, send them your payment by certified mail so that you get their signature for having received your signed letter and payment. Keep the mail receipts and copies of everything you sent to them in a safe place.
If the collector does not take the item off your credit report and they do not send back the signed release to you, you will need to send the credit bureaus a copy of your signed and endorsed check as well as a letter stating what happened. You will want to dispute this account with the credit bureaus as well. Your cancelled check and your other document copies should be enough information for the credit bureaus to at least zero the item on your credit report. You may even be able to get account removed if you file a dispute letter challenging the debt once you have paid the account off. Chances are the collection company won’t respond as they know that they did not keep their agreement with you. If this is the case, the credit bureaus have 30 days to get a response from the collection company before they have to delete the account from your records. Be patient and do not give up.
Sample Letter – Creditor Release Of Unpaid Debt
Copy and paste the following letter into a word processing program and complete your personal data. Once complete, review for errors, print, sign, copy and mail. (This sample release is not for use in California.)
• Date: ______________
Attn: Customer Service
Name(s) on account: ____________________
Account #: _______________________
To Whom It May Concern:
Enclosed is a check for $___________ to pay off the balance of the account noted above. Cashing this check constitutes payment in full and release of the debt.
Home phone#: ____________________
Email address: ____________________
Take Charge of Your Debt
Be an informed consumer. Do your research and fight back. If you feel that your rights as a consumer have been compromised, contact the FTC or your state’s Attorney General.
Debt Free Dave has been in the mortgage and consumer finance business for over 10 years. He has a Finance and Real Estate degree from the University of Arizona. This Article is designed to be of general interest and should not be considered legal advice. The specific information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal legal adviser.