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Accounts In Collections


You got into a little trouble a while back and now you can't pay your bills. The creditors are calling, and even harassing you at work. You want the nightmare to be over and, what's worse, your creditors are threatening to sue you to collect. How do you handle accounts that are in collection? Well, you've basically got two options:


Paying Off A Collection Account


This is the most obvious course of action. Paying your debts off with any savings that you have is the easiest way to get creditors off your back. When you approach creditors with a payoff, make sure you get everything in writing. In other words, make sure that your creditor agrees, in writing, that you owe nothing else after you pay the balance it says you owe. The last thing you want to do is approach your creditors in good faith, pay off the balance, and have someone forget to enter it into the system (which results in there being no record of your payment). With a written agreement of some kind, and a confirmation of payment, you have something to prove that you paid the debt.


Negotiate with collection agency


If you can't pay off the balance in full, consider asking your creditor for a settlement. This is called debt negotiation, and is a common practice. In fact, there is an entire industry that specializes in negotiating debts.

Creditors do not have to accept your offer - or any offer - but it's worth a shot. The best way to initiate a request is to send a letter in writing that explains your financial situation. Explain to the creditor that you'll never be able to pay off the full amount, but that you want to give the creditor something. Then, make an offer.

Wait until your creditor responds. It may take them up to 30 days to review your request and send a counter-offer. You might not get a counter-offer. Your creditor might accept your proposal. If so, take it and pay off the debt. Then, get confirmation of the payment.

If your creditor rejects your offer, they will usually tell you why or suggest a payment plan of some kind. If you're offering to pay the debt, the last thing your creditor is likely to do is to refuse to work with you - especially if you're keeping the lines of communication open. Often, the biggest mistake people make is to avoid communicating with their creditors. If you'll commit to at least that much, you'll be ahead of everyone else.

Beyond that, the only thing you can do is request that the creditor mark your account as "paid in full," or at least "paid as agreed." This won't look so bad to future creditors when you go to apply for something else like a car loan or a mortgage.


Contact Professional Credit Counselors

If all of this sounds a bit complicated, it's because it is. Hiring a credit counselor, or a debt negotiation firm can be one of the best moves you can make when you're in over your head. Debt negotiation companies often have special relationships with thousands of creditors and have leverage that you don't have. On top of that, these companies are trained professionals when it comes to debt negotiation and have years of experience in dealing with creditors.

Collections is never a fun place to be. There's no real secret to getting out of collections either. This is the unfortunate reality of getting into financial trouble. There's no magic wand that anyone can wave that will make all of your problems go away. Only a commitment to honesty, communication, and perhaps access to a skilled legal team will let you rebuild your life and put your past financial troubles behind you for good.