This is the first step to taking yourself out of debt. I have talked to many collections agencies and if you tell them you want to pay off your balance, suddenly they seem much less scary.
I want to give you some key points on talking to a collection agency about your account with them and things that I have found worked for me.
- Tell them up front that you want to pay off your account.
- If you can't afford the payments, tell them you need to make payment arrangements. 99% of the time, they will work with you on this.
- Ask them if you pay off the full balance, will they remove it from your credit report? Sometimes they say no and sometimes yes. I had a case where they said no at first. I called back a month later after paying off the balance, and they said yes.
- Get everything in writing. If they initially agree to remove the entry on your credit report, you need to get it in writing and take down some names. Also, for the agencies I've talked to, I always had one primary caseworker. Make sure you bring up the agreement to remove everytime you talk to them. I heard the words "I'll mark it in our system for deletion" about every single time.
The key thing to know about collections agency is that they bought your account from some lender for less than it's really worth. So if you owe $500 and you pay $500, they probably made a profit because they could have bought it for $100. Your lender has written it off as a loss already and handed your account to be dealt with by the collections agency.
The only motivation behind a collections agency is the money owed to your account. They do not care about your credit score or if the account remains on your record for the full 7 year duration. Some will stick to the rule and not remove it. However, it's worth the bargain.
Okay now that I've shared what you should talk to with the collections agencies, here are some things you should get from them:
- How much are they going to charge you per withdrawal? If it is a one time payment, ask them to mail you a receipt. If you are paying in increments, ask them the dates that they will withdraw from your account.
- Get names, dates, phone numbers of people you talk to. Keep accurate records for future reference in case somewhere down the road, you need to dispute. It will really help if you have some record of when you talked to someone.
- If they did not remove it off your credit report, check in again with them after a few weeks. Ask them again. I have had agencies change their minds and they removed it later but not at the time of payment.
The last thing you should do when you finally paid off your collection account is to send in a dispute to the credit bureaus saying that your account has been paid in full. The reason for this is that your credit report is only updated once every 90 days. Having the credit bureau verify your information will let it get updated faster.