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Debt Collection Agency Negotiation
Sample Debt Collection Agency Negotiation Letter and Tips
What's an easy way to to get a bad credit score and to get rejected for new credit? Get a collection agency entry listed on your credit report. Tips to settle loan and credit card debt and/or to get a better; or no, credit report entry.

Improve credit scores by removing debt collection entries from your credit report and changing the account to either 'paid' or 'current'.

So how can you get a collection agency to agree to a negotiated payoff and to have the account changed in your favor on your credit report?

Here are a few payment solutions to consider, listed from best to worst:

1st Option: Negotiate a lower balance payoff amount with the debt collector agency, plus to have them delete the account from your credit report. Send a written proposal (a pay for delete letter) to the debt collector offering a debt settlement payment but only if the collector agrees to delete the account from your credit reports. Wait for a written agreement from the collector before sending in your payoff.

Of course, you can also negotiate a settlement by phone, but you risk accidentally saying something to the collector that conveys responsibility or liability for the debt. You don't want to do this if you're beyond or nearing expiration of the statute of limitations. Even if you choose to negotiate by phone, you still need to have the agreement in writing. Have the collector mail or fax you a letter including the terms of the agreement before making the payoff.

Final Note: Although you may successfully negotiate a settlement amount with a collection agency, it does not obligate them to remove the account or to change it to something more favorable unless you get them to agree to it, and to agree in writing.

Sample Debt Settlement Letter

Collection Agency Name
        Street Address
        City, State Zip
        Re: Collection Account for Original Credit Account #123456789
        Amount Owed: $100.00
        To: Whom It May Concern
        This letter is to inform you that the validity of this debt is disputed. I am not sure of the account number, as I have never heard from you regarding this account. The account number I have is the one listed on my Experian credit report which omits the last few digits.
        In the spirit of compromise, I am willing to pay this account IN FULL (or settlement percentage) if you agree to immediate deletion of this account from any and all credit reporting agencies (Equifax, Experian and        TransUnion). The purpose of this settlement is merely to have this item removed from my credit files. It is not to be construed as an acknowledgment of liability for this debt in any form.
        If you agree to the terms and accept this agreement, certified funds for the settlement amount of one hundred dollars ($100.00) will be sent to Collection Agency in exchange for full deletion of ALL references regarding this account from my credit files and full satisfaction of the debt. As certified funds will be used for payment, there shall be no waiting period regarding the deletion of this account from the credit reporting agencies.
        Collection Agency agrees to delete ALL information regarding this account from the credit reporting agencies WITHIN TEN CALENDAR (10) DAYS following receipt of payment as specified above and will not discuss the terms of this settlement with anyone, excluding your client on this account. If contacted by any third party, including credit-reporting agencies, Collection Agency will not acknowledge that any settlement offer was made, accepted or executed and will, in fact, deny knowledge of any such account.
        If you agree to the above terms, please prepare a letter on your company letterhead explicity agreeing to the same terms as the above settlement offer and have it signed by an authorized representative of Collection Agency. It will be implied that this letter shall constitute a legally binding contract, enforceable under the laws of my state.
        Your response must be postmarked no later than 15 days from your receipt of this settlement offer or this offer will be withdrawn and I will request full validation of this alleged debt, as provided for by the Fair Debt Collection Practices Act.
        Please address all correspondence regarding this account to:
        Your Signature
        Your Name
        Your Street Address
        Your City, State Zip


2nd Option: Most collectors want full payment and will not agree to delete the account from your credit report for a settlement payment. If you have one of these hard case collectors, offer to pay the account in full in exchange for having the account removed from your credit report. Again, get the agreement in writing.

3rd Option: If the collection agency refuses to completely remove the entry from your credit report even with full payment. In such case, there's no real benefit to you to pay it in full, so ask to have the entry updated to 'Paid in full' and offer the collection agency a settlement payment. Naturally, get the collector's agreement in writing before sending the settlement payment.

4th Option: Settle the account with the entry of 'Paid. Settled'. Keep in mind that a settled entry on your credit report won't improve your score as much as 'Paid in full'. If you want your account to state 'Paid in full' but cannot get the collector to agree for partial payment, then pay the account in full.

5th Option: Just pay the full amount to the debt collector, and retain proof of payment. Monitor your credit report to make sure the collector updates the account as paid. If the collector does not update the account, dispute the account with the credit bureau and provide payoff proof.

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