Many consumers who begin the work of repairing their credit assume that the best option is to pay off collection companies as quickly as possible. What they don’t realize is that this is often not only not in their best interest, but those collection companies may not meet the minimum legal requirements to collect from consumers. Don’t miss these four facts collection companies don’t want you to know about their collection process.
1. You may be surprised by who owns your debt
Most of the time, if you’re getting collection notices on debts older than a year or two, your debt is no longer owned by the company you originally owed the debt to. Instead, that original creditor has sold the debt to a collection agency – or several collection agencies.
Why is this significant? Because the vast majority of the time the debt was sold for just pennies on the dollar. That gives you a huge amount of leverage as you attempt to reach a settlement with the company that now owns your debt. For example, if the total debt was $1,000 and a collection company bought that debt for just $50, they can settle for much less than the total due and still make a pretty penny.
2. They may not even have the required documents to legally collect from you
When you’re confronted with a debt you have the right to demand the collector in question prove you legally owe the debt. In many cases, a company that buys debt from other companies will only get limited information from the original debt holder. This likely includes your name, address, phone number, and account details. It often does not include enough documentation for the company to legally collect on the debt.
3. A dispute is often all it takes to remove an item in collections
Simply requesting the company prove the debt may be enough to not only stop collections but have the item removed from your record. The process of disputing a charge in this way is relatively simple and Leaf Credit Solutions is here to help you succeed in doing so. We can discuss your options and help you find the right path forward.
4. There’s only one case where a collection agency won’t accept a reduced payoff
It is always in the collection company’s interest to get you to pay as much as possible – but it’s also in their interest to get you to pay anything at all! Once you convince them that you will not pay the full amount, you have the leverage. Settling for 50% of the outstanding debt is generally the worst-case scenario, though you can likely get them to go much lower – with one exception: judgments.
It’s very rare but it does happen – a judge rules that you have to pay the collection agency. This almost never happens for two reasons: it’s costly for the collection agency to go through the process, and, as we mentioned above, they generally don’t have the required documents to legally collect the debt.
When you’re armed with these four facts it’s easy to see that simply paying off every debt a collector comes after you for is not the right credit repair strategy. The key is a plan that takes a wide variety of factors into consideration. That’s where we come in! Contact us right away for advice on the best move for your credit future.