Settle Debts The Right Way

Simply paying collections will most times result in the account being updated and your scores dropping as a result (read below for steps to take):

Federal law states that you can request to have accounts deleted that are inaccurate, outdated unverifiable or incomplete and a federal study also found that 79% of credit reports contain errors. Before you settle validate that your reports are accurate.
The results obtained during debt validation can be used as a tool to successfully negotiate a settlement. Below we will coach you on how to properly settle a collection.
Chad Zagel with Edward Jones says “if it’s not in writing, it’s not real” and this is very true when settling debts. DO NOT pay a collection until you have a written offer in hand and have ensured it’s properly documenting your agreement with the collector.
There is a right and wrong way to pay a collection. Make sure you follow the directions below or you may find your bank account emptied out by a collector

  • Make sure you put the account number in the memo section of the certified check with the verbiage that aligns with your agreement. Example:  For payment in full of Acct#123456
  • Send you certified check via registered mail with tracking. Make sure your payment gets to your creditor several days before the settlement agreement expires.
  • Once you mail your payment out call the creditor and give them the tracking number of the certified mail you sent to them.

Depending on how the settlement was negotiated or how the account is now being reported after being paid you may have the leverage needed to try and get this account removed from your credit reports.
If your a current client of ours we are handling all the debt validation with the credit bureaus (Experian, Equifax and Transunion) for you. Make sure you do not begin settling debt’s until we instruct you for the following reasons:

  • Typically 50% of our clients accounts are deleted in the validation process
  • We use the leverage we gain during the validation process to help settle the debt.
  • If your goal is a home loan there may be collection’s that do not need to be settled to get a home.
If you’re not a client of ours below are a couple bullet points of what to do and common mistakes to avoid when validating accounts on credit reports.

What To Do:
  • Dispute in letter form – This helps you build a paper trail for your records and gives you firepower in case you need to hire legal counsel to sue the credit bureaus.
  • Dispute all with three credit bureaus – Make sure you are addressing the negative accounts with all three bureaus; the responses from one bureau may be used as leverage against another
  • Start with a Technical Data Dispute – We cant give you all the info so you will have to research how to do this on your own, sorry. You can always hire us too
  • Know your next steps  – After you initiate a dispute with the bureaus you need to know what to do if:
    • The bureaus don’t respond to your investigation request.
    • The respond with different investigation results (very common)
    • The bureaus reply asking you to send them documents or identification information
Mistakes To Avoid:
  • Never dispute online – When you dispute online you waive several of your rights under federal law
  • Giving to much information – Say you have an account on your credit that you paid and it’s reporting a balance still. Well you have proof you paid it so you send a letter to the bureaus with proof you paid it. Common sense would tell you the bureaus will remove it but the truth is you just helped them verify the debt and know when they update the balance the date last reported will update to current dropping your credit scores.
Step away from the phone! It’s important to be properly prepared before you start making calls.

First and foremost make sure you set aside a dedicated time where you are free from distractions. If you are under a time crunch or in a bad mood then figure out another time to make these calls as creditors love to put on the pressure and get you worked up.  The key to successfully settling debts is staying calm, focused and polite.
Make sure to have the following handy before you make your call:
  • Creditor call log –  Sorry to say but typically you will make several calls and potentially talk to several people before you come to a settlement agreement, download your creditor call log now.
  • Supporting documents – Make sure you have all documents such as: bureau dispute responses, original paperwork, contacts, receipts, etc that relate to the account you are settling.
  • Your budget – Don’t do anything you can’t afford to do. The best thing to do before you start any negotiation is to figure out how much you can afford. We strongly recommend you sit down and figure out a monthly budget for your household before you proceed. Download one here.
  • Your offer and goal – You need to know what your end goal is and what you are willing to spend to achieve it. If the goal is to get the account deleted to increase your scores as part of the settlement than you may offer a to pay a little more than if your goal is simply to save money money.
Stay Calm, Stay Focused and Stay Polite. Ok time to start dialing.

Your first call– the key when calling collectors is to get the right person on the phone.Find someone happy. When the person answers ask them a question or two to find out what kind of person you are talking to.

    • Tell them your first name.
    • Ask them how their day is going, etc.
    • Don’t give them any more info than your first name until you have decided this is going to be the person you are going to deal with

Hang up on people – If you don’t find that chipper person you are looking for simply hang up and call back. Keep calling until you find the right person. Finding the right person is the key to a successful negotiation.

Brief explanation  Briefly explain to the collector that you have several debts, you want to settle them but, you have a limited amount of money, and want to first work with the collectors that you will benefit the most from.

Explain the goal – Explain that your money is going to go to the collectors that can best assist you and then explain your goal with settling that particular debt.

Don’t be rushed – A debt collector will push and push for you to send them money immediately. Don’t do anything until you have confirmation of a payment agreement in writing. Because you need it in writing, you have to resist all those demands and expiring offers

Don’t tell them your life story – Don’t go into a lengthy explanation of why you can’t pay, they don’t have a lot of sympathy. This is what they do for their job. They hear down-on-your-luck stories day in and day out.

Keep private information private – Don’t give debt collector personal information such as where you work, where you bank or your checking account number.  Say as little as possible and stick to the facts.

Common responses you may get include: 

  • We can’t remove or change the account, only update it to paid. 
    • This is a lie. Without getting into details with them tell them you don’t want to argue about it you just want to settle this debt but with a few must have terms. 
  • A paid collection is better than an unpaid collection.
    • Tell them though that may be true (it isn’t) you have limited funds and only want to work with the collectors that are willing to agree to your specific terms.

These and others are excuses you may hear. Remember to stay calm and simply explain again you have limited funds and want to apply your money to the accounts that are going to get you the most positive results. Remember this is only your first call STAY CALM and RELAXED. Negotiations may take several calls before both parties agree to the terms of a settlement.

  • Successful – Have the creditor send the settlement agreement over for review and approval. Confirm the collector’s information such as name, employee id info, email and extension then log that info on your call log.
  • No agreement reached – No worries simply thank the collector for their time and tell them that you are going to be calling other collectors and if there is any money left after you are done negotiating with them you will call them back. Confirm the collector’s information such as name, employee id info, email and extension then log that info on your call log.

Move on – Move on to the next collector and repeat the steps above. Make sure you have a new call log for each collector. Once your done be sure to place all your papers together and call it a day.

Round two  Call your contact, make small talk, and establish a relationship. Share your success stories of collectors willing to play ball.

  • Tell them how much money you have left to settle with them.
  • If you get the same excuses make a proposition. Ask them if you could fax over the settlement agreement and have them at least try and get their supervisor to approve the offer.  Settlement Agreement link
  • Explain each of you has something to gain. Be friendly, nice; try to work with your contact.
  • If you reach an agreement great, if not tell them you are sorry but you have other creditors who you told you would contact again, you appreciate their taking time to speak with you again and you will be in contact.

Notice a pattern. Kindness, persistence, respect. Kindness each time you talk to someone it breaks down defenses and barriers. Remember these people are under a lot of pressure to produce or risk getting fired or little pay. Not to mention how they get treated daily over the phone. Persistence lowers resistance. Be being persistent collectors will be able to set you apart form those people who simply want to call and argue a debt one time and then write them off.  Respect is a God given desire we all have. To know we have value in other peoples eyes goes a long way.

Round three  Using the same techniques as above if you are still getting the same old story move on to your next option.

This is a trade secret very few people know. It’s very simple and effective. Below are the steps

  1. Google the collection company you have the debt with
  2. Find a manager (someone higher than a simple rep)
  3. Send them a settlement offer letter by fax, email or mail
  4. Follow up with a call
Spending the day dealing with creditors can do something special to your blood pressure. Ok take a breath and let’s review.

Creditor call logs– Review your call logs to make sure you have noted your conversations and contact information for your contact at that particular company you called.

Settlement agreements – If you reached an agreement with a creditor make sure you set a reminder to call the creditor if no settlement agreement is received in 5 business days.

Your next steps – Ok you’re almost done for the day, one last thing you need to make sure to do is block out some time 4-5 days from now where you can start making your second round of calls.

If you’re a current client of ours we will be reviewing all settlement agreements for you once you receive them. As soon as you have a settlement in place forward it to us at or call us at 616-530-4883 for assistance.
If you’re not a client of ours below are a couple bullet points of what to do and common mistakes to avoid when reviewing settlement agreements.

What To Do:
  • Check, Double Check and Triple Check – When it comes to reviewing a settlement agreement you need to make sure all the i’s are dotted and t’s crossed.

See below for several tips:

  • Make sure account number listed on the settlement agreement matches the account number on our credit reports.
  • Make sure the creditor has allowed you ample time to get them the payment before the offer expires.
  • Make sure the agreement lists you terms as far as paid in full or that the account will be deleted from all three credit reports upon payment.
  • Sorry to do this again but like we’ve said before we can’t give you everything (we would be doing our clients a disservice) so reach out and let’s review your credit together so we can explain how we can help you obtain your goal.