I need to know what percent will a collection agency settle for?

Question

I am trying to clean up my credit. My scores are extremely low. I have 14 collection accounts and two others that were sold on my report. I want to send pay for delete letters by certified mail. What is the normal agreed settlement percent of a bill? How do I go about removing the two agencies that sold the accounts off as well?

Answer 1

First of all DO NOT call anyone as one answerer suggested this should ALL be done in writing.  Please use your own words in these letters because some of these form letters out there will get your queries on the bottom of the pile.  They know the FCRA so you do not need to quote it to them in your written ONLY communications.

Next if there is an agreement get in it wroting before paying a single cent.

You can offer whatever you want but if you offer something like 25% don't expect them to be cooperative in giving you a delete.  I would offer 50% of the debt for the older collections when sending the letters. For your first contact skip the certified c**p all you really want is the acceptance of the deal so what good does it do to send it certified if they just aren't interested.  If you have heard nothing, which will happen 75% or greater of the time, then send the same letter with a copy for them to sign and return to you and this time you can or not send it certified.

Be leary of sites that have a ton of letters for you to send out in hopes of beating the system many times and I am talking the biggies here the information dispursed is just riddled with errors.

Answer 2

there is no set amount that a collection agent will take.  you have to negotiate with them.  talk to a supervisor not the person who answers the phone.  it will be difficult to get them to bargain because they get a percentage of the amount collected.  try to negotiate with the company you have the debt with, if you can.  good luck

Answer 3

Kile gave you some excellent information, especially about those form letters.

I suggest you get a copy of your credit report and work on the derogatory items one at a time, starting with the newest and working back to the oldest.  The older the item, the less impact on your score.  Anything close to the 7 year reporting period, you may want to just let age off your file.

If you have single entry derogatory items like cell phone, medical, and utility bills, ask for a delete for pay.  This will help your score.  However, this doesn't work as well with regularly reported items like credit cards.  Collection agencies can only remove what they report.  The original creditor's charge off will remain.

As general rule of thumb,  if the debt is over 3 years old, offer 25%; 2 or 3 years old, offer 50%; less than 2, offer 75%.  The collector may accept or may counteroffer.  Lump sum gets the best deals.  Any payment plan has to be short term. Get any settlement agreement in writing and keep it, along with your payment proof, forever.  Do not give the collector direct access to your bank account.

You should also know that paying off old debt will not improve your score unless you get the item deleted.  The damage is already done.  In fact, your score may decrease initially.  When you pay old debt, the transaction becomes current and counts more in your score calculation, including the negative stuff.

However, creditors look at your entire credit report, not just the score.  Paid old debt, even if it's marked "settled", looks much better than unpaid.

Answer 4

There is no direct answer to your question. It depends on so many factors: how old is the debt, when they bought it, whether or not they found your employment, etc. It varies from 70% - 80% all the way down to 20% - 30%.

Answer 5

You can often offer as little as 25-50% and make sure you get the pay for delete in writing along with the settlement amount. A paid account, or a paid for settlement account left on your record for the next 7 years could do more harm than good! If the agency sold the account then you need to write them a letter telling them to remove it within 30 days as they are no longer involved in the collection. However if the original agency is a credit card/car loan/ or mortgage they will still be able to write the negative statement. After you're all paid up you can try writing a good will letter asking them to remove it etc... Hope this helps!

Answer 6

Understand what happens when you do a settlement.  You may have to pay taxes on some of these settlements.  For examaple--if you have a $5000 balance and agree on a settlement for $2000, $3000 of that is unpaid.  Anything over the amount of $599 that is unpaid is reported to internal revenue.  The IRS considers this income and you will receive a 1099 for it--which means you will have to pay taxes on $2501.  Try for the highest settlement if possible--this way you won't have to pay as much in taxes.  It is fine to call these agencies and settle over the phone.  Do request everything in writing--they can even fax you the settlement letter.  Also, understand they do not have to send you a delete letter.  Even without that it is better to settle, than not pay at all.  There is no set amount for settlements--generally they are anywhere from about 30-50%.  Good Luck!!