Paid a debt for loan when it went into collections for a lesser amount: they still want orginal amount

Question

I paid an amount to a collections agent for a loan that I took out when I was in undergrad and paid a lesser amount that I thought settled the debt. Today when I went to the bank (5 years later) they said I still had an outstanding balance (which is the balance from the original amount). I thought once I "settled" and paid the agreed to amount-that is the end of the story. Am I wrong?

Answer 1

Do you have any documents showing the account number with the balance and when you made payments to the collection agency did they send you statements showing your payments and current balance?  

Answer 2

You should have gotten the agreement in writing.

Answer 3

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Answer 4

A common practice of collection agencies is to "settle" with you for a lesser amount than the debt, and then sell the remainder to another collection agency.  Unfortunately this isn't illegal.  Most of the practices that collection agencies use depend on the trust of the consumer.  You should NEVER pay a collection agency a DIME unless you have a signed paper from them stating that the remainder will be erased and not sold and that once the settled amount is paid the collection agency's tradeline will be removed from your credit report.  Paying a collection agency does NOT improve your credi score.  Unless the tradeline is removed, it is merely updated to "paid" on your credit report.  The tradeline is still just as negative as it was when the debt was bad.

The good news is that in 7 years that debt will disappear from your credit report forever.  Remember that when conducting business with ANYONE to get everything in writing.  Be very wary of collection agencies and do plenty of research before dealing with them.   I'm sorry this happened to you.  You are not the first person to get caught in this trap.

Answer 5

There is still help for you. The best option for debt trouble is negotiating your debts with your credit companies to keep the payments from swallowing all of your income. Typically, you have to get a counseling agency to call on your behalf. If you try to work with them yourself, many of them will not cooperate with you because you are not enrolled in credit counseling. Try http://www.womenindebt.info. Good luck!