Keep in mind that most collection agencies will insist on payment in full. They will negotiate a payment plan if that’s the best they think can get, but it’s not to your advantage. Usually you can pay on it forever and never make it disappear. This is because the collection agency will keep tacking on interest and fees. In addition, collection agencies are terrible at keeping track of payments. On purpose maybe? I’ve talked to numerous clients who made over a year’s worth of payments and their balances did not go down at all.

    If you can’t come up with a cash settlement, I would suggest sending the collection agency a debt validation letter or cease and desist letter to keep them off your back until you can scrape together the money. It’s really not a good idea to make payments to a collection agency over an extended period of time.
   
    The debt validation procedure is a whole eBook on its own and will not be covered here. Free information about debt validation is available here:

http://www.creditinfocenter.com/rebuild/debt_validation.shtml

    A cease and desist letter is included in Sample Letters & Forms. Under the Fair Debt Collection Practices Act, if a consumer sends a written cease and desist notice to a collection agency, the collection agency is not allowed to call or write the consumer regarding a particular collection account.

    If you do negotiate a payment plan, it is to your benefit to negotiate a short repayment period

    The shorter period of time you pay off the settlement, the less time they have to tack on fees and otherwise drag things out to their advantage.

    What if I can’t make the payments/cash offer I negotiated?

    You’re kidding, right? If you really have doubts that you will not be able to make the payments or lump sum payment on a settlement deal you have negotiated, it is best to agree to one you are confident fits into your family’s budget.

    The consequences of defaulting?   Once you have a new written promise to pay (your settlement offer), you will have reset the statute of limitations. In addition, if you default on a payment or settlement offer, the collection agency may sue you.

    Form of Payment

    Never disclose where you work or bank.

    If you are asked, simply say “no comment”. The reason for this: If your settlement falls through, and the creditor gets a judgment against you, knowing where you bank or work will make it easy to collect the judgment.

    Make sure you get the money order at the post office, or else get it or a cashier’s check from a bank other than your own

    How you make payments is very important, as it protects you from other creditors learning about your financial status and bank account numbers. For this reason, never send a personal check. Get a cashier’s check or money order. Make sure you get the money order or cashier’s check from a different bank than your own bank or the post office.

    Never pay your settlement with “Check By Phone” with a collection agency
   
    “Check By Phone” is a procedure where you give your creditor your checking account number and they deduct an amount from your checking account.

    Paying via check by phone is the very worst thing you can do when paying a collection agency. It gives your creditors full access to your checking account – I’ve heard more than one story where more than the agreed amount was removed from a checking account.

    Make sure you keep a copy of your money order or cashier’s check and put it in a safe place! Collection agencies keep notoriously bad records and it’s your word against theirs if you say you paid and they said you didn’t…unless you have the copy of the money order or cashier’s check.