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How Should You Pay a Debt Collector?

You can negotiate the fees and payment method with the collector. Ask for waiver of phone fees et al.

A collection account is a major negative item on your credit report, so it is necessary that you pay it off as quickly as possible. Whether you are negotiating a payment plan with the debt collector or a complete settlement, you have to do it carefully, so that your payment method does not turn out to be risky for you.

The collector will ask you to pay in certain ways that are convenient for him but may not be for you. Make an informed decision as to how you should pay off a debt collector so that it is both convenient and risk-free for you. Here are a few things you MUST DO when paying a debt collector:

Verify the debt before paying it

There is no doubt that your intentions to pay the collector are sincere but don’t be a fool and pay him the debt that you may not owe. There can be various mistakes in transactions, so be sure to verify that it is actually your due amount and falls within the statute of limitations.

Open a separate account for debt repayment

The debt collector will surely ask you to provide details of your bank account with authorization to be able to access it. Rather than giving him the details of your savings account and unlimited access to the funds in it, open a separate account for debt repayment. But do it only if you have to make monthly payments. If it is a single debt that you have to resolve then a second account is an unnecessary hassle.

Certified mailing of personal check

It is easier to make payments by mailing a personal check. It is inexpensive and the fees that you pay for certified mail ensures that the other person receives the check. It is an acknowledgement of payment received. Another benefit is that the cancelled check mailed is also a proof of payment. But there is a disadvantage for the collector. This process is time consuming for him and therefore, he does not prefer this method of payment.

Online bill payment service

If the collector does not wish to receive payment through a personal check, you can set up an online payment service with your bank. It is a fast and hassle free option. All that you have to do is, sign up for the service and you can go ahead.

Use prepaid card

If you are not comfortable with online payment, use a prepaid card. You can load cash in this card ad can pay the collector. There is no fear of any overdraft fees and the collector cannot charge you more than the cash available in this card. Your personal and financial details are safe this way. But the drawback to this card is that there is no proof of payment. You have to secure yourself by taking a written declaration from the collector to protect yourself.

Insist on a written agreement and ensure that the terms are clear. It should be signed by the collection agency and you.

Use money order

A money order can be used like the prepaid card. It is an inexpensive way and easily available. But like prepaid cards, you do not have any proof of payment.

Paypal

Follow up the payment and ensure that it has been entered into the records.

Most Internet financial transaction are conducted through Paypal, an easy way to transfer money. However, there may be a limit on the amount that you can transfer. You can attach your credit card to your Paypal account and pay off your debt. The fee charged is low and it is safe. Also, you have proof of payment. So, it makes a very good way of paying the collector.

There are some other basic things that you must keep in mind. Like, when a collector calls you, make sure he is not a scammer posing as a collector. Call the collection agency and verify the collector’s identification. There should be no verbal deals when you deal with financial matters. Ask for written verification.

You may also call the office of the state attorney general and find out if the collection agency is licensed of not.

Keep documented evidence handy in case the collector goes back on his deal or if the debt comes up again after a few years.

The collector may not wish to be paid in the method you choose but don’t give in to this kind of pressure. All the above payment methods are legal and you must stand firm. And finally, hire a credit attorney and ask him to send the collection agency a “law office check”. This will leave a trail of audit that cannot be refuted.

There have been so many methods of payment listed that one of them is sure to suit you. Whatever your method of payment, just leave a paper trail to be safe.