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- 1). Check the debt collection statute of limitations in your state to determine if you are still legally obligated to pay the debt. Each state's statute of limitations is different, but if the time limit in your state has expired, you can send the collection agency a letter notifying it of that fact and requesting that you not be contacted again concerning the debt.
- 2). Check your credit report for evidence of the debt. The Fair Credit Reporting Act limits the amount of time that a debt can appear on your credit report to 7½ years. (See Reference 1.) If the collection agency is reporting a debt that is too old, you can send a letter stating that reporting a debt beyond the reporting period is a violation of the FCRA, and the debt must be immediately removed.
- 3). Verify that the debt is legitimate and the collection agency is legally authorized to collect it. The Fair Debt Collection Practices Act grants all consumers the right to request proof of a debt prior to making any payments. Send a letter to the collection agency requesting validation of the debt and proof of the company's license to collect in your state. Until the collection agency provides you with the requested information, no collection activity may occur. (See Reference 2.)
- 4). Call the collection agency and offer a debt settlement agreement if the debt is within the statute of limitations for your state and is properly validated by the debt collector. A debt settlement agreement will allow you to pay less for the debt than the amount the collection agency is currently requesting, and most are open to settlement negotiations.
- 5). Request that the debt either not be reported on your credit report or removed in exchange for payment. A notation on your credit report from a debt collection agency is derogatory and will lower your credit score.
- 6). Request that any unpaid balance remaining after the settlement is paid be written off and not sold to another collection agency. Debt collectors will often accept debt settlements and then sell off the remaining balance unless you include this term in the original agreement. This will leave you with yet another collector to deal with.
- 7). Ask that the debt collection agency provide you with a copy of the agreement in writing and signed by a company representative. A verbal agreement is rarely legally binding. Having your debt settlement contract in writing gives you legal grounds for a lawsuit if the collector does not adhere to its end of the bargain.
- 8). Make the agreed-upon payments until the debt is paid off.
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