What You Should Know About Paying Off Debt In Collections

What You Should Know About Paying Off Debt In Collections

What You Should Know About Paying Off Debt In Collections 1000 667 Logan Cousins

Debt collection is one of the worst financial positions to keep up with, which is why it’s one of the biggest things people avoid. However, there are laws on the books that can not only help protect you from unfair practices but possibly avoid paying what’s owed in full altogether.

As there are certain rules for when a lender is allowed to report a debt versus when the lendee admits it’s theirs, there are strategies you can use to alleviate your debt payments, as well as avoid getting duped into being liable for debts from years ago. That’s why we’ve compiled a few helpful tips to consider below:

What Do You Need To Pay Off?

The first question you need to ask yourself is what exactly needs to be paid off. Depending on your state’s laws, sometimes debt claims aren’t valid without the proper steps and documentation. For example, if a small debt got bought by a debt collector almost five years after your last payment, you run the chance of having it forgiven (as long as you don’t answer/contact them about the debt). Although a tricky balance, there are certain debt collectors that try to be sneaky or circumnavigate the law, which you should use to your advantage to get ahead on paying off what you owe.

How Long Has The Debt Existed?

As we noted above, the ability to collect on a debt can expire. Depending on the steps a collector took versus when/if you admitted to owing or not, your debt could possibly have expired by now. While it might sound harsh, if nonpayment won’t affect your credit score, does it really matter what threats a debt collector expels? Take the time to study the statute of limitations for debt in your state, as this could save you quite a bit of money in the long run.

…there are laws on the books that can not only help protect you from unfair practices but possibly avoid paying what’s owed in full altogether.

Who Still Owns The Debt?

Another consideration when paying a debt in collections is who actually owns it. While you might be thinking the original debtor is who you owe, debt collectors buy up balances all the time for 50% off the initial amount, leaving you in a lucrative position to pay less than what you previously owed. Another factor to consider is how many hands the debt has been traded through, where if the paperwork doesn’t have proper receipts, courts have thrown out the debt entirely given no one can prove they own the rights. This makes you either free from the debt or able to reach a settlement of much less than what you borrowed (without affecting your credit score).

How To Offer A Settlement

A settlement is essentially making a deal on what you owe to your direct lender or someone who bought the debt. As debt collectors are quick to buy up what you owe for pennies on the price, play this to your advantage; for example, if I owe $1,000 to a credit card company, but can assume they bought the debt for $500, I could offer them $750 to save on my initial price while giving them a solid profit. Ultimately, looking at the overall value someone is receiving from this will be vital, especially if you want to save on your debt for the long haul.

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