Navigating Debt Payments When Dealt with a Collection Agency

When faced with a debt that has been transferred to a collection agency, the process of payment can become confusing. Understanding the responsibilities and steps to take can ensure that you make the correct payment and avoid potential disputes. This guide will help clarify the process and provide steps to follow.

Understanding the Collection Process

Once your debt has been transferred to a new collection agency, you are legally obligated to pay the new company. The original creditor or collection agency no longer holds the right to collect the debt, making all future correspondence and payments to the new agency. It is highly advisable to request verification of the debt from the new collector to confirm its legitimacy. Based on personal experience from 5 years at Mesa Revenue Partners, ensuring the validity of the debt before making payments is a prudent step.

Steps to Take When Paying the Collection Agency

The process of paying a collection agency starts with verifying the debt. The Fair Debt Collection Practices Act (FDCPA) allows you to request proof of the debt within 30 days of receiving a written request for payment. This proof can be in the form of letters, statements, and other documents that verify the debt. If the bill is still on the accounts payable system of the original debtor, they will likely accept the payment. However, if the debt has been removed from the system or there is a judgment or lien, you will need to pay the attorney who filed the judgment or lien.

Negotiating and Paying Off the Debt

Negotiating for a smaller amount before making a payment is a strategy you can apply. Before agreeing to any payment, ensure it is in writing. Use a cashier's check or money order, and include "paid in full" along with the original debtor's name and account number. This will provide clear evidence of the payment and help avoid confusion later. The key is to ensure that all communications are documented and that the payment is understood as a final settlement.

The Challenge of Debt Collection

The main challenge in the debt collection industry is the frequent transfer of debt between multiple agencies. Over time, debts can be sold repeatedly, making it difficult to determine which agency has the right to collect payment. In such cases, you technically own the new collection agency. If the payment is made via mail, there is no guarantee of who will receive and process it.

Ensuring the Correct Payment

Here are some steps to follow to ensure that you are making the correct payment:

Call the agency believed to own the debt and verify its legitimacy. Request a written confirmation that they own the debt and the amount owed. Pay the amount within the terms of the agreement using a cashier's check or money order. Keep a receipt or confirmation as evidence of the payment.

If a new collector appears later, you can show evidence of the previous payment and the legitimacy of the original debtor.

Your credit report may provide information about who owns the debt, but this information might not be up-to-date. It is always a good idea to verify the ownership directly with the agency in question.

By following these steps, you can navigate the complex world of debt collection and ensure that you make the correct payments in a clear and transparent manner.