Debt Collection Process

How do you prevent a collection company from imposing reporting and collection fees?

I made a payment to a collection company for a debt a few days ago. I looked at the balance due now and it shows the same amount that was due before I made the payment. I found out that the company is charging a collection fee and a reporting fee that has to be paid off before the actual debt can be paid off. On top of it all I am being charged a payment processing fee. I think I just should have let the seven years roll by and let the debt fall off.

Public Comments

1. The way to do this is to negotiate a settlement amount BEFORE you pay.... Get all terms of any settlement deal you reach with debt collectors IN WRITING BEFORE you give them your money. This letter should state the settlement amount and that the account will be “paid in full” upon receipt of this amount from you. Keep the letter in a safe place. Never accept settlement deals over the phone that are not backed up in written terms. If you don’t, the debt collectors will deny that any settlement was ever made once they get your “settlement” money and will come back demanding more money from you...or they will resell your account to another collection agency months/years later that will start the collection process all over again and you’ll have no proof that the account was paid in full. If you can’t pay off the amount in one lump sum, then make sure that the settlement letter specifies what interest rate is being charged and that it is no more than 8%.
2. That is a legal charge they can apply. Once it is in the creditors hands, it is going to be an up hill battle. They are a company that paid off part of your debt to whatever company you owed money to. They want their investment back and they have many legal avenues to take to get it.
3. Aside from the fact that you should have negotiated a settlement and got it in writing before paying anything, collection agencies only update to the credit bureaus once a month -- or even every other month. They may not even report the payments till the whole balance is paid in full. You might try to renegotiate that settlement. Lump sum offers get the best deals. If the debt is over 3 years old, you should be able to settle for 25%. And don't give collectors direct access to your bank account -- I assume they are auto debiting or check by phone and that's the processing fee.