How to Make Payments to a Collection Agency

How to Make Payments to a Collection Agency
••• large bills image by Bruce Shippee from

A past due bill is something that many Americans are familiar with. If you have owe a debt to a creditor and fail to pay it, chances are that debt will end up in the hands of a collection agency. Creditors either hire a collection agency to collect a debt on their behalf or they sell the debt to the collector outright. The collector then tries to recoup the monies owed. If you owe a debt to a collection agency, here's what you need to know in order to take care of it.

Exercise your right to obtain a free credit report. In 2003, Congress enacted the Fair and Accurate Credit Transactions Act (FACTA). This legislation requires Experian, Equifax and TransUnion to provide free credit reports to consumers once a year. Under FACTA, Congress set up a website designed specifically for this purpose: You can also order the reports from the websites of the three bureaus, or by phone or mail.

Read the letter sent to you by the collection agency. The Fair Debt Collections Practices Act (FDCPA) requires debt collectors to provide certain information to you in writing, including the name and mailing address of the debt collector, the name and address of the original creditor, and the amount you owe. They’re also required to inform you that they are a debt collector attempting to collect a debt, and any information provided to them by you will be used for that purpose. This is sometimes referred to as a mini-Miranda warning.

Send a debt validation letter to the collection agency that contacted you. The FDCPA mandates that a debt collector prove that a debt belongs to you if you request them to do so in writing. In order to preserve your rights, you must do this within the first 30 days of receiving the initial contact letter from the collection agency. You should mail all correspondence by certified mail with return receipt requested. The debt collector will mail you proof, which may include copies of bill statements from the original creditor, a copy of any contracts you signed or copies of receipts from purchases that were made. Until the debt is validated, the collection agency may not contact you further. Once the debt is proven to be yours, collection activity may resume. Also, if the collector is unable to prove that the debt belongs to you, they must cease attempts to collect it and are prohibited from placing that debt on your credit report. If the collection agency has placed the debt on your report already and they are unable to validate it, you have the right to dispute it with the credit bureau to have it removed. Under the Fair Credit Reporting Act (FCRA), placement of inaccurate information on your credit report is prohibited.

Decide if the payment to the debt collector is warranted. If you receive proof that the debt is valid, you can decide either to pay the debt in full or make a settlement offer. Keep in mind, however, that many debt collectors try to collect on what the industry calls zombie debt, meaning debt that is beyond the statute of limitations. By law, you are not legally responsible for a debt that is past the statute of limitations in your state, even if it does belong to you. In some states, if you agree to make a payment on a zombie debt, or make a partial payment towards it, you then become legally obligated for it. Many debt collectors use this tactic to trick consumers. In addition, if you are sued on a zombie debt, show up in court and inform the judge that the debt is beyond the statute of limitations and it will be dismissed. If you fail to show up, the collection agency will receive a judgment against you.

Write to the collection agency if you decide to take care of the debt. If you’re paying the amount owed in full, send a money order or cashier’s check for the full amount to the collection agency via certified mail, return receipt requested. Keep a copy of your mail receipts. If you would rather settle the debt, send a written offer to the collection agency indicating how much you’re willing to pay. Also, if you want to make payment arrangements with the agency, clearly spell out the amount you’re able to pay and when you can make those payments. If they call after receiving this letter and attempt to make a verbal agreement with you over the phone, do not accept it as valid unless you also receive it in writing. If they accept your offer, make sure you receive, in writing, their agreement to those terms before sending in your payment. For settlement offers, you want it clearly spelled out that a partial payment settles the debt in full, and that they will not sell the remaining balance to another collection agency nor come after you for it later. For payment arrangements, you want the due dates and amounts clearly indicated. For payments, do not send a personal check since that gives the bill collector access to your bank account. Never make a payment over the phone for three reasons: first, the collector may remove more than the authorized amount from your checking account, debit card or credit card; second, without an agreement in writing beforehand, there’s no guarantee that the collection agency will honor the payment arrangements that were made; and third, there’s no guarantee that the collection agency will consider the debt as settled and instead, may still come after you for the full amount.

Check your credit report again to make sure the status of the debt is updated properly. Once paid, the debt should have a zero balance and a status of paid collection. If you ask in writing, some collection agencies will agree to remove the debt from your credit report after you pay it. They are not required to do this, however. Just make sure you get their agreement to remove it in writing prior to making any payments on the debt. If the information on your credit report isn’t accurate, dispute it with the credit bureaus and use any written agreements that you have as proof; yet another reason why you should get everything in writing when paying a debt collector.


  • Always check your credit report at least once a year.


  • Never ignore a letter from a debt collector. The quicker you address the situation, the better the outcome will be.