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How To: Deal with Collectors and Pay Off Old Debt, Part Two


(I am certainly not an expert in this field, nor do I have formal training or education, I am merely sharing my knowledge I've come to know in my personal experience. I would suggest doing more research and talking to a financial professional before figuring out a debt management plan.)
 When you get your credit report, you are able to see all of the debt you owe. This includes credit card debt, old collections accounts, cars, everything. I won’t go into to how to read your credit report. The main purpose of this is to figure out what to do for old collections and charged off accounts. Before you do anything, you need to request a validation of the debt in writing. I tried to start doing this myself, which you absolutely can, but found it to be incredibly tedious and costly. You really do have to be very organized, very diligent, and very determined to do this process yourself, especially if you have a lot of collections. If it’s just one or two, I would recommend just doing this process yourself and not paying a company. If it’s more than that, and you see there are other mistakes on your credit (like an incorrectly reported late payment) than I have found it costs me just as much money (and no time at all) to hire a company to do it for me. The one I work with is Sky Blue. They are the highest rated credit dispute company on the market and they are very affordable. I believe it’s $35 a person, per month and they do an excellent job. They will also tell you, without taking a single dime, whether they will be beneficial to you. If they can’t do anything for your credit, they won’t even attempt it and just take your money. Their website is (I am not compensated for my opinions of Sky Blue, I am just a happy customer.) The reason I say that it’s better to let a professional handle it is because you have to send several requests in writing, certified and return receipt, which cost about $5 or $6 bucks each time, so, you do the math.
There are several reasons you need a debt to be validated. For one thing, if you really aren’t sure if this debt belongs to you, a validation letter can prove that to you. A validation letter also should clarify the owner of the debt. In our current economic climate, debt is a valuable commodity. Your debt can be sold to companies several times before you actually pay it off. If you have a debt with AT&T for a phone bill, but ABC Collectors comes along and says they are collecting the debt for AT&T, how do you know that they are legally able to collect the debt?
Here is a good example. You borrow money from a friend, Jane Doe. You know you owe money to Jane Doe, but John Smith comes along one day and says, “Jane told me you owe her $10 and I am here to collect it.” Would you hand over $10 to him without speaking with Jane first? Of course not. This is the same with a collector. People have been really angry because I won’t just hand over my money to them when they call me. I am like, “You could be anyone off the street. I need to know who you are and that you are legally able to collect this debt.” Usually when I tell a collector that I am more than willing to pay my debts, but I am not just going to hand over my money to any and everyone who calls me up and asks for it, they are understanding and will send me the validation I am after. If a collector refuses to provide you something in writing, that should be a red flag, as most collectors know that when you ask for it, they are supposed to send it. And furthermore, they are not allowed to continue collecting on it until they have provided you the proof you were seeking. If they refuse to send you something in writing, you need ask them to stop contacting you until they can. They are required, by law, to stop the collection calls if you ask them to. If they continue to call you, send a cease and desist letter. At this point, you might want to look and see if you can find an attorney that would represent you in a case involving harassing collectors and have the collector deal with the attorney directly. There are lots of attorneys out there who are more than willing to prosecute violating collectors and most will do it at no charge to you.
The main thing with a validation is that I don’t want to have to pay a debt twice because I didn’t pay the right person the first time, so I always ask for them to send me one, even if I know I owe the debt, just to make sure all of the rules are being followed on their end.

Another reason to validate your debt is to make sure the statute of limitations on your debt has not run out. Sometimes, you are not legally required to pay on a debt if a certain amount of time has passed, but make sure to check the laws in your states specifically. I have not run into this, but you might.
So, at this point, they’ve sent you a validation letter, you know the debt belongs to you, and you are ready to get it paid. What now?


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