Setting Up a Payment Arrangement
Submitting a payment arrangement depends on the debt collector’s assessment. Acceptance of the payment arrangement will depend on the collection agency, the debt, the amount you propose to pay, and sometimes the length of time the collector has for the debt.
Note: The more you can pay and are able to settle the debt sooner, the more likely the debt collector will accept your request for a payment arrangement. Debt collectors may be hesitant to accept a payment arrangement that extends for more than a few months.
Typically, debt collectors hold onto debts for up to six months, so you will be more successful in setting up a payment arrangement in the first or second month after the collector contacts you, especially if you can pay off the account quickly. On the other hand, if you wait a few months before proposing a payment arrangement, the collector might refuse or demand a higher amount as they will soon lose the account.
Payment Arrangement and Statute of Limitations
Before making any payment or payment arrangement, or even confirming your debt, make sure that the statute of limitations for the debt claim has not expired. This is the period during which the debt can be legally enforced, which limits the debt collector’s ability to sue you. This time frame varies from state to state and is usually between three to six years, but it can extend up to 15 years.
A payment arrangement on the debt may restart the statute of limitations, lengthening the time frame during which the debt collector can sue you. Since you are interested in settling the debt, you may not mind that the statute of limitations for the debt claim is starting over.
Note: A payment arrangement does not restart the credit reporting time frame. This period is seven years from the date of the account’s delinquency, regardless of whether you made a payment or not.
Proposing a Payment Arrangement
Before proposing a payment arrangement, ensure that the debt is yours. You can write a letter to the debt collector requesting verification of the amount owed. If you are satisfied with the verification and ready to proceed, the next step is to determine the amount you can afford to pay.
Review your budget and upcoming expenses to calculate how much you can afford to repay the debt monthly. Don’t let the debt collector pressure you into paying more than you can afford. Once you reach an agreement with the debt collector, continue making payments according to the established schedule. If you miss a payment, collection actions can resume.
When a Debt Collector Doesn’t Accept
If the debt collector does not accept your payment arrangement, your options are limited. You can save enough money to pay off the debt in a lump sum. Start saving money monthly – as much as you would have paid if you had a payment arrangement – until you have enough to settle the account in full. Keep in mind that during this time, the debt collector will continue their attempts to collect the amount from you, which may include suing you.
Paying off the account using a credit card, a mortgage loan, or a debt consolidation loan is another option, especially if it becomes necessary to address the balance. While you technically have the debt, you have the option to make smaller monthly payments until the account is settled.
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Sources:
– Federal Trade Commission. “Time-Barred Debt.”
– Consumer Financial Protection Bureau. “What If I Believe I Do Not Owe the Debt or I Want More Information About the Debt?”
Source: https://www.thebalancemoney.com/can-i-make-payment-arrangements-on-a-debt-collection-960575
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