Ask an Expert: How Do I Pay the Right Debt Collector?

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By Bruce McClary | Friday April 16th, 2021

The NFCC often receives readers questions asking us what they should do in their money situation. We pick some to share that others could be asking themselves and hope to help many in sharing these answers. If you have a question, please submit it on our Ask an Expert page here.

This week’s question: All my debt has gone to collections. The collections change hands from time to time. How do I make arrangements with the right people to pay my debt and improve my credit score?

It’s very common for debts to be sold multiple times to different debt collectors. It’s a practice highly inconvenient for debtors attempting to pay off what they owe. But, if you are ready to pay off your debts, you could identify your collectors in two ways. One way is to wait for the collector to contact you and ask for a debt validation letter. And the other is to review your credit reports to determine who is the collector reporting your debt.

Request debt verification letters

Federal law gives you the right to request the debt collector to prove that you owe the debt. When you first establish contact, ask the collector to communicate with you in writing and send you a debt validation letter. The collector should send it to you within five days of your conversation. If they don’t, send your request in writing within 30 days of the first contact. The letter sent by the debt collector should include details about how much you owe, the identity of the original creditor, and what to do if you don’t owe the debt.

If the collector cannot provide this letter or refuses to mail you one, most likely, they are not the current owners of the debt. Moreover, they should stop collection immediately.

Review your credit report

Another way to verify who owns your debt is to review your credit reports. Most debt collectors report your debts on your credit reports once they own them. So you can expect to find the original creditor, listing your account as charged-off, and the current debt collector. Once you have the collector’s name, get their address online and request a debt verification letter. If you have multiple collectors for the same debt, initiate a dispute with the credit bureaus to delete duplicate accounts. You can easily dispute incorrect information initiating a dispute with each credit bureau where you found the mistakes.

Paying the right collector

When paying the right collector, never pay with a personal check or any payment method that gives them access to your accounts or personal information. As an alternative, you can send them a money order or cashier’s check. These are relatively affordable options and allow you to communicate via certified mail with a return receipt to keep proof of delivery. Keep detailed documentation of all letters and payments, and ask all creditors to send you proof of payment. Then, review your credit reports to ensure they show your debts as paid.

Paying off your collections is a good start to rebuild your credit and increase your score. However, it is not enough. You need a strategy based on your current situation. In very general terms, a good score comes from paying on time, keeping balances low, and getting new credit sparingly. If you think you need additional help to pay off your debts and rebuild your credit, don’t hesitate to contact and an NFCC Certified Financial Counselor. They can help you understand the collection process and develop a  personalized strategy to boost your score in time. Counselors are available over the phone and online. Good luck!


Michigan license number:   DM-0016282 Available to the public and licensed in Michigan.

Section 13(1)  When a licensee establishes a debt management plan for a debtor, the licensee may charge and receive an initial fee of $50.00

Section 13(2)  A licensee shall attempt to obtain consent to participate in a debt management plan from at least 51%, in number or dollar amount, of the debtor’s creditors within 90 days after establishing the debt management plan. If the required consent is not actually received by the licensee, the licensee shall provide notice to the debtor of the lack of required consent and the debtor may, at its option, close the account. If the debtor decides to close the account, any unexpended funds shall be returned to the debtor or disbursed as directed by the debtor.

Sec. 14. (1) A contract between a licensee and debtor shall include all of the following:

(a) Each creditor to which payments will be made and the amount owed each creditor. A licensee may rely on records of the debtor and other information available to it to determine the amount owed to a creditor.

(b) The total amount of the licensee’s charges.

(c) The beginning and termination dates of the contract.

(d) The principal amount and approximate interest charges of the debtor’s obligations to be paid under the debt management plan.

(e) The name and address of the licensee and of the debtor.

(f) Any other provisions or disclosures that the director determines are necessary for the protection of the debtor and the proper conduct of business by a licensee.

Sec. 18. (1) In addition to the fee described in section 13(1), a licensee may charge a reasonable fee for providing debt management services under a debt management plan. The fee under this subsection shall not exceed 15% of the amount of the debt to be liquidated during the express term of the plan.

(2) A licensee may offer a debtor the option to purchase credit reports or educational materials and products, and charge a fee to the debtor if the debtor elects to purchase any of those items from the licensee.  Fees charged under this subsection are not subject to the 15% limitation on fees described in subsection (1).

(3) Except for a cancellation described in subsection (4), in the event of cancellation of or default in the performance of the contract by the debtor before its successful completion, a licensee may collect $25.00 in addition to any fees and charges of the licensee previously received by the licensee. This $25.00 fee is not subject to the 15% limitation on fees and charges under subsection (1).

(4) A contract is in effect when it is signed by the licensee and the debtor and the debtor has made a payment of any amount to the licensee. The debtor has the right to cancel the contract until 12 midnight of the third business day after the first day the contract is in effect by delivering written notice of cancellation to the licensee. A cancellation described in this section is not subject to, and a licensee shall not collect, the fee described in subsection (3).

(5) If a debtor fails to make a payment of any amount to a licensee within 60 days after the date a payment is due under a contract, the licensee may, in its discretion, cancel the debt management contract if it determines that the plan is no longer suitable for the debtor, the debtor fails to affirmatively communicate to the licensee the debtor’s desire to continue the plan, or the creditors of the debtor refuse to continue accepting payments under the plan.

(6) A licensee shall not contract for, receive, or charge a debtor an amount greater than authorized by this act. A person that violates this subsection, except as the result of an inadvertent clerical or computer error, shall return to the debtor the amount of the payments received from or on behalf of the debtor and not distributed to creditors, and, as a penalty, an amount equal to the amount overcharged.

530 W Allegan Street, 7th Floor
Lansing, MI  48909-7720

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