Before Sending Payment, Get an Official Debt Settlement Offer Letter

If you’re doing your own debt settlements, one of the most important steps is confirming the settlement offer. Once you get the creditor to agree to a debt settlement, you should get an official agreement from the company before you make payment. If you make a payment without having such a letter, things could go wrong. Worst of all, the company could continue to ask you to send payment claiming they didn’t make a settlement agreement. Before you make payment, get a settlement letter from the company that includes specific information.

What Your Settlement Letter Should Include

1. The letter should be on company letterhead, regardless of whether you’re dealing with a collection agency or the original creditor. This company letterhead helps make the settlement offer official and helps show the offer came from someone within the company.
2. The letter should include a date so you know when the settlement offer was made.
3. Make sure the correct account number is listed on the debt settlement letter. This is especially true if you have multiple accounts with the same company. If you’re dealing with a collection agency, ask them to list both the original account number with the original creditor and the internal control number or account number used by the collection agency.
4. There should be some type of wording to say that your account will be updated as settled or settled in full. The amount of the settlement payment should be listed. Make sure the settlement amount included in the letter is the same settlement amount you agreed to. If the amount is spelled out, it should be spelled correctly. Any error with the settlement amount could come back to haunt you.
5. Make sure the settlement payment due date is listed and spelled correctly. It should be the date that you agreed to.
6. Fax or mailed copies of the official settlement letter are both acceptable as long as they at least include the information listed above.

Making Your Settlement Payment

Once you have the official settlement letter and you’ve confirmed the information contained in the letter is correct, you can make payment. A money order or certified check are the best payment options. Be careful about writing a check or giving your checking account number to a collection agency because they have been known to withdraw more than the required amount. Send the agreed payment amount by the due date to hold up your end of the bargain.

Double Check Your Credit Report

After about 30 days, check your credit report to confirm the settlement has been updated. Your account balance for that account should display $0. The status may display “Settled” or “Settled in full.” If that’s not the case, you should contact the creditor or debt collector to confirm the settlement was received and that your credit report will be updated.

If both an original debt and debt collection are listed for a single debt, they should both have a $0 balance. You may have to contact the original creditor with proof of payment to have the account updated. You can also use the credit report dispute process to have the credit bureau investigate the account.

About LaToya Irby

LaToya Irby is an expert blogger in personal finance. She is passionate about helping others understand the value of good credit and debt management. LaToya has experience working as a collection specialist in the financial services industry.