Can I Make Payment Arrangements on a Debt Collection?

Finance check-up
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Paying off a debt collection is beneficial to your finances in most cases. Not only will you stop debt collection calls, you take care of an outstanding debt on your credit report, and improve your chances of getting approved for future credit cards and loans.

While you might want to pay off your collection, your bank account may make it difficult. Sometimes debt collections are too large to pay all at once.

You may be able to split up the payments and pay off your collection account by making a payment arrangement with the collection agency.

Will the Debt Collector Accept a Payment Arrangement?

Debt collectors are not required to accept a payment arrangement. Whether the debt collector will accept a payment arrangement depends on the debt collector, the debt, the amount you're proposing to pay, and the amount of time the collector has had the debt.

The more you can pay and the sooner you can pay off the debt, the more likely it is that the collector will accept your request for a payment arrangement. Don't expect the collector to agree to a payment arrangement that spans more than a few months.

Debt collectors typically hold debts for about six months, so if you'll have more success making a payment arrangement in the first month or two after the collector contacts you. On the other hand, if you wait a few months before proposing a payment arrangement, the collector might refuse or push for a higher payment since it will be losing the account soon.

Payment Arrangements and the Statute of Limitations

Note that if you make a payment arrangement with a debt collector, it can restart the statute of limitations on the debt. The statute of limitations limits the amount of time the debt collector can sue you for the debt. This time limit varies by state and is usually between three and six years, but can be as long as 15 years.

But, since you're interested in paying off the debt, you may not mind that the statute of limitations is restarting.

Making a payment arrangement does not restart the credit reporting time limit. This is seven years from the date of the account's delinquency, regardless of whether you may a payment or not.

Proposing a Payment Arrangement

Before you suggest a payment arrangement, review your budget to figure out how much you can afford to repay each month. Don't let the collector push you into paying more than you can afford to. Once you've reached an agreement with the debt collector, keep up with the payments as scheduled. If you miss a payment, collection actions can resume.

If, however, the collector won't accept your payment arrangement, you have no choice but to pay in full. Start by putting aside money each month - as much as you would have paid if you had a payment arrangement - until you've saved up enough to pay the account in full. Keep in mind that in the meantime, the debt collector will continue its attempts to collect from you.