What to do if the creditor will not provide you a valid settlement letter

If you have asked the creditor to send you a new, valid Settlement Letter and they refuse, you do have some options it is common not to know what to do next.  Here we will discuss if you should pass up the settlement at this time or if you should accept the settlement without a valid letter.

Pass up the Settlement at this time:  There are critical reasons why UGotiate recommends making sure your settlement letter contains valid information such as the due date, settlement amount, account number, and language indicating the settlement amount will resolve the account in full.  Having all of this information on the settlement letter is for your protection.  Most creditors include this information on their letter as a default, but if they don’t it is all information they should have easy access to.  So, if a creditor absolutely refuses to put one or more of the recommended items on your letter, something may not be right and it may be best to pass up this offer at this time.  It is likely the account will move to a new Collection Agency at some point and you can start another offer when that happens.   If you choose to pass up this offer at this time, you can use the funds from this offer to move on to another creditor.

Accept Settlement without Valid Letter:  While it is always best to refrain from paying a settlement without a valid settlement letter, in some cases a person may choose to accept a settlement without a valid letter.  Some people take the risk because the offer outweighs the risk for them.  For example, if the settlement amount is extremely low (less than 15%) than it may be worth it to take the deal even if the letter is missing one of the recommended required items, like an account number.  You need to weigh this carefully before making a decision.  For example, if the settlement letter is missing the due date or settlement amount, it is more of a risk to pay this than if the letter is just missing the account number.  Say the letter is missing the settlement amount, how can you ever prove that the amount you sent was the actual settlement amount and not just a payment on your account should something come up in the future indicating that the account is not settled in full?  If the creditor comes back looking for more money, you need to be able to prove that you do not owe the remainder of the balance. 

While paying on a settlement without a valid letter can be risky, there are ways to protect yourself.    If the creditor refuses to provide the recommended required information on a letter, you could ask them to verbally state all of the required information during a recorded phone call with you.  Then you need to keep that recording along with your settlement letter in your files for the next 7 years.  Also, when making out the check for the settlement payment, make sure to write in the memo field something like “payment is for settlement in full”.  You should keep a copy of the cashed check with your records for 7 years as well.  And the last way to protect yourself is to call the Creditor after the settlement check has cleared to request a Settled in Full Letter.  A Settled in Full Letter indicates that your account is now paid and resolved in full.  To read move about Settled in Full Letters, you should read:  ‘Calling a creditor to request a Settled in Full Letter'.