How to Satisfy Your Collection Agency

How to Satisfy Your Collection Agency


When a collection agency contacts your business about funds owed, its means business. By the time a collection agency becomes involved in the collection process, you already may have received multiple requests from your creditor to make good on what you owe. By responding promptly to a payment demand, you can avoid embarrassment and possible legal action. You may also be able to preserve the credit your small business has achieved if you handle the matter with care.

How to settle with a collection agency.

Your Debt?

The first step is to verify that the debt is yours. You have received notice from a collection agency that you owe money, but is that claim legitimate? If the claim has veracity, is the amount reported as being owed correct?

If the debt is yours, be prepared to respond to the collection effort. If not, you may need to prove that the debt does not belong to your business. Ask the collection agency to provide written documentation of what you owe.

Detailed Notes

Once notified by a collection agency, you will want to document everything. All calls, letters, emails and other interaction must be tracked. Because you may be dealing with more than one person, obtain each person’s name, title and contact information.

Submit a settlement offer with the collection agency. If you are unable to pay the entire debt, negotiate a reduced dollar amount to settle the collection claim. The collection agency may have obtained your debt from your creditor paying them just pennies on the dollar for the right to collect what you owe. At this point, your business credit has already been adversely affected, but you may still have leverage with the collection agency to reduce the amount owed.

Make Payment

If the collection agency agrees, in writing, to accept your negotiated settlement, prepare to make payment on that amount. You may be able to pay the settled amount all at once or be given several months to make payments. Once your final payment has been made, have the collection agency issue you a letter stating that the debt has been paid in full.

Obtain copies of your business credit reports. After the debt has been settled and paid, obtain a copy of your business credit reports to verify that the debt has been reported as being paid off. Your credit reports will reflect that your debt went to collections, but it should also show that the debt has been paid. If the reports have not been updated, supply the credit reporting bureaus with proof that the debt has been settled.

One point to remember: Record of any collection procedure will stay on your business credit report for several years.


All Business: Can I Settle For Less Than I’m Owed?

Consumer Reports: How to Settle Your Credit Card Debt for Much Less

Gaebler: Business Debt Collection

NOLO: When You Can’t Pay Your Business Debts: Personal Liability and Bankruptcy Options


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Categories: Business Services

About Author

Matthew C. Keegan

Matt Keegan is a freelance writer and editor as well as publisher of "Matt's Musings", his personal blog. Matt covers campus, consumer, business and financial topics on various websites and blogs, and has been published in the "Houston Chronicle", "Sam's Club Magazine" and "Wisconsin Golfer".