There are a lot of blogs discussing how to settle debt, but once your debt settlement is finalized, many consumers are not sure how they should actually pay the creditor or collector. It is not as simple as you might think. You want to be smart about the type of financial information you provide a debt collector because they will use it against you if it is in their best interests. Consider the following:
Draft From Your Bank Account/ACH/Debit Cards
Although it is convenient to have a collector withdraw the payments directly from your checking account and it usually doesn’t cost you anything, there is risk in providing your bank account information to a debt collector. Once you have given permission to auto-debit your account, it opens the door to misuse. The collector may “accidentally” debit your account incorrectly or withdraw funds when you do not have enough money in the account to cover it, which can lead to overdraft fees. Finally, it may be difficult to stop the withdrawals. If you want to use the method of payment, consider opening a separate account dedicated to paying the collector. This will allow you to keep the rest of your funds separate from the account the creditor has access to.
Paying by check is relatively simple and inexpensive. Your cancelled check also provides you with proof of payment. However, it is not a fast method of payment and it provides the collector with your checking account information. Thus, it may be smarter to use your financial institution’s online bill pay service. This allows your bank to send a check that provides the collector with guaranteed funds, but your personal banking information is not provided to the collector.
Many debt collectors will not accept a credit card payment. Additionally, it does not eliminate your debt to pay with a credit card. Rather, it changes the debt to credit card debt, with new interest rates and fees.
A prepaid card allows you to load money onto the card and then spend that money like you would with a credit card. However, the issuer of the prepaid card will charge fees which may be worth it in order to protect your personal financial information from the collector.
Take the first step to resolving your debt problems today by contacting us for a FREE initial consultation. The attorneys at Fitzgerald Campbell represent debtors all over the State of California in debt settlement, collections harassment and credit card lawsuits. If you have a matter relating to a debt you owe, contact us today by calling (844) 431-3851 for a consultation.