So, what is your best bet once the credit company does a write off on your debt? Do you arrange to make payments with the collection agency or do nothing for the next 7 years or what?
Get the exact amount to pay it off in writing from the company or collection agency. Get a cashier’s check from your bank or a postal money order (both are traceable). Send a copy of the letter and your check to each of the credit bureaus so the debt can be marked as PAID on your credit report. Mail everything PRIORITY MAIL with a SIGNATURE REQUIRED. Documentation is the key.
what if you can’t afford to make the full payment? Should you set up payments with the collection agency? Isn’t a personal check “traceable” as well once it is cashed? With all the other precautions (and others have mentioned sending it registered mail), a personal check is cheaper as there is an additional charge for money orders and cashier checks.
Yes it is. However, you don’t have to wait for a cashier’s check to “clear” like you do with a personal check before you get credit for it from the creditor. It is just like “cash”. No waiting for it to clear. A personal check can bounce (if the check writer buggers up their checkbook), while a cashier’s check or a money order cannot, unless – I guess – the bank goes under while the check is in transit.
My bank will give me some small number of cashier’s checks per month for free, and charges a little bit after that. I think I’ve gotten one in the last decade.