How to Settle Debt with Portfolio Recovery

Edited by Hannah Locklear

If you’ve recently received a letter from Portfolio Recovery Associates, LLC, you may wonder who the company is. This letter probably means that you owe money for an unpaid debt with an old creditor. Since you likely never heard of Portfolio Recovery before receiving the letter, why would you owe it money?

Portfolio Recovery Associates is a debt collector that purchases overdue consumer and business debts, including credit cards, medical debt, and other types of loans. Once it receives your account from a creditor, it will begin contacting you to set up a payment arrangement.

Currently, Portfolio Recovery Associates has an A+ rating on BBB. However, customer reviews tell a different story. The company has a 1.24 (out of 5 stars) rating with clients and nearly two thousand complaints within the past three years. Many of the complaints relate to harassing calls and inaccurate credit reporting.

If one of your prior creditors sells your account to Portfolio Recovery, you’ll want to take action to prevent matters from getting worse.

Do not ignore communication from Portfolio Recovery

It’s best not to ignore communications from debt collectors. When you first receive a notice that Portfolio Recovery is seeking to recover money from you, ask for a validation of the debt. Under federal regulations, you have up to 30 days to request that Portfolio Recovery provides the information that confirms you owe the debt.

Validating the debt confirms that the company has full ownership of your obligation. You can also make other requests of Portfolio Recovery that can be beneficial if you intend to fight the claim.

You can request a formal debt validation by sending a Debt Validation Letter. When writing your letter, include the following:

• A request to notify the credit bureaus that you dispute the debt
• Proof you owe the debt, such as copies of contracts or account statements
• Approximate age of the debt and the last action you took on the account
• Debt collector’s license number
• Determination of whether the statute of limitations expired

You may also threaten legal action against Portfolio Recovery, especially if it doesn’t comply with the collection rules set forth by the FDCPA.

Should I pay Portfolio Recovery if I owe the debt?

By the time Portfolio Recovery purchases your debt, the obligation is likely pretty old. Your original creditor may have held the account for six months or longer before charging it off. If Portfolio Recovery validates your debt, you have several options.

You can set up a payment arrangement with the company, offer to settle the debt, or ignore the communication.

Under a payment arrangement, you agree to make regular payments to Portfolio Recovery until you pay off the obligation. In some cases, Portfolio Recovery may reduce the balance you owe by a certain percentage, allowing you to repay the debt more quickly. Depending on the amount you owe, it may take a few months to a few years to pay off the balance.

You can also attempt to settle the debt for a one-time payment. Under a settlement agreement, you offer a certain percentage of the total value of the debt, typically less than half of your obligation. In exchange for your payment, Portfolio Recovery agrees to free you from the remainder of your debt and will stop further collections activity.

Settling the debt allows you to pay less than what you owe while preventing further negative impacts on your credit report.

Ignoring Portfolio Recovery can buy you some time, but pay strict attention to the statute of limitations. If the statute of limitations on your debt hasn’t expired, the company may take legal action against you once you become unresponsive.

Portfolio Recovery is suing me to collect a debt. Can I still settle?

If Portfolio Recovery initiates a lawsuit against you, you’ll need to consider your actions very carefully. A settlement is possible, but you’ll want to follow specific steps. These include:

1. Respond to the lawsuit with an Answer before your state’s deadline.
2. Send a settlement offer to kick off negotiations.
3. Get the debt settlement agreement in writing.

Let’s take a closer look at each step. You can also watch this video to learn more:

1. Respond to the lawsuit

Your first step should be filing an Answer to the lawsuit. An Answer explains your side of the story and directly replies to the points listed in the Complaint (also known as a Petition in some states). Depending on your circumstances, you can deny responsibility for the debt, argue the obligation amount, or contest its jurisdiction.

Even if you intend to try to settle the debt before your court date, filing an Answer prevents Portfolio Recovery from obtaining a default judgment against you. You’ll still have your day in court if Portfolio Recovery isn’t willing to play fairly.

2. Send a settlement offer

Next, you’ll decide how much you can offer for a settlement. Review your savings and decide on a reasonable offer. Usually, 60% of the obligation is a good starting point. Remember that the other option is paying the total amount—a settlement can prevent this.

Before a lawsuit, Portfolio collectors will probably try to get you to pay 80-90% of the debt. That's because you're dealing with debt collectors who don't really have the authority to call the shots on the settlement, they're just trained to get the best deal possible for Portfolio Recovery.

However, once the matter escalates to a lawsuit, you're in a better position to work with Portfolio's legal department to reach a settlement. At this point, there's a much better chance you'll be able to negotiate a lower settlement, especially if you can demonstrate that you understand your rights as a consumer and you're willing to fight back in court.

Portfolio Recovery would rather take your money and move on than continue with a long, expensive, legal battle.

Start by sending a lower offer to Portfolio Recovery, giving yourself room to negotiate and settle for more if they don’t accept it. You can use the following prompt:

“I am offering Portfolio Recovery a lump-sum payment of $___ to settle the debt with case number ___. You can accept or counteroffer. If you accept, respond to this message with only ‘Accept.’ If you want to counteroffer, respond to this message with only ‘Counteroffer: $____.’ Please do not contact me in any way other than by responding to this email. I’m prepared to litigate this matter and win in court. I’m also prepared to file an FDCPA complaint. This offer expires in 6 days on MM/DD/YY. I will pay the agreed amount within 90 days of the settlement date.”

Wait to hear back from Portfolio Recovery. Your offer will catch the company’s attention, but it may need some time to determine whether your settlement offer is agreeable or if it will make a counteroffer.

If your finances are limited, explain your situation. Sometimes, debt collectors will grant you additional room for savings if they understand your current hardships. And like we said, Portfolio Recovery would probably prefer to settle for a portion of the debt than continue with legal fees.

3. Get the agreement in writing

Once you have an agreement with Portfolio Recovery, get it in writing. A written contract, including terms that indicate your settlement satisfies your remaining balance, can prevent you from future debt collection activities. You’ll want to abide by the terms of the agreement, so make your payment within the appropriate time frame.

Be very careful when providing your financial details to debt collectors. In some cases, they may attempt to use your account information to collect other debts you owe or to receive more money toward your obligation.

If you’re uncertain of the debt settlement process and want some qualified help settling your account with Portfolio Recovery, SoloSettle can help you navigate the debt settlement process from start to finish.

Now, let’s look at an example of how to settle a debt with Portfolio Recovery.

Use SoloSettle to settle your debt with Portfolio REcovery

SoloSettle, powered by SoloSuit, aims to empower you to negotiate and reach a debt settlement on your own.

SoloSettle makes negotiating a debt settlement easy by providing a structured process. Our software helps you send and receive offers from collectors. It will draft offers for you and protect you from the potential lies and bullying of debt collectors.

Most importantly, SoloSettle makes sure all of the proper legal language is included to protect your rights when communicating with the creditor or debt collector.

When a settlement agreement is reached, SoloSettle manages the settlement agreement documentation for you and protects your sensitive financial information from the collectors, preventing them from over-charging you.

The proof is in the pudding. Check out this review from a real SoloSettle customer:

“I'm very thankful for SoloSettle.. Having a third party negotiate the settlement was instrumental in resolving this case and saved me from two giant headaches: 1) I didn't have to deal with the plaintiff's lawyer and 2) I didn't have to go to court. I also love that the payment was processed through SoloSettle. I was nervous about sharing my personal financial data with the other side, but SoloSettle protected that for me. I hope I never get sued again, but if I do, I would use SoloSettle again in a heartbeat.

SoloSettle really saved me a ton of time and heartburn and kept me from having to be my own lawyer in court.”

What is SoloSuit?

SoloSuit makes it easy to fight debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)

How to answer a summons for debt collection in your state

Here's a list of guides for other states.

All 50 states.

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