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Settling Debt with Portfolio Recovery Associates
If you’ve received a letter or lawsuit from Portfolio Recovery Associates (PRA), you may be wondering how to resolve this debt. PRA is one of the largest debt buyers in the U.S., purchasing defaulted debts like credit cards or medical bills for pennies on the dollar. They then try to collect the full amount from consumers.We understand this can be a stressful situation. But there are options for settling your PRA debt so you can move on financially. This article will explain how PRA operates, your defense options, and how to negotiate a settlement.
Who is Portfolio Recovery Associates?
PRA purchases charged-off debts from original creditors like banks or hospitals. The company buys these delinquent accounts for much less than face value – usually around 20 cents on the dollar. PRA then tries to collect the full balance from consumers through letters, calls, and lawsuits.PRA is based in Norfolk, Virginia and is a subsidiary of PRA Group, Inc. (Nasdaq: PRAA). PRA Group reported $183 million in net income for 2021. So PRA has the resources and motivation to pursue debts vigorously.
Responding to PRA’s Collection Attempts
If you receive a letter or call from PRA, don’t panic. First, request debt validation within 30 days. This requires PRA to verify details like:
- Original creditor
- Date of default
- Amount owed
- Proof you actually owe the debt
Review the information closely for accuracy. Do the dates and balances match your records? Is it past the statute of limitations for debt collection in your state?If PRA can’t validate the debt, they must cease collection activities. You can also dispute inaccurate details with the credit bureaus to protect your credit report rights.
Options for Settling PRA Debt Lawsuits
If PRA sues you over an unpaid debt, you have three main options:
- Negotiate a settlement – Pay a lump sum that is less than the amount owed.
- Payment plan – Set up monthly payments with PRA.
- Contest the lawsuit – File an Answer and defend yourself in court.
Settling directly with PRA generally saves you money compared to losing in court. But don’t let PRA rush you into a decision. Consider all your options and the long-term impacts.
How to Negotiate a Settlement with PRA
Settling your debt requires strategic negotiating. Follow these steps when working with PRA:
Respond to the Lawsuit First
Even if you want to settle, file an Answer with the court to avoid a default judgment. This preserves your right to defend yourself if talks with PRA fall through.
Make a Reasonable Settlement Offer
PRA typically settles pre-lawsuit for 80-90% of the debt amount. But once sued, aim for 40-60% or less of the total. Explain your financial hardship if you can only afford a lower percentage.
Get Agreement Terms in Writing
Before paying anything, get written confirmation from PRA that your lump sum settles the debt in full. Make sure PRA agrees to file for dismissal of the lawsuit.
Strictly Follow Settlement Terms
Carefully abide by all due dates and payment amounts in the agreement. If PRA reneges on the deal, your written contract will support your defense.
What to Avoid When Settling with PRA
While negotiating with PRA, beware of these common pitfalls:
- Settling without written terms
- Letting PRA rush you into a decision
- Providing bank account access
- Missing settlement payment deadlines
- Settling without dismissing the lawsuit first
These mistakes can allow PRA to continue collections or sue you again despite the settlement.
Getting Help Settling Your PRA Debt
Settling directly with PRA can be intimidating. An experienced debt settlement service can negotiate with PRA on your behalf. They assist with:
- Responding to the lawsuit properly
- Gathering documentation about your finances
- Making well-timed, reasonable settlement offers
- Finalizing agreement terms in writing
- Ensuring the lawsuit gets dismissed
This saves you time and stress. And working with professionals often leads to better settlement terms compared to negotiating alone.
What Happens After Settling with PRA?
Once you settle your account with PRA, they are legally barred from further attempts to collect on that debt. The account will show as settled for less than the full balance on your credit report. This is better than an unpaid collection.Settling your PRA debt gives you a fresh start. Now you can focus on rebuilding credit and achieving your financial goals. But be sure to learn from this experience. Use budgeting tools and credit monitoring to avoid delinquencies in the future.
Frequently Asked Questions About PRA Settlements
How much can I settle my PRA debt for?
There are no fixed settlement percentages with PRA. Typically, 40-60% of the total debt amount is reasonable if PRA has filed a lawsuit. The key is negotiating the lowest possible lump sum you can afford.
Should I settle with PRA or keep fighting in court?
There are good reasons to settle or defend in court. Settling is usually faster and costs less than litigation. But if you have a strong defense, like PRA exceeding the statute of limitations, you may get a better outcome by seeing the lawsuit through.
What should I do if PRA won’t negotiate a reasonable settlement?
If you make a solid offer but PRA won’t budge, reiterate your financial hardship and that it’s in their best interest to settle. If they still refuse, you may have to defend yourself in court rather than settle.
What happens if I default on a PRA settlement agreement?
Defaulting gives PRA the right to continue collections and pursue the full debt amount. Avoid this by only settling what you can realistically afford to pay. Dealing with PRA can be intimidating and stressful. But you have options, including negotiating a settlement, defending the lawsuit, or utilizing a debt settlement service. With the right approach, you can resolve your PRA debt and move forward. The most important thing is not ignoring the lawsuit and working to resolve it as quickly as possible.