Portfolio Recovery Associates (PRA) is one of the largest debt collectors, and has been in business for 23 years. It is also a debt buyer. This means that it purchases portfolios of charged-off accounts from creditors and attempts to collect payment from the consumers who owe the debt. Debt buyers generally purchase delinquent accounts for pennies on the dollar of the debt value, and the purchase gives them the right to collect against valid debts in the portfolio.
There are numerous complaints against PRA with both Consumer Affairs and the Better Business Bureau, although it does receive an A+ rating from the BBB. In speaking with clients about their experiences with debt buyers, Michael Bovee, co-founder of Resolve, has found that PRA has been among the least approachable. This can make it challenging for consumers to work directly with PRA and is why they need to understand their rights and even consider seeking guidance on how best to respond to a collection letter.
If you’ve received a letter from PRA, your first step is to review the information it contains. Determine if it is correct (Is this your debt? Is the amount right?). Also check to see if the statute of limitations has expired. The statute of limitations is the period in which legal action can be taken against you to recoup outstanding debt. The statute of limitations varies by state, so check this chart to see your state’s time limit.
Once you’re clear about the details of the debt that the letter discusses, you can determine how best to respond, including:
- If the information is incomplete, incorrect or you want to ensure PRA has the documentation to back up its claim, you can send it a request to validate the information. It is wise to send this via certified mail, return receipt requested.
- Challenge the information if it is incorrect. Send a letter informing PRA of any misinformation that helps you establish you are not required to pay this debt.
- If the debt is outside the statute of limitations, you still have a responsibility to pay it, but the collection agency cannot threaten a lawsuit. It may encourage you to make a small payment against this debt, but watch out: By doing so, you could unwittingly restart the clock on the debt and open yourself to a lawsuit. It may be wise to seek legal counsel from a consumer law attorney to determine the best way to respond; many offer a free consultation.
- If this is your debt, the information in the collection letter is correct and the debt is still within the statute of limitations, you might consider negotiating a settlement to pay a percentage of the balance owed. Make sure you have the settlement agreement in writing from PRA and that it states the account will be considered paid in full or settled once the last payment for the negotiated amount posts. You can learn more about debt settlement here.
One policy that sets PRA apart from some other large debt buyers is the speed at which it requests removal of the account from consumer credit reports regardless of the age of the debt. Per the website, PRA contacts the credit bureaus to request removal of its account from your credit report about 30 days after your final payment posts. Cavalry Portfolio Services does this as well. Midland Credit Management waits until two years after the first delinquency date, although, unlike the other debt collectors, it provides a generous grace period before its first report to the credit bureaus. Whether you are dealing with your original creditor or a debt buyer such as PRA, much of your process is the same.
As you consider how to handle the debt now that it is with a new owner, you can use Resolve’s online platform to help you assess your options or contact Resolve experts to consult with you for free. Like many debt buyers, PRA actively pursues collections using the courts. If you are being sued by a collection law firm on behalf of PRA there are time sensitive issues you will likely want to address. Get started here.
Read our article “What is a Debt Buyer and Why Should I Care?” to learn more about this industry.