How to Settle Debt with Portfolio Recovery Associates (PRA Group)

Portfolio Recovery Associates (PRA Group) didn't issue your original credit card or loan. They bought your debt for pennies on the dollar after your creditor gave up collecting. That business model is why you can often settle for 30-50% of what they claim you owe.

The company files over 100,000 lawsuits yearly. If you've received a letter or been served, you have leverage—but only if you act before default judgment. Here's how to negotiate a settlement that works.

Verify the Debt First (You Have 30 Days)

Portfolio Recovery must prove they own your debt and that the amount is accurate. They buy accounts in bulk, and errors happen constantly. You have 30 days from their first written notice to request validation.

Send a debt validation letter via certified mail. Demand:

• A copy of the original creditor's contract bearing your signature
• Account statements showing the balance calculation
• Proof that Portfolio Recovery owns the debt (assignment agreement)
• Their debt collector license number for your state
• The date of your last payment or account activity

If they can't provide this documentation, they cannot legally collect. Many debt buyers lack complete records for older accounts.

Check If the Debt Is Too Old to Sue Over

Every state sets a statute of limitations on debt collection lawsuits,typically 3 to 6 years. If your last payment was beyond that window, Portfolio Recovery can't win in court even if the debt is valid. They'll still try to collect, but you have an absolute defense if sued.

Look up your state's limit at your state attorney general's website. Calculate from your last payment date, not when the account first went delinquent.

How Much Portfolio Recovery Will Accept

Portfolio Recovery buys charged-off debt for 2-8 cents per dollar of face value. A $5,000 credit card debt cost them maybe $250. That's your negotiating room.

Typical settlement ranges:

• 30-40% if you can pay a lump sum immediately
• 50-60% if you need a payment plan over 3-6 months
• 70-80% if they've already filed a lawsuit

Start lower than you're willing to pay. Offer 25% for a lump sum. They'll counter at 50-60%. Meet in the middle around 35-40% if you can pay within 30 days.

Never Make a Payment Without a Written Agreement

Debt collectors will promise anything on the phone to get a payment. Once you pay, they'll claim you agreed to the full balance and demand the rest.

Before you send money, get a settlement agreement in writing that states:

• The settlement amount you'll pay
• That this payment resolves the entire debt
• They will report the account as "paid in settlement" to credit bureaus
• They will not resell any remaining balance
• A payment due date

If they refuse to send written terms, do not pay. Legitimate collectors will always document settlements.

How to Negotiate Your Settlement Offer

Portfolio Recovery trains collectors to extract maximum payment. You need a strategy.

Step 1: Gather Your Financial Reality

Calculate what you can actually afford as a lump sum or in monthly payments. Be honest about your budget. If you offer $1,500 and can't pay it, you'll restart the whole process.

Step 2: Make Your Initial Offer in Writing

Send a settlement offer letter via certified mail. State:

"I dispute the full amount but am willing to resolve this matter. I can pay [X amount, typically 25-30% of the claimed balance] as a lump sum within 30 days if you provide a written settlement agreement releasing me from all further obligation on this account."

Include a sentence about financial hardship if true. "I am currently [unemployed/on disability/supporting dependents] and cannot pay the full claimed amount."

Step 3: Wait for Their Counteroffer

They'll likely reject your first offer and counter at 60-70%. This is normal. You now know their range.

Step 4: Split the Difference

Come up halfway between your offer and theirs. If you offered 30% and they countered at 60%, propose 45%. Emphasize that this is your maximum and you need the agreement within 7 days or you'll withdraw the offer.

Deadlines push collectors to take deals they'd otherwise sit on.

What Happens If You're Already Being Sued

Portfolio Recovery filed a lawsuit before you could negotiate. You have two immediate tasks:

1. Respond to the lawsuit by the deadline (typically 20-30 days from service). File an Answer with the court disputing their claims. Use our bankruptcy screener to see if you qualify for protection that stops the suit entirely.
2. Negotiate while the case is pending. Portfolio Recovery prefers settlement over court. They win most cases by default because defendants don't show up. If you respond and appear willing to fight, they'll often settle for less than the claimed balance plus their attorney fees.

If you can settle after being sued, insist the agreement includes dismissal of the lawsuit with prejudice (meaning they can't refile). Get this in writing before you pay.

Portfolio Recovery's Collection Tactics (What to Expect)

Portfolio Recovery operates within the Fair Debt Collection Practices Act (FDCPA), but they push boundaries. Expect:

• Daily phone calls from different numbers and collectors
• Calls to your workplace until you tell them to stop
• Threats of legal action that may or may not materialize
• Time-limited settlement offers that expire and then reappear

You can stop all phone contact by sending a cease communication letter demanding they only contact you in writing. This removes the pressure to make verbal agreements you'll regret.

Recording Your Interactions

If you live in a one-party consent state (35 states allow this), record all phone calls with Portfolio Recovery. Tell them at the start of the call. If they violate the FDCPA,threaten jail, harass you, misrepresent the debt,you have evidence for a counterclaim worth up to $1,000 in statutory damages.

Will Settling Hurt Your Credit?

Portfolio Recovery already reported your account as a collection or charge-off. That damage is done. Settling updates the account status to "paid settlement" or "paid for less than full balance."

This is better than an unpaid collection but worse than "paid in full." The collection entry remains on your credit report for seven years from the original delinquency date with your original creditor,not from when Portfolio Recovery bought the debt.

Settling stops the damage from spreading. An unpaid collection invites a lawsuit and potential wage garnishment. A settled collection closes the account and prevents further legal action.

When Bankruptcy Makes More Sense Than Settling

If you owe Portfolio Recovery plus multiple other creditors, settling one account may not solve your problem. Consider filing bankruptcy if:

• Your total unsecured debt exceeds $10,000
• Multiple creditors are threatening lawsuits
• You're already facing wage garnishment
• You cannot afford settlement payments on all accounts

Chapter 7 bankruptcy eliminates most unsecured debt in 3-4 months. Portfolio Recovery cannot collect once you file, and their debt disappears at discharge. Check if you qualify before negotiating settlements you may not need.

After You Settle: Protect Yourself

Once Portfolio Recovery accepts your settlement payment:

1. Keep every document. Save the settlement agreement, your payment confirmation, and any email correspondence. If they resell the remaining balance or misreport to credit bureaus, you'll need proof.
2. Check your credit report in 60 days. Confirm the account shows as settled and the balance is updated. Dispute any errors immediately through the credit bureau.
3. Watch for resale attempts. Debt buyers occasionally sell settled accounts to other collectors by mistake. If a new collector contacts you about this debt, send them a copy of your settlement agreement and a cease communication letter.

The Bottom Line

Portfolio Recovery bought your debt cheap and will accept far less than the full balance to close the account. Validate the debt, offer 25-35% as a lump sum, and get everything in writing before you pay a dollar. If they've already sued you, respond to the lawsuit and negotiate from there. The worst move is ignoring them until a default judgment gives them access to your wages.