[ksaun]

20+ years ago, I was in a situation that, at this high level anyway, was similar to what you're describing. The collections agency had also put a black mark on my credit history. I don't recall the details, but to whatever extent I did contact the medical provider or the insurance company, they claimed to be unable to help me. (I no longer owed them money, afterall.) The amount I supposedly owed was some hundreds of dollars, not thousands.

After repeatedly failing to have any success communicating with the collections agency, I sent a letter to the Better Business Bureau about the situation. The collector stopped contacting me and my credit history was restored. I never spoke with a lawyer about it and don't know if my approach to addressing the problem was typical.

From my experience, I would suggest that you take the fight to the collector. They are the ones to whom you currently supposedly owe money. (I did not attempt to sue anyone, though, and maybe that detail, or others, would change the answer for your specific situation.)

[bityard]

> The collections agency had also put a black mark on my credit history.

This doesn't seem to be true. According to Experian, the original _creditor_ is the one that puts the black mark on your credit history when they sell your debt to a collections agency. (Typically for pennies on the dollar.)

> After repeatedly failing to have any success communicating with the collections agency, I sent a letter to the Better Business Bureau about the situation. The collector stopped contacting me and my credit history was restored. I never spoke with a lawyer about it and don't know if my approach to addressing the problem was typical.

At a guess, the collections agency might have decided it wasn't worth fighting you over it for a few hundred dollars and dropped your case to spend more time on larger targets. But I don't see how they (or the BBB) could have fixed your credit report, they don't have the power to do that.

> I would suggest that you take the fight to the collector.

I mean, you can try but you are unlikely to succeed. These people are (usually) skilled negotiators, they can't easily be outfoxed or convinced to be on your side. Their only goal is to get money from you. The dirty secret that the collections agencies don't want people to know is that nobody has any actual obligation to pay them. They buy bad debt and hope they can convince you to pay them. The ONLY leverage they have is the ability to guilt and intimidate. Some agencies engage in shady behavior (calling friends and neighbors, making threats). These behaviors are generally illegal, but the kind of people who fall that far into debt are generally not the kind of people who can afford to take legal action against a lawyered-up agency.

You never HAVE to pay a collections agency, and even if you do, the debt NEVER gets paid back to the original creditor, just the agency collecting it. Neither will paying them fix your credit report in any way.

If you have debt that was legitimately defaulted on and made its way all the way to a collections agency, the very best thing to do is not engage them. They will give up eventually. They _might_ try to help if the debt wound up in collections due to a creditor's mistake, but I wouldn't bet too much on it.

[ksaun]

> > The collections agency had also put a black mark on my credit history.

> This doesn't seem to be true.

Maybe the situation has changed over the past couple decades. (I don't recall which of the three credit reporting agencies this was with.) It was true for me back then. :)

In my case, the collector didn't initiate contact. I learned of the situation because I checked my credit report and then it was I who contacted them. I didn't know who they were or why they thought I owed them money. They tried to convince me to pay them, saying they'd remove the mark from my credit report after I did so.

I had believed the medical service (a couple years in the past at that time) had been completely covered by insurance and didn't know that anyone thought money was owed. I don't know where the original miscommunication/mistake had occurred. I only know that the collector dinged my credit report and that I had documentation showing that my insurance had addressed the original claim (paying the medical provider), which enabled me to challenge the collection agency's assertion.

(Thank you for the additional information and context you've added about collection agencies. I knew little about them outside of my direct experience with this one.)