The direct payment play is to make very small direct payments to the original creditor. It may be hard to believe, but you can often avoid paying your debt by paying too little, too late, to the wrong party!
Strange as it may seem, collection agencies and their clients are often at odds! Clients do not like to pay collection agencies their 40%-50% fees, and always feel that the collection agency is not contacting the debtors often enough to be effective. When a payment comes to the client, many clients simply cash the check, and don't tell the collection agency about the payment. This drives a wedge between the collection agency and the client and misleads the collection agency about the status of the debt.
Even when an agency and the creditor are working together, there can be serious problems with direct payments. One problem is that most accounts receivable systems don't have any provision for outside collections, and therefore make it hard or even impossible to automate the association of payments from debtors with collection agencies involved in the collection process. In one case I know of, a large company bought another large company, and along with the purchase, they of course, bought all the unpaid credits. One of the things that fell through the cracks was all of the collections efforts of the purchased company. After two years, the company still did not have a clear picture of their collectibles.
A good agency typically sends several letters, and if the debt is sufficient to warrant it, calls the debtor. The debtor might say all sorts of things, like ``I don't know what you're talking about'', or the ever popular ``I don't owe them that much, you had better get your facts straight before you make false claims against me.'' The agency should then call the creditor and ask for a clarification. Once the new balance is discovered, the agency can mark it as a direct payment and reduce the future payments to the creditor by the amount of the collection fee on the direct payment. The agency then sends a letter to the debtor updating the account and requesting future payments be sent to the agency instead of the original creditor.
The problem comes in that the debtor is not really paying off the debt, or in many cases, even the interest on the debt. The agency never has accurate records, and is at odds with the creditor. There are several solutions to this dilema.