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UNDERSTANDING COLLECTIONS
The job of collection agencies is to make you pay
unpaid debts. They can be relentless in their pursuit of
collecting monies owed, resulting in a great deal of
stress. However, you can eliminate some of this
aggravation and re-gain control of your issue by
learning what your rights are under the Fair Debt
Collection Act and educating yourself with some common
negotiation tricks.
We also suggest your
learn how accounts in collections affect your credit.
What are collection agencies?
A debt collection company will buy your debt from
your
original creditor for pennies on the dollar. They will
then make efforts to collect the debt you owe with
relentless phone calls and letters.
What kind of debts are purchased by bill collection
companies?
Types of debts purchased include but are not limited
to: cell phone bills, credit cards, and all types of loans,
as well as phone bills,
bills from gyms, video stores, cable companies, and
more.
What is the general procedure they will use for
collecting the debt?
They will contact you at either work at home via phone,
fax and or mail.
How should I handle a debt in collection that is not
mine?
Any letter received from a collection agency should
be addressed immediately. You will usually have thirty days
to respond before further action will be taken against
you, thus damaging your credit. If you determine that
the listed debt is not yours or has been paid, you
should contact the collector and the listed creditor to
and resolve the issue by explaining that the bill is not
yours or has been paid. You will likely have to provide
proof. A good idea would be to keep
records of all conversations you have with all parties
involved.
What kind of impact will an account in collections
have on my credit?
Debts in collection will be marked on your credit file.
They will remain on your file for seven years regardless
if you settle/pay the debt or not. Any information a
collection agency places on your credit file should be
examined carefully for errors and/or misinformation.
What are my rights when dealing with bill collectors?
You have rights that are protected under under the Fair
Debt Collection Act. You can demand that you are only
contacted by bill collecting companies via mail, and not
by phone. In fact, you can request that you are not
contacted at all (not a good idea unless the debt is
paid).
Collection companies are also not allowed to pretend
that they are one of the major credit bureaus. They are
also not allowed to threaten you. They can not tell you
that you owe more money than you really do, curse at you
or make threats.
Use this link to learn more about
your rights when dealing with collection companies.
What should I do if I am contacted by a collection
company asking for payment of a legitimate debt?
In most cases, you can negotiate with the bill
collectors. They will likely reduce the amount you owe
and eliminate interest rates. They may even waive late
fees. Once a payment agreement is made, you should pay
the debt in full and look to
rebuild your credit.
If you have other debts that are not in collection, you
need to make sure that you can afford to make keep these
payments current. You don't want to be in a situation
where you settle one outstanding debt, but can not
afford to pay your existing debt.
How do I negotiate with a collection company?
As mentioned, debt collectors will buy your debt
from your creditors for pennies on the dollar. This
gives them a great deal of flexibility in the amount
they can reduce your debt by. Always look to make an
offer that is very low. You will likely go back and
forth with them, similarly to negotiating the sale price
of a car. However, you can not walk away from this deal.
**It is very important that you obtain in writing the
terms of any negotiated deal in writing.
How can I avoid having my debt go to collections?
Bottom line, pay your bills on time. You should also
keep track of your bills. If you don't receive a bill
one month, that does not mean you don't have to pay it.
It probably got lost in the mail or misplaced by someone
in your family that takes the mail in.
 More
about
consumers rights under the Fair Debt Collection Act
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