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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

More Debt Related Articles:

-- Learn about do-it-yourself debt elimination.

-- Coping with a financial crisis is not easy. We offer some helpful tips that will make these stressful times easier for you and your family.

-- Getting a copy of your credit report will help you reduce the chance of misinformation being present that can hurt your credit score.


 

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