Dealing with Debt Collectors
If a creditor cannot secure payment from an individual, the company may secure the services of a debt collector. Few things are as unnerving as a call from a debt collection agency, but before you panic, take a deep breath. You have a number of options.
Deal, Don’t Dodge
Let’s start with the one thing you shouldn’t do. Don’t ignore phone calls or letters from collection agencies. The issue needs to be resolved before the collection agency gets the courts involved. This is true even if the agency makes a mistake and comes after you for a debt you repaid or never had — unless you contact the agency the mistake will damage your credit rating.
Know Your Rights
Collection agencies have to abide by guidelines set out in the Fair Debt Collection Practices Act. The company cannot make harassing or disruptive phone calls to you. Abusive language and threats are also illegal. If the agency takes such acts, report them to the Federal Trade Commission and your state’s attorney general’s office.
Mistakes happen. The collection agency claims you owe for those Mustang horns or hubcaps but you know you paid the debt off. If you plan on disputing the debt send a letter stating your intentions within thirty days of contact with the agency. Send the letter by certified mail to make sure the agency doesn’t deny receiving the letter.
If the agency receives the letter within 30 days they have to cease collection efforts unless they can produce evidence you still owe the debt.
Document Everything, Offer Little
You could wind up in court, so document all communications with creators and the collection agency. If the agency contacts you to discuss the matter by phone, note the time, date and what was discussed. Ask the agency to send written confirmation of the call and any agreements made by phone.
Don’t offer debt collectors too much information. Giving the agency banking information is strongly discouraged. If you agree to a debt payment schedule, pay by money order instead of check.
Go to Court
If the debt collector makes a court date, be sure to show up. Often the debt collector has minimal evidence against debtors, but unless you show up to challenge the claim the courts will award the case to the collection agency. This can lead to court orders which freeze bank accounts or garnish your wages.
Negotiate a Smaller Settlement
Remember the collection agency wants to get paid at least something for its efforts. Try to negotiate a lower settlement account. Start by offering to pay back 10 percent of the balance, and with some luck and little haggling you convince the collection agency to settle for 30 percent. If you take this route, be sure to get written proof the agency agreed to the negotiated amount.
Guest Post by Katie Elizabeth, a keen freelance writer and content coordinator