deal with collection agencies
Financial Planning

Ways to Deal With Collection Agencies

Dealing with collection agencies is rarely a pleasant experience.

A collection agency is a company hired by your creditors to recover money that’s overdue or accounts that are in default. When a creditor tries but fails to collect funds from you, they mostly work with third parties. These third parties as collection agencies. It is never usually a pleasant experience to deal with collection agencies.

The most detrimental aspect of it all is how this affects your credit score. On your credit account, companies like Sunrise Credit Services and others will appear under the title of ‘collections account.’ This will damage your credit score and affect your ability to be get loans in the future. You’d then have to contact companies that specialize in removing these collection account tags from your credit report.

Getting a call from a debt collection agency can be an intimidating experience. It’s important to do research to understand how they work and your rights when dealing with them.

The following list explains some ways you could deal with collection agencies when they come knocking.

Communication is Key

According to Credit Glory, maintaining a good flow of communication with the debt collection agency is important in amicably resolving your debt. Make sure to pick up the phone whenever they call. Also, be proactive with your communication.

If you move, ensure that they’re aware of it and give them the details of your new address. The more proactive you are, the more inclined they’ll be to deal with you well.

Get Everything in Writing

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After you and the collection agency have come to an agreement that works for both parties involved, get everything down in writing. This is necessary especially if the agreement involves a payment plan or a settlement.

Nothing should be paid until you have the written agreement from the collection agency. Keep copies of the agreement and all subsequent payments for future reference.

Get Your Facts Straight

It’s possible to be liable for debt that isn’t yours or debt that’s over what you owe. That being said, it’s important to have all your documentation to avoid this happening. Having your information in hand will help you dispute any false claims.

Within five working days of contacting you, the collection agency is required under law to send you a debt validation notice.

The purpose of this notice is to list the size of your debt and to whom you owe the debt to. After that, you have 30 days to request proof of the debt the agency wishes to collect. This is called a debt verification request. Only after proof is sent can negotiations proceed.

If the agency fails to provide sufficient proof, a cease-and-desist letter can be drafted and sent to the agency asking for them to terminate communications.

Debt collectors are synonymous with rough behavior and rude treatment. It’s prudent to look up what debt collectors can and cannot do. They can’t harass you or your family. A collection agency may only contact your employer to verify your employment.

In additional to this, they cannot publish your debt in public spaces. They also can’t repossess property or valuables that are unrelated to your debt. Knowing these things should give you the confidence to deal with collection agencies.

Know the Statute of Limitations

A common error is to pay for a debt you no longer need to pay. When your debt has gone past the statute of limitations (usually between 3 to 10 years dependent on your region), you’re exempt from paying off that debt.

If you wish to pay off the debt either in full or in partial (due to moral obligations), note that in some regions, doing so will make the statute of limitations void. Also, the agency may be able to take you to court on the basis of re-aging debt.

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Be Firm

Be prepared to have extensive negotiations with the collection agency. Go into the negotiations fully aware of what you’re willing to pay. It is also a good idea to go into these conversations knowing how to structure the payments.

Debt collectors are skilled at digging up information and will do their best to get you to pay as much money as possible and as quickly as possible. Don’t allow yourself to be bullied into a payment plan that’ll only be detrimental to yourself.

Tips to Deal With Collection Agencies – Summary

No matter how daunting the task may seem, for the sake of your credit score and peace of mind, effectively dealing with a collection agency is crucial. These few tips will go a long way in smoothing out the process.

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