There’s nothing remotely fun about dealing with a debt collector, but knowing your rights and understanding which strategies are at your disposal can help you resolve the matter as painlessly as possible.
If you haven’t experienced the hassle of dealing with a collection agency yourself, you’ve no doubt heard the horror stories at least – harassing phone calls, non-stop letters, and more. What you might not know, however, is that the Fair Debt Collection Practices Act has been put in place to give consumers like you a bill of rights, and there are also a few negotiation pointers that can help you make the best of a bad situation if you find yourself with a collection agent nipping at your heels.
Debt Collection – An Introduction
There are more and more collections agencies going into business every year, and the industry currently pulls in about 15 billion dollars annually. Probably not a sign that our economy is at its healthiest, but that’s the situation. These companies purchase outstanding debts from anyone – libraries, cable companies, hospitals, gyms, cell phone companies, etc. – for a mere fraction of what’s actually owed by each consumer.
Debt collectors have a host of research tools at their disposal and are able to determine where a debtor lives and works (and where the debtor has lived and worked in the past), giving the collection agency ample ammunition to contact any individual with an intimidating amount of information on that individual’s personal history.
Collection Agencies – What They Do First
If one of these agencies purchases a debt you owe, they’ll usually start by sending you a letter. The letter will tell you that you have 30 days to dispute any facts contained within it, so read it carefully and respond immediately if you plan to contest. Make sure to take careful notes on any communication you have with a collections agent, and keep copies of anything you send them.
Once any debt is sent to collections, it can remain in your credit report as a negative item for seven years from the last 180-day late-payment (or non-payment) report filed by the original company to whom you supposedly owed the debt, so it’s in your best interest to fight any inaccuracies. Many debt collectors intentionally misreport the facts in order to give you a false sense of relief once the facts are straightened out; don’t fall for this tactic.
The Fair Debt Collection Practices Act Can Help You Out
It’s important to know that the Fair Debt Collection Practices Act gives you the right to request that a collector stops contacting you altogether, or only contacts you via the mail. This law ensures that collectors can’t pose as a credit bureau, insinuate that you’re guilty of a crime, or use any obscene language. If you have an account in collections, be sure to familiarize yourself with the Fair Debt Collection Practices Act and use your knowledge to your advantage.
What If I Do Owe the Money?
Assuming you’re now familiar with the FDCPA, the next step is probably to start negotiating a payment plan and begin to focus on rebuilding healthy credit. Be sure to pay off any debts you have that aren’t in collections first; debts that are in collections will remain on your record for seven years, regardless of how fast you pay them off. No hurry there.
What you should do once you’ve decided you’re going to pay (regardless of the speed at which you choose to do so) is to negotiate a deal with the collector. Since they’ve purchased your debt for mere pennies on the dollar, they’ll profit off of pretty much anything you agree to pay them. If they offer to have the debt taken off your credit report, be sure to get that in writing – it’s technically not legal, and you’ll need to prove they offered it as a solution if the debt shows up on your record at a later date.
There’s nothing remotely fun about dealing with a debt collector, but knowing your rights and understanding which strategies are at your disposal can help you resolve the matter as painlessly as possible.
If you want more information on debt collection practices please ask EdGAR.
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