Aspiration & Struggle

4 Tips When Dealing With Collection Agencies

By  | 

There’s nothing worse than an aggressive phone call from a creditor. But before you let them get the best of you, it’s important to know that you have rights—and leverage—when dealing with collection agencies. Here are a few tips that will help you make the most of the repayment situation.

1. Know Your Rights

If a collector is calling you to demand payment, you should start by requesting proof that the debt is yours. Write a letter to the collection agency seeking evidence (you should spring for certified mail to make sure it’s received). This is also a good opportunity to put in writing that you want the collector to stop calling you. Barring contact doesn’t make the debt go away, but it will put a stop to the constant phone calls while you address the situation. Keep in mind that the Federal Trade Commission’s Fair Debt Collection Practices Act also protects you from debt collectors calling you at inconvenient times (late at night, for instance) and inappropriate places (like your place of business).

Collection agencies have been known for using intimidation tactics to get people to pay. They have no right to tell your friends, family, or coworkers about your debt. If you get a collector threatening such actions, submit a complaint with his or her name to the Consumer Finance Protection Bureau, the Federal Trade Commission, or your state attorney general’s office.

2. Negotiate When You Can

Let’s say you had a $400 medical bill that you couldn’t pay, or you just didn’t even realize that insurance failed to cover it. Your doctor would most likely make a few attempts to collect the payment before selling it off to one of many collection agencies. When a collection agency buys debt, it’s usually for a substantial discount. The agency might pay $200 for your $400 debt.

So, if an agent collects $250 from you, their company will profit $50. This is why you can negotiate with collection agencies. State how much you are able to pay, and see what the agent says. You’ll most likely be able to shave a significant amount off the debt you owe.

3. Be Smart About Repayment Methods

Start by getting your agreement in writing before you start to pay it off. You can ask to use the “pay for delete” method, meaning that once you pay off your debt, the collection agency will remove it from your credit report. They are not required to do this, but it’s worth asking.

When you have a repayment plan in place, it’s beneficial to set up a bank account that’s used specifically for debt repayment. A collection agency could take more than the agreed upon amount if given full access to your bank account. Having a separate account will keep your debit card information, routing numbers, and personal checks confidential. Paying with a money order or a certified check are also good alternatives. If you do decide to open a new checking account, make sure it doesn’t come with overdraft or insufficient-funds fees in case the collection agency attempts to take more than what is due.

4. Keep Careful Notes

Keep notes throughout the entire process of dealing with collection agencies, and be sure to keep copies of anything you send or receive. Don’t forget to get your final agreement in writing before making a payment. Covering your bases will prove to be very useful in the end.

Dealing with collection agencies is a burden, but it’s important to know your rights before you set up a repayment plan. If you believe the debt in question isn’t yours, you should immediately dispute it on your credit report.