Tips on handling the collection agents
When a collection agency calls do you feel you have to respond? Do you know how to protect yourself ?
When they call you can avoid talking to them by hanging up, screening the calls and you can make it legal with a “cease and desist letter.”
If your decide on this tactic be sure you include your name, address and account number with the letter. The basic communication you want to get across to the agency is “do not contact me further about this debt.”
This letter is best sent by certified mail as you will have proof the company received it. This action does not cancel your debt. The original creditor or the collection agency may decide to sue, or the creditor can simply hire another third-party collector.
If you do take the calls some states give you the right to tape the conversation. If this isn’t the case where you live, keep a record. The record should include the time and date of the phone call, who you spoke with and the basic information covered in the call.
You have the right to tell them you are taping the call (even if you are not). This usually results in their best behavior.
What if you decide to pay off this debt? Here are some things that will be handy to know. You can work out a deal to pay less than the full amount. A collections agency is always authorized to take something less than 100 percent, the usual being 50 to 60 percent.
No matter what deal you work out with the collection agency, get everything in writing before you send them any money. You could pay in full, pay a percentage and payment in lump sums or payment plan. Require the agreement be in writing or the deal is not complete.
You have some bargaining power with them on their reporting to credit bureaus. Make them stipulate that they will not report anything negative to the credit bureaus regarding the debt. Have your original creditor sign off on the deal. A collection agency could offer to settle that $1,000 credit card bill for just $500. But once they’re paid, the original creditor can still come after you for the other $500.
If you negotiate a settlement for less than you owe, you could end up paying taxes on the unpaid portion. But if the unpaid amount is less than $600, a collection agency does not have to report it to the IRS. Be sure to include this as part of your written agreement.
Do not agree to an automatic withdrawal of any of your bank accounts, pay with a check. The advantage is that you will have a physical record that you’ve paid. Another benefit is this puts you in control regarding exactly what you’re paying and when. The best advantage is you know they cannot continue to access your account or incorrectly deduct higher amounts than your agreement.
Remember when this bill is paid to get something in writing clearly stating that the account is paid in full. This will protect you if it were to come up on your credit report.
Knowing the laws in your state is a very simple way to protect yourself. Garnishment, lawsuits and property seizure are illegal in some places, which gives you a little more leverage to work out a deal. Call your state Attorney General’s office or the state consumer protection office to learn what is allowable.
Third party collectors have a choice on which laws they need to abide by depending on where the debt originated and the laws of that state vs. your current resident state. A call to that state Attorney General’s office may be warranted.
Something you should also be aware of is that time may have run out on the debt. While there is no federal statute of limitations on debts, most states limit the amount of time a creditor has to collect a debt. Do your research as the deadlines vary from state to state.
You can also file complaints against the collection agent if you suspect he or she has crossed the line. This is when having a tape recording or your notes of the phone call(s) can be of value.
This knowledge and implementing these actions should assist you in righting your financial status. There is always the possibility that you have unclaimed money or property. Currently over $25 billion is held by states and the federal government under unclaimed property laws. To discover if you have cash waiting to be claimed, click here.
