Having an account with a debt collection agency can be frustrating, not to mention detrimental to your financial health. Most companies allow your account to be delinquent for a few months before they turn it over to a collection agency, as the collection agency is the last resort to recover money from you. However, if you discover that you have an account with a collection agency, you need to act quickly to resolve the matter.
01 of 05: Request a Statement
If you are working on paying off old debts, or if you weren’t aware that you were missing payments on a bill, such as a medical bill, you will need to deal directly with the collection agency to settle the old debts, not the original creditor.
You will need to request a statement from the collection agency that outlines the original amount of the debt, along with any fees that have been added to your account. You may be surprised by the fees that can accumulate with an unpaid bill.
If a collection agency contacts you and attempts to collect a debt on an account you don’t remember having, be sure to request account information to verify that it is indeed yours. Under the law, they must provide you with further information, as well as proof that the debt is yours.
02 of 05: Negotiate Payment Terms
If you have enough money to pay off the debt in full, you should consider doing that. This debt will show up on your credit report as paid in full, helping to raise your credit score by showing that you are cleaning up old debts and changing past habits.
If you do not have sufficient funds to pay off the debt in full, consider negotiating a settlement for the debt. Here’s how it works: offer the amount you have as a lump sum to be a complete settlement. This means that the amount you pay will settle the debt.
Before sending the payment, make sure to receive a formal letter indicating that the amount paid will be considered a full settlement. You can also negotiate a payment plan with fixed installments each month until the debt is paid off completely.
03 of 05: Deal with Identity Theft
Remember that debt collection agencies are not perfect. Sometimes, they will just look for people who have the same name listed on the debt and start calling all of them to find the debtor. They are not always careful in ensuring they have the right person. That’s why you need to prove that the debt is yours before you start making payments on this debt.
The debt might be associated with your name and Social Security number but not actually be yours. In this case, it is usually due to identity theft. If you suspect that this has happened to you, you should file a police report and send a copy of the report to the collection agency. The collection agency should stop harassing you until the issue is resolved.
And do not give the collection agency your full Social Security number. Instead, ask them to provide you with the last four digits of the number associated with the account and verify if they match.
04 of 05: Dealing with the Collection Agency
There are laws governing how debt collection agencies can collect owed money. These laws prevent these agencies from harassing you or engaging in similar behaviors.
For example, once you speak to them and explain the circumstances surrounding the debt, you are not obligated to respond to daily phone calls from them. They are also not allowed to tell others about your debt.
If it is confirmed that the debt is not yours, they must stop contacting you. If the debt is yours and they do not agree on a reasonable repayment plan, you can always request to speak to a supervisor.
Remember
If you are in debt and have not paid it off, they can sue you, which may lead to wage garnishment until the debt is settled. It’s best to set up a monthly repayment plan that you can afford if you’re not in a position to make a large lump sum payment to the agency.
05 of 05: How to Prevent Future Accounts from Going to Collection Agencies
Once you have dealt with an account at a debt collection agency, it is important to take steps to prevent this from happening in the future. Start by setting up a budget and making efforts to pay off all your debts as quickly as possible.
Stop using credit cards, create a monthly spending budget, and stay on top of utility bills and rent to avoid falling into significant debt in the future. Taking control of your finances is the best way to ensure that you remain debt-free and won’t have to worry about collection agencies again.
Frequently Asked Questions (FAQs)
How can I see the original date my account was sent to collection agencies?
If you do not have the information you need, you can (and should) request further information from the collection agency. You should send this request for more information in writing, and you should do it as soon as possible. You have the greatest legal protection from collection agencies in the first 30 days after the initial contact.
How long do you have before healthcare bills are sent to collection agencies?
Healthcare providers independently decide when to send the debt to collection agencies. Some hospitals may send your medical debts to collection agencies within 30 to 60 days, while others may wait more than six months.
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Sources:
Experian. “Collections on Your Credit Report.”
Consumer Financial Protection Bureau. “What Should I Do When a Debt Collector Contacts Me? Download “I need more information about this debt.”
Consumer Financial Protection Bureau. “What Information Does a Debt Collector Have to Give Me About the Debt?”
Experian. “Can Paying Off Collections Raise Your Credit Score?”
Consumer Financial Protection Bureau. “What Is the Best Way to Negotiate a Settlement With a Debt Collector?”
Federal Trade Commission. “Guide for Assisting Identity Theft Victims,” Pages 38-40.
Consumer Financial Protection Bureau. “Should I Share My Personal Information, Including Birth Date and Social Security Number, With a Debt Collector?”
Federal Trade Commission. “Debt Collection FAQs.”
Consumer Financial Protection Bureau. “How Can I Stop Debt Collectors From Contacting Me?”
Consumer Financial Protection Bureau. “Can a Debt Collector Garnish My Bank Account or My Wages?”
National Consumer Law Center. “Dealing With Medical Debt: Consumer Advice From NCLC.”
Source: https://www.thebalancemoney.com/my-account-has-been-sent-to-debt-collections-what-do-i-do-2385994
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