Dealing with Collection Agencies

I got a letter the other day from a collection agency about a hospital bill that I had just recently gotten taken care of. I had to get in touch with the agency, and the hospital straightened the whole thing out, thankfully.  But, some people are not so lucky. What happens when it’s your mortgage, your car, or medical bills that are being demanded by the collection agency? Some of those things are thousands of dollars. Here’s some tips on what you should do.

1. Do not avoid them. Unless you are planning to file bankruptcy or you have nothing to take, it’s stupid to avoid the debt collectors. Most of the time, if you avoid them, the consequences are worse than if you just swallow your pride and return their call. Although collection agencies are there to get the money that is owed to the people they represent, they will often make a mutual agreement that is suitable for both parties involved.  Getting a lawyer involved, especially if it is a substantial amount of debt, is never a bad idea.

2. Ask for their employee ID number and for them to record the call. Even though a lot of collection agencies are reputable, there are some whose employees are not the best, and it’s okay to take measures to protect yourself from harassment.  But, as with anyone, you need to give respect to get respect, and this situation is no different. Being polite and cooperative goes a long way, especially because most of the contacts that these people have are rude and angry.

3. Know your rights. You also have other rights as someone who owes debt. The Fair Debt Collection Practices Act (FDCPA) keeps people who are in debt safe from harassment and annoyance by the collection companies. Some basics of this are the following:

-          They can’t call someone who isn’t on the loan/contract/whatever. Third parties are out.

-          They cannot call you at a certain number if you tell them they cannot.

-          They cannot use abusive, crude, or threatening language.

-          All communication must be private, no public notices.

-          They can only call between 8 AM and 9 PM.

-          They must send you written documentation within 5 days after they first contact you with all of the information necessary to clear the debt and what legal action can be taken.

One of the biggest problems people have with collection agencies is protecting their assets. You need to protect any government funds (Social security, disability, etc), because they are not required to be used toward debt payment. Professionals suggest you may even route these to a separate bank account so that you don’t have to worry about this potentially being a problem. They also suggest that you use a money order instead of a personal check.

4. Find a debt counselor. Make sure that they are accredited by a national organization like the National Federation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies. Many states also require that credit counselors are accredited by the state they are practicing in as well. They, and a consumer lawyer, will help you sort through your debt and make things manageable.

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