Dealing with collection agencies

When you owe a debt that has gone into collection, eventually you will have to deal with the collection agency handling the account. It is important to know and understand your rights before you engage them. The relevant collection agency laws in the United States are enacted under the FDCPA. You should familiarize yourself with the act before dealing with collection agencies.

Your rights when dealing with collection agencies

The FDCPA gives you specific rights with respect to dealing with collection agencies. First, the collection agency is required to send you in writing a statement which clearly states the amount of your debt and the creditor’s name. This statement has to be sent to you within 5 days after they first contact you. The written notice has to also indicate that you have the right to request a written verification of the debt and also to dispute the debt. Once you have received the statement in the mail, you can then decide how to proceed in dealing with the collection agency. The FDCPA does not require you to answer any questions that the collection agencies are asking or to provide any information to them.

Tips on dealing with the collection agency

Although you should always check with an attorney specialized in consumer law to properly evaluate your options, the following tips may be helpful in dealing with the collection agencies.

- when the collection agency first contacts you, ask them to send you the statement but do not answer any other questions they ask. You do not want to get into a conversation with them as they will look for clues in anything you say to find more ways of pressuring you into paying up

- do not let yourself feel guilty or pressured in any way when dealing with collection agencies, remember that the collection agency laws regulate how they can deal with you

- simply tell them to provide you with a name, address and phone number where you can correspond with them once you have received the statement of debt

- once you receive the statement, you can write to them via registered mail of you desire to receive written verification of the debt. If they do not respond with the written verification, they are in violation of the FDCPA.

- Once you receive the verification, you can decide whether you want to pay the debt, negotiate a settlement or dispute the debt.

- Always correspond via registered or verifiable letter mail when dealing with collection agencies

If you decide that you owe the debt and you are comfortable that you can afford to pay in full, simply ask the collection agencies to advise you of best way to pay. Remember that you should always insist that you require the debt collector to remove any derogatory information from your credit report before you pay. Always insist on this point and ask the collection agency to send you their commitment to this effect in writing before you pay. Another important point if you have decided to pay is the amount you are paying. The collector is not allowed to collect more money than the original debt, and so you should not be paying a penny more. According to the Federal Trade Commission, which overseas the FDCPA, the number one complaint when dealing with collection agencies is that they try to collect more money than the original debt.

If you decide to attempt negotiating with the collection agency, then you should always consider hiring an attorney to represent you. Obviously calculate whether it is worth hiring the attorney based upon the amount of the debt. The key in negotiating is that you want to somehow convince the collection agency that you really do not have the resources to pay the amount in full. This is a very important point in dealing with the collection agencies. If they are convinced of this, they will be inclined to negotiate since they want to earn at least something opposed to nothing for their efforts. Often, the collectors have outright purchased the debt from the original creditors for pennies to the dollar, and so they will be willing to take what they can to secure some profits. If you are seriously contemplating bankruptcy, then it may be a good idea to give a hint to the collection agencies to this effect. As soon as they hear bankruptcy, they will want to negotiate as fast as possible because they will get nothing once you are legally bankrupt.

If you decide to dispute the debt, then you have to do so within 30 days of initial contact. Send the collection agency a letter stating that you are disputing the debt. At this point they are obliged by law to advise the credit bureaus that the debt is in dispute. If the collection agency does not change the status of the debt to a dispute status, then they are in violation of the law. Normally, you will receive a prompt proof of the debt in the mail and at this point you should really be getting the advice of an attorney.

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