USAinDebt

Collection agencies can be a real pain in the neck. Their representatives are annoying, rude and they won’t leave you alone until you pay them. Besides that, a collection agency is capable of ruining your credit profile for up to 7 years and that can really hurt you in many ways. So if you have one of the abovementioned annoying persons calling you, read on.

Before anything else, let’s clear up what is a collection account and what is a collection agency. Simply said, a collection account is opened on a bill that you haven’t paid for a while. Like your cell phone bill, or your credit card payment – if your cell phone carrier or bank for some reason haven’t received any payments from you over an extended period of time,  they will do a couple of things. First, they will try to call you. Second, they will mail you. And third, if they still haven’t heard from you, they will sell your bill to a collection agency. What happens is that the collection agency pays the money you owe for you, and takes over your bill. So now you owe that money to a collection agency. They will open a collection account under your name, get your credit reports and post a collection record on usually all three of them. Then they will get your contact information and start harassing you by phone and mail.

So big deal, you think. I will pay them back just like I would have paid the bank or the cell phone company. Yes but no. As mentioned before, they post a record on your reports. And if you don’t take care of that record, it will stay there for 7 years. Good luck getting a normal loan with that black spot on your papers – you will be seeing a lot of rejection letters because of your “derogatory public record”.

Dealing with collection agencies is fairly easy. You can take care of it yourself, and please don’t fall for the “pay to erase” trick, or otherwise don not send any payments because you were promised something over the phone.

To begin, pull your credit reports. You have the free option to do that from https://www.annualcreditreport.com/ or for $9.99 per month from http://www.mycreditkeeper.com/. Make sure that this debt is actually yours! Next, contact the collection agency. If you don’t feel like talking to them, send everything by mail! There is no law that can force you to talk to them. Write down names, dates, times, everything. Keep it in a folder. Having an accurate record is crucial! Ask them to verify your debt – what exactly do you owe, and what are the repayment options. Your next step is to offer them a deal. Let’s say that you really do owe $5000. Send them a letter, saying that you can pay $2000, and you will immediately do so, if they send you back in writing that your account will be closed and no records of any kind will be made on neither of your credit reports. If you can’t afford a lump sum, just offer them a monthly payment. Mail that out with a delivery confirmation and sit tight. 99% of the agencies will accept the lump sum, and 80% will accept the payments. Just make sure that they return a promise in writing, with their letterhead and address, signed or stamped.

And at the end, just some more tips: Do not give them your bank information over the phone or in writing. When they accept your payment (lump or monthly) and you get the above mentioned things in writing, then you can mail them a money order. This will keep your bank info private. Keep a copy of the money order!  Take a look at the THE FAIR DEBT COLLECTION PRACTICES ACT which explains what are your rights and responsibilities. Don’t leave this problem, it won’t resolve itself. The collection agency can sue you to get their money. Read everything above carefully, act smart and you will get yourself out of it the painless way.

Tags: collection | fico | credit | bill | collection agency | debt