Steps to deal with collectors and reduce debt

The biggest financial nightmare for any consumer - getting collection calls for unpaid debts. Credit counselors and state regulators opine that it would be a mistake to overlook debt collection letters. If you get a call from a collection agency, then deal with it, otherwise the situation may get worse.

When a debt collection agency contacts you

Usually, a debt collection agency contacts you under the following circumstances:

  • 1 An account has been assigned to them by creditors
  • 2 They have bought an account from creditors
  • 3 They have bought an account from another collection agency

Do it yourself debt collection tips

Check out some do it yourself (DIY) debt collection tips and use them to get financial freedom.

Try to work with the creditor

Nothing can be better if you can work out a favorable repayment plan with the creditor before the account is assigned or sold to a collection agency. If you're delinquent on an account, then contact your creditor as soon as possible.

Pay heed to the collection calls:

Never ignore the collection calls or letters. Federal laws allow consumers to ask collection agencies validate the debt within 30 days of initial communication. Send a validation letter via certified mail with return receipt request.

Keep all the records with yourself

You'll have plenty of conversations with the collector regarding the debt. Keep records of all the conversations you've with the collector. Keep the letters with you. Note down the brief summary of the conversation in a paper.

Make sure you pen down the key details:

  • The name of the collection agency
  • Total debt amount
  • The time of collection call

Be practical and stick to business

Don't feel guilty just because you couldn't pay your bills on time. The debt collector may use that to make you pay more money. Don't panic and be over emotional. What you need to do is be rational and work out an affordable payment plan.


Check out the SOL period on the debt before striking a deal. You may end up stretching the SOL period by making a payment arrangement on a very old debt.

Don't fall for the false threats

Don't reveal your credit card number just because the collector has threatened to file a lawsuit against you. It is not always financially feasible for the collectors to file a lawsuit. Moreover, they may not have enough evidence to prove that the debt is legitimate. They're counting on the fact that you'll pay money soon after receiving the legal threat.

Consult an attorney

Consult a good attorney in your area when you're served. Remember, you've to try your best to win the case. If the debt collector wins the case and obtains judgment, then your wages may be garnished. The attorney will guide you to deal with the lawsuit in the best possible manner.

Ask the collector to cease communication

If the debt is not legitimate, then ask the collector to not contact you anymore. It's best to make the request in writing so that you've a document with yourself. Send a Cease and Desist letter via certified mail with return receipt request.


Where you can register a complaint against a debt collector

If you feel that a debt collection agency has violated the FDCPA laws, then you can file a complaint with the following agencies.

FTC

You can register a complaint through the FTC website. The other thing you can do is call at the toll-free number (877) FTC-HELP and lodge an official complaint against the collection agency.

State consumer protection agency

State laws regarding debt collection process often vary. If you feel that the collector has broken a state law, then it's a wise idea to file a complaint with the State Attorney General.

ACA

You can register a complaint with the Association of Credit and Collection Professionals. They have introduced a complaint system to regulate collectors.


Last but not the least, you can check out the resource materials available at the National Consumer Law Center to know about the debt collection process in details.

Final Thoughts

Not all the debt collectors are bad. Some do abide by the rules and regulations whereas others violate the federal laws in order to collect money. Cooperate with the law abiding collectors and try to arrange a repayment plan for the legitimate debts. Find an accredited credit counseling agency in your locality and get help from them to facilitate a payment plan that would suit your budget perfectly.

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