How To Work with a Debt Collection Agency

You might be frightened at the thought of trying to work with a debt collection agency.  It is important to try to resolve your unpaid debt with a collection agency rather than avoiding their phone calls and letters.  By dealing with the debt collection agency, you can avoid further financial problems.

Before you can work with a debt collection agency, you need to have a basic understanding of your rights.  There are certain things that a debt collection agency is not permitted to do.  The Fair Debt Collection Practices Act provides consumers with protection against unfair collection tactics.  View this act so that you can know whether a debt collection agency's actions violate the FDCPA.  Anytime you believe a violation has occurred, you can report the debt collection agency to the Attorney General’s office in your state as well as to the Federal Trade Commission.

If you are going to work with a debt collection agency, you will first want to confirm that the debt is valid.  Request validation from the debt collection agency.  They must comply with your request to verify your debt.  You will also want to compare information about the debt with any of your own records.  If you believe the debt is not accurate (even if you receive validation), you will want to contact the original creditor and perhaps even the credit reporting agencies.

It is often necessary to work with a debt collection agency to resolve a legitimate debt.  You should not avoid the debt collector as this can make matters worse.  If you refuse to take any efforts to resolve your debt, the collection agency is more likely to attempt to sue you in court for the debt.

Explain your current financial situation to a debt collector.  Offer to make reasonable repayment plans.  You can also offer a potential payoff settlement if the debt is small enough that you feel you can pay a portion of it off in a lump sum.  In some cases, a debt collection agency will still offer you a debt settlement even if you are not able to pay the settlement in full at once.  They may even break up the settlement into several different payments if you ask.

If you need to work with a debt collection agency, you will want to see everything in writing.  Do not send any money to the debt collection agency until you verify that the agency is licensed for operation in their state.  Letters from the debt collection agency should offer information about their state of licensing.  If you agree to a monthly payment arrangement, you will want to receive details on that payment arrangement before making your first payment.

Do not agree to a payoff agreement without receiving details on that payoff arrangement in writing.  The letter should state that the original creditor has agreed to accept the payment as payment in full.  You should also ask the debt collection agency to report the debt as being paid in full - even if you are offered a reduced payoff option - to the credit reporting agencies.

You can work with debt collection agencies to resolve your debt as long as you know your rights and do not allow the debt collectors to pressure you into payment arrangements without the proper paperwork.


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