If you’ve fallen behind on your bills, there’s a good chance a debt collector may have contacted you or will be contacting you shortly. A debt collector works for a collection agency who bought a debt from a creditor to whom you owe money. Since their job is to collect the money, they may plague you with phone calls until the account is fully paid off.
Here are six steps to consider to get your debt out of collections.
1. Don’t Stress
Whether you’ve dealt with collection agencies in the past or you’re new to the process, receiving threatening calls and statements in the mail (more on this in a minute) can be stressful and scary. It is important not to stress or panic. You are not alone! Millions of debts have gone into collections before. However, it is also important to note that, unless you take action, the debt in collections will not go away. Avoiding the situation will only make matters worse. Failure to act can result in a judgement, which can lead to garnishment of your wages or a frozen bank account.
2. Know Your Rights
It is important to know your rights when it comes to dealing with debt collectors as, unfortunately, it is not uncommon for some to abuse their power. The Fair Debt Collection Practices Act states that debt collectors are not permitted to use abusive or obscene language, make any threats of violence or harm, repeatedly use the telephone to annoy and harass a debtor, call before 8 a.m. or after 9 p.m., or discuss your debt with a third party. They must also respect your request to not call you at work, if you have indicated that.
A debt collector may only contact other people regarding your debt that you have approved, such as an attorney or a family member. (Note: They can call other third parties, but only for local information and they can’t say they’re a debt collector.) If you feel a debt collector has violated your rights, you should file a complaint with the Federal Trade Commission.
3. Gather Information to Validate the Debt
Gathering all the information you have regarding the debt in question is a good start. Consider checking your credit report for any inquiries or anything that may seem like suspicious activity. (You can view two of your credit scores for free on Credit.com.) If the debt in collections is in fact yours, gather information regarding the original creditor who sold the debt, as well as any evidence of your payment history with that creditor.
Believe it or not, it’s quite common for collection agencies to make mistakes regarding debt they claim they are owed. You can verify a debt within 30 days after a collection agency has sent you a validation letter.
4. Pay in Full or Arrange a Repayment Plan
If your validation notice proves the debt is in fact yours, there are a few actions you can take. One option is to pay the debt in full. Many may decide to take this option to stop the collection calls and turn to fixing their credit. Unfortunately, this is not possible for everyone. If you are unable to pay your debt in full, consider negotiating a repayment plan with the collection agency. Creating a repayment plan that works for you can help you settle your debt while simultaneously improving your credit score.
5. Negotiate a Deal
If funds are tight and you find yourself to be a negotiator, you may be able to lower the amount you owe to the collection agency. While this may save you some money, it’s not always easy or possible. List any hardships you have that may have prevented you from making your payments. When negotiating, it’s important to be firm with your offer, keep notes of all conversations and take note of who you’ve spoken with. If you’re able to negotiate a deal, consider getting everything, including your payment schedule, in writing.
6. Seek Help
There’s no shame in asking for help. Before you take steps to pay your debt in full or negotiate a deal, consider hiring a debt-settlement law firm (Full Disclosure: I am one). These legal professionals have experience dealing with collectors and can negotiate on your behalf. Just make sure to do your research and find someone reputable.
Knowing what a debt collector can and cannot do will help protect you from unfair practices used by agencies to collect on the debt. You should also consider meeting with a financial adviser who can help you understand your financial situation so no future debts end up in collections. Understanding why your debt went into collections in the first place can prevent it from happening again.
Debt collector calling ad nauseam? You can find debt collection rights here.