(3 votes, average: 3.67 out of 5)
Loading ...A woman was told by a collection agency that her credit card company was going to sue her for fraud because she used her credit card after charge privileges had been suspended by the creditor. She didn’t think that was the case, so she went back through her records, then called the credit card company to find out what they were talking about. “We don’t have any intention of suing you for fraud,” she was told. She called back the collection agency and told them what she had learned and accused them of breaking the law in trying to collect the debt. They didn’t call her again.
Tell It Like It Is: Most debt collectors realize there are cases where they will have trouble collecting payment because the debtor just doesn’t have any money to pay. Telling creditors or collectors exactly how bleak your financial picture really is may keep them from hounding you as aggressively as they would if they thought there were any chance you could come up with a payment. There may be an additional bonus: Describing your dismal financial situation in great detail may also relegate your debt to the back of a long list of debts the collector is working on.
Write a Letter: If you’re too nervous, upset, or afraid to talk with a collector about your problem, write a letter. Explain your situation and propose a solution. Send your letter to the collection company immediately via certified mail, and keep a copy for your records.
Take Your Time: You shouldn’t agree to a repayment schedule if the payments sound too high. It is vital that you examine your income and expenses and determine how much you can realistically afford. If a collector’s offer seems unrealistic, tell her that you want to think about it for a few minutes and get back to her. Then call back with all the reasons why you can’t pay that much, and propose a reasonable counteroffer.
Collectors are in the business of collecting money, and some can get pretty tough. Nevertheless, you shouldn’t allow anyone to pressure you into agreeing to a repayment schedule that you really can’t afford. It’s going to hurt both you and the collector in die long run.
Wheel and Deal: Debt collectors are often open to creative offers for payment. For instance, you may offer to pay 75 percent of the money owed up front, if the collection company will accept that partial payment as payment in full. Other collectors may agree to moderate repayment schedules. You might also be able to ask the collection agency to remove any remarks about a collection account from your credit report in exchange for prompt payment, which they may or may not be able to do.
Keep in mind that the debt collector cannot dicker without the creditor’s go-ahead, unless it has bought the debt from the original creditor. In other words, if the creditor to whom you owe the money demands that the agency collect at least 70 percent of the original debt, you won’t be able to negotiate a deal that allows you to settle the debt by paying 50 percent today. But you don’t know how much they have to collect, so it doesn’t hurt to try to strike a deal.
The most important thing to remember when dealing with a collection agency is that it wants the cash, and it wants it yesterday. By agreeing to make a lump-sum payment immediately, you may be able to negotiate a good deal. Before you call, decide the maximum amount you are able to pay now, and don’t agree to pay more. Since you are negotiating, it may be a good idea to start with a lower amount than you are willing to pay, and work up from that.
Keep Good Records: Write down details of every single conversation you have with a bill collector. Note who you talked with, when and where they contacted you, and any agreements made. Keep copies of all correspondence sent to you and from you regarding the debt. If you make any payment arrangements, send a letter to the collector outlining your agreement. This is extremely important, in case there are problems later. You may want to send your letter by certified mail, to make sure you’ll have a record of receipt.
If you agree to settle a debt for less than the total amount owed, you will want to do two things. First, write on the check a disclaimer that states “cashing this check constitutes payment in full.” In some states, that will prevent the collector or creditor from suing you for the difference between the check and the total amount of the debt.
Secondly, write a letter to the collector or creditor, and send it certified mail, return receipt requested. In that letter outline your agreement, and note that the collector has agreed to accept your partial payment as payment in full. Refer to the check you have enclosed, and reiterate that if the creditor cashes the check, it will satisfy the debt in full. It would also be a very good idea to check with your state attorney general’s office or consumer protection office to determine whether creditors in your state still have the right, after cashing a check with a disclaimer, to collect the difference.
Be on Guard if you are contacted by a collection agency that seems to be using harassing, high-pressure techniques. While there are many professional collection agencies that would not break the law to collect a debt, there are also unscrupulous agencies that will do anything to get paid. Some creditors even look the other way when the collection agencies they hire engage in illegal tactics.
Pay When You Can: Avoid writing post-dated checks, and never write a check if you don’t have the money in the bank to cover it. If the check bounces, not only will the creditor or collector hit you with a bad-check fee (anywhere from $10 to $30), the payee may also take you to court for purposefully writing bad checks—an illegal act that sometimes entitles the payee to damages of several times the amount of the check.
October 14th, 2008 at 9:41 pm
Great ideas! Wish, I knew this information when I was in college!