If you’ve recently received a letter from a consumer collection agency, it doesn’t mean that you will face all or any of the nightmares you hear about. In fact, the more you know about collection agencies and the more you understand your options, the more likely you will be to figure out a way to repay your debts that will work for your personal finances. Collection agencies don’t want to make your life miserable; they want to work with you and get the money you owe, which will also improve your credit. Usually, you can work out a payment plan that will accommodate your finances, and the collection agency will appreciate that you will resume paying your bills, even on an alternative plan.
You have received a letter from a consumer collection agency because the company to which you owe money has hired that agency to work with you to retrieve your debts. Your original loan company doesn’t want to scare you or hassle you, but you have probably caused your lenders a more complicated problem than they can handle alone. Unless you think your lenders have made a mistake and you don’t owe money, in which case you can easily clear things up by contacting your lender. But if you have had some problems in meeting your monthly payments, then a collection agency will act as a mediator between you and your original lender, and try to get you to pay the money you owe. Collection agencies save original lenders time, money, and effort by tracking down debtors, and agencies will help you get back on your feet again, as well.
As soon as you get the first letter from a consumer collection agency, your first step of action should involve contacting the agency; otherwise, the agency will only continue contacting you, and may also get annoyed because you’re ignoring your obligations. You can either write or call the agency, and when you do, you should tell the agency how you plan to pay. If you just make excuses, the agency won’t consider that a responsible action. Of course, you should try to pay off all the debt as quickly as you can. But you may not find this possible at the moment, and so in this case, figure out what payment you can afford per month, and offer that as an alternative. The consumer collection agency may or may not agree, but in either case, you will have started the negotiating process.
The No. 1 thing to remember when dealing with consumer collection agencies includes keeping open communication. Most likely, you and the agent will experience some tense conversations, but remember that you both have the same ultimate goal: to fix the problem as quickly as possible. Although federal law prohibits collection agencies from harassing you, the law doesn’t forgive your debts either.
The collection agent will probably allow you to make payments either in a lump sum or in a series of monthly payments, but don’t default. If you bounce checks or miss payments, the agent will only get aggravated and feel like you deceived his or her trust. Take your debt payments seriously: collection agencies do have the power to get permission to discipline you in ways such as garnishing your wages and seizing your personal assets. As long as you can discipline yourself to pay your debt consistently, then you should eventually work out a deal with your collection agent.
By Lisa Zyga