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Dealing
With Collection Agencies
Are
You Constantly Receiving Harassing Calls From Collection Agencies?
What
Are Your Rights?
What Is A Collection Agency?
A collection agency is a third party hired by your original creditor to
collect the debt that you owe. A creditor may turn an account over to a
collection agency after the account has been behind three to six months.
Any legitimate collection agency will send you a written notice with all
of the terms included, upon your request.
Common Threats Made By Collection Agencies
Most people are contacted by collection agencies over the phone. Some collection
agencies will threaten you in order to receive a payment. They may say that
they will tell your employer about the debt you owe. They may threaten to
send you to jail or they may threaten to garnish your wages. These threats
are illegal and violate Section 807(4) of the Federal Trade Commission Fair
Collection Practices Act. You may contact the FTC to make a complaint at
1-877-FTC-HELP.
Initial Steps To Take When An Account Has Been Turned Over
Once you find out that your account has been turned over to a collection
agency, you should contact the original creditor to make sure this is true
and find out if there is anyway to have your account recalled. The original
creditor may take the account back if a reduced payment can be negotiated.
If the original creditor will not recall the account, try to work out an
agreement with the collection agency. If you are experiencing any financial
hardship explain this to the collection agency. If you can afford to pay
some or all of the debt at this time, you should.
When Negotiating With A Collection Agency You Should...
If a payment has been negotiated with a collection agency make sure you
ask them to send you the payment arrangement in writing and keep copies.
You should also ask for the representative's name that you spoke with. This
will serve as proof of the agreement if any problems occur in the future.
Most collection agencies will negotiate a settlement, which would be taking
less than the total amount due. This normally requires a one time payment
in full. Be careful! A settlement may report negatively on your credit report.
The IRS also considers a settlement taxable and treats the amount forgiven
as income for tax purposes.
Helpful Tips
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Do not
make promises you can not afford. It will be worse if you agree to
make payments that you can't.
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Never
give a credit card number or checking account information over the
phone to a collection agency. They may take out more money than you
have agreed to.
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An unpaid
collection account is damaging to your credit report. The sooner you
can pay it off, the better!
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