When a customer falls behind on paying off their debts, the business in question can procure the services of a collection agency. It is essential to employ effective strategies when dealing with debt in collections if you want to be debt-free.
Should a debt go into collections, you have two options, resolve the debt, or have your day in court. Poor personal debt management systems can cost you valuable assets and a source of livelihood, which is why it is essential to understand the process of dealing with a debt in collections.
How Will You Know Your Debt is in Collections?
Once a debt collection firm is involved, you will notice communication will originate from a different company. Subsequent communication is through calls, mail, text messages, or emails. It is best not to ignore them because they may offer information on your repayment options.
Why Did Your Debt Go into Collections?
Your debt only goes into collection after you have failed to meet your payment deadlines. You may receive notices from your creditor informing you of the same. In this situation, the original creditor sells your debt to a debt collections agency. The original creditor does not make substantial profits from this sale.
Once your debt has been sold, the debt collection agency starts the process of collecting the debt. The amount owed will stay the same, but the notices of due debt will come from a different company. The only difference is that a third company has bought the rights to collect.
Now with that said, mistakes do happen. The debt could have been considered “bad” due to no fault of your own, which is why it is important to investigate the situation before you take responsibility for it.
How Can You Deal with a Debt that has Gone Into Collections?
Debt collections firms are often ruthless when executing the terms of your contract, so it is vital to style up and get your financial ducks in a row. We put together a few strategies you can use when dealing with a debt collections firm.
· Avoid Hasty Decisions.
While it is crucial to look back at the poor financial decisions that landed you in this predicament, it is equally important not to panic. Making rash decisions can put you in a worse situation. Keep in mind that you can pull yourself out of debt with a bit of financial adjustment and hard work.
However, do everything possible to verify the debt is in fact yours and collectable before you take responsibility for it. Creditors have a finite amount of time within which they can institute legal action against you. If that time period has elapsed and they can get you to say the debt is yours the clock will restart.
· Gather All the Relevant Information
Some people may be tempted to ignore the problem and hope it goes away. Unfortunately, this approach will yield no fruit. When dealing with debt in collections, it is vital to take the bull by the horns.
The first thing you need to do is educate yourself on your rights. Knowing your rights will help you protect yourself in the payment process. Next, you need to study the terms of your agreement.
Insist the collector validate the debt with written documentation of when the debt was incurred and with what company. You also want contact information for the original lender, the amount of the original loan and how much of the current balance is fess and accumulated interest charges. Request this in writing. The collector has to charge the debt off if they can’t provide it.
· Try and Re-Negotiate the Debt.
If it turns out to be a valid debt, you’ll need to work out a payment plan with the collector. You might need a credit card debt relief company to help you in this regard in some instances. You’ll find more information about this at https://www.bills.com.
Once a debt collection agency is on your case, time is not on your side. You must act swiftly and decisively to get your debt settled. First things first, do not accept responsibility for the debt until it is proven to be yours. You can then base your following actions on that outcome. Also keep in mind there are a number of rules within which collection agencies must operate. The FTC website has all the information you’ll need to protect yourself in that regard.