Final Thoughts On What Do You Do When You Get A Collection Letter
If you have received a debt collection letter, its never going to be fun. But dont worry, its definitely manageable.
In particular, if you know the debt is really yours and is accurate, its often best to simply send a letter to the debt collector to settle the debt. That way, you can often work out a payment plan without things escalating.
Alternatively, feel free to write a dispute letter to a collection agency if you think something about this isnt right. They all have processes in place to deal with these, including if youre right and theres been a mistake made on their side.
But if a debt is yours and youve received a validation notice about this, meaning the clock is ticking, dont bury your head in the sand and try to ignore it. The problem could become much worse for you so its best to try to deal with it head on.
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Debt Clocks For Lawsuits And Credit Reports
When dealing with debt collectors, its important to understand two debt clocks:
- Statute of limitations. Each state has its own statute of limitations regarding lawsuits for debt collection. The timeline starts with the original creditor and is usually the date of last activity. The statutes vary considerably. For example, in Rhode Island, a creditor has 10 years to sue you for an unpaid balance, but in South Carolina, it has only three years. Once the statute of limitations has elapsed, you can no longer be sued for the debt.
- According to federal law under the Fair Credit Reporting Act, evidence of late payments, defaults, and collection activity can remain on your credit report for a total of seven years. After that, the lender or collector should not furnish the information about your account to the credit reporting agencies. If it does, you have the right to dispute it with the credit reporting agency and have it removed.
If the debt is both past the statute of limitations for your state and it cant show up on your credit report, collectors have very little leverage to get you to pay. They can still try, and if you want to send the money, you can, but be careful.
Making a partial payment or even negotiating with the collector can result in the collector re-aging the account, which will then start the statute of limitations over.
What To Do If Your Debt Is Already In Collections
As you go over your accounts, you may find debt that is in collections. If this is the case, don’t ignore itpretending the debt doesn’t exist won’t make it disappear. Tackling it as soon as possible will eventually put an end to the collections calls, and quell those worries about the money you owe.
Other potential action you can take once your debt is in collections includes:
- Requesting that the debt collector stop contacting you. If you make this request in writing, a debt collector must cut off contact in most cases.
- Negotiating what you owe. A debt collector may be willing to settle for a lump-sum amount that’s less than the amount due or may be open to a payment plan.
- Seeking assistance from a nonprofit credit counseling service. A credit counselor may be able to develop a plan for paying off debt that’s in collections and also come up with a household budget for you that prevents you from falling behind on more debt.
- Hiring an attorney. When the situation becomes extremely stressfulthe debt collector threatens to take you to court, for instanceit may be time to seek legal help.
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Speak Professionally And Authoritatively
Most of us take our speaking voices for granted. But the tone, pitch, inflection, and even the speed at which you talk can have a powerful influence on your listener. Think about typical news anchors or radio commentators. They have voices that command attention. With a little effort, you can develop one too.
Try recording a general collection call opening and then listen to yourself. Make adjustments as needed, and try again. This will not only improve how you come across on the phone, but it will also build confidence. It does take a little time and extra work, but remember, success is strongly linked to preparation.
Here are a few hints that might help:
- Dont chew gum or drink when youre on the phone
- Speak a bit slower and enunciate
- Use a lower-pitched voice
- Pause more often
- Make sure you pronounce the ending consonants of words and dont slur
- Smile while you talk although the person on the end of the line cant see it, they will hear it and everyone responds more openly to a smile than to a scowl
Adhering to these simple tips will greatly improve your telephony skills and give you the authority to command the conversation.
What Should You Include In Your Debt Validation Letter
A debt validation letter doesnt have to be fancy or complicated, but it should include a few essentials. First, never admit that the debt is yours or that you intend to pay it because this can reset the statute of limitations.
Let them know that you are requesting debt validation and when you received original notice of the debt collectors intention to collect. For example, youd mention the date of a letter or the date and time of a phone call.
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The Debt Collection Process In Canada
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If you find yourself unable to pay back any type of unsecured debt you will more than likely need to deal with a debt collection agent. Credit card companies and other types of lenders who provide unsecured loans employ collection companies to get their money back when their customers stop making regular payments.
Unfortunately dealing with a collection agent is never a pleasant experience and often if you borrowed from a less than reputable lender, your maybe even have to deal with illegal collection tactics. This is why it is imperative that you, as a borrower, must have at least a general idea of what the collection process should legally look like in Canada.
Below were going to lay it all out for you, the good, the bad, the legal and the illegal. This article will be a reference for anyone currently going through the debt collection process. We want you to know what your rights are and also what your responsibilities are, because if youre not going to responsibility pay off your debts there are some consequences that you need to beware of.
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Check Your Credit Reports For Signs Of Identity Theft
As youâre going through your credit history, itâs a good idea to look for unusual activity that could mean someone stole your identity. For example, you might see a credit card company you donât recognize from a store you never shop at.
If you believe thereâs an error, send a written letter to each credit bureau where the error is listed. You should be very specific about what the error is, why you believe there is a mistake, and ask that the item be removed. The Consumer Financial Protection Bureau and the Federal Trade Commission have templates you can work from if you need to file a dispute with one of the credit reporting agencies.
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What Impact Does A Collections Account Have On Your Credit
An account that ends up in collections may well have damaged your credit already. Late payments can significantly hurt your score.
How much the collections account will impact your credit depends on your . A collections account will have a more significant impact on a credit score in the 700s than one in the 500s.
Some newer credit scoring models either ignore paid collections accounts or weight them less heavily. Unpaid medical accounts are also treated less harshly than other late bills. However, most creditors are still using older credit reporting models when making lending decisions.
Reasons To Ask For Debt Validation
A request for debt validation helps confirm all these things. First, youll know that the original creditor legally authorizes the debt collector to collect money from you.
You can also check to make sure that all past payments have been applied and check the accuracy of any fees applied to the debt.
Finally, you get to make sure that you actually owe the debt that they say you do.
If you fail to validate all of these points, you risk paying a debt you dont actually owe or even paying someone who shouldnt be taking your money. Its a safe way for any consumer to protect themselves from countless scammers and unscrupulous debt collection agencies.
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Late Payment Of A Tax Bill
Bills are issued by the Colorado Department of Revenue when you do not pay your tax in full when you file your return, if you paid late and owe penalty and interest or if you did not file a return and the Department filed one for you. When a Notice of Deficiency is issued, you have 30 days to notify the department if you disagree with the bill. Be sure to read the notice carefully to understand your rights and to see what documentation is required.
If you do not pay or protest the bill within the allotted time, the Department will issue a Final Determination and Demand for Payment. Should you fail to pay the balance in full or start a monthly installment plan, CDOR may take certain actions to collect your unpaid taxes. Actions taken by the Colorado Department of Revenue may include the following:
- Filing a judgment/lien with the county to prevent the sale of your assets
- Referral to a third-party collection agency
- Seizure of assets such as wages, bank accounts and property such as cars, boats or real estate
- Applying your state or federal income tax refund to your tax debt
It is important to contact us and make arrangements to pay the tax due voluntarily. Penalty and interest will continue to accrue until the tax is paid in full. For more information about your bill, read the topic Respond to Billing Notices above or call the number listed on your bill. To find more information on how to request a payment plan, visit the Payment Plan page.
What Happens If You Don’t Pay A Collection Agency
Ignoring debt can be detrimental to your credit score, and the collection agency can sue to garnish wages or seize assets in lieu of debt payment. That, in turn, affects your ability to access financial products, and when you are offered a loan or line of credit, it will likely come with a high-interest rate. Bad may also affect the way potential employers view your application.
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Can I Refuse To Deal With A Debt Collection Agency
You can refuse to deal with a debt collection agency. If you know who the original creditor is, you might be able to pay the creditor instead.
On the other hand, if the debt collection agency owns the debt, then you might not be able to deal with the creditor anymore. That is why you should reach out to the original creditor to find out more about the debt. You need to see if the debt is actually yours, and see what your options are.
Learning That You Have Debts In Collection Can Add A Lot Of Stress And Anxiety To Your Life
If youve fallen behind on your bills or debts, a debt collector may contact you. Debt collectors are typically people or agencies paid by creditors to collect on certain past due debts.
But dont panic if you have debts in collection and dont ignore the debt collectors either. Instead, educate yourself about your rights, the effects on your credit, and your best options for working with debt collectors. Heres what you need to know so you can move forward.
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Find Out If A Credit Agency Tried To Contact You
Debt collection agencies only get paid if they collect from you, so usually youll know if you have accounts in collections. However, if youve moved or changed your phone number, a collection agency could be trying to reach you at an old number. If you see a collection account on your credit score, contact the creditor listed.
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Wait Until It Falls Off
When the debt in question is legitimate and you cant convince the debt collector to delete it from your report, your only remaining option is to wait. After seven years from the date the account first became delinquent, the collection should fall off of your credit report.
Although this means the collection will continue to impact your credit score its impact will lessen as time passes.
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Getting Your Credit Reports
You can get free copies of your credit reports from the 3 credit agencies – Experian, Equifax and TransUnion . Ask for the ‘statutory report’. Its worth getting reports from all 3 agencies as they sometimes have different information.
Your credit reports might not have details of all your debts, so you should also look at the information your creditors have sent you. Credit reports dont normally show changes in the last 4 to 6 weeks. They also wont show if you have:
- council tax arrears
- money you owe to family and friends
- money you owe to tradespeople, like builders or solicitors
Always Be Prepared Generally And Specifically
NASCAR great Bobby Unser is credited as saying, Success is where preparation and opportunity meet. We couldnt agree more. You can never be over-prepared when it comes to tackling a collection call.
Be Ready to Handle Excuses
Before making your next collection call, take time to compile a list of common customer excuses, matching them with effective rebuttals. Write them down on file cards or include them in your computer scripting. Group them by category and keep them handy. Exchange ideas with others in your department. Then, when the customer tries to end the call by offering an excuse, you can take control by countering with a well-thought-out reply and returning to the purpose of your call collecting the debt.
Here are some examples from our collection experts to get you started:
Customer:The check is in the mail.
Collector:Great! May I have the check number, amount, and date it was mailed so I can ensure it is posted correctly?
Customer:I have a cash flow problem right now.
Collector:I understand that times are difficult. Can I set you up on a payment plan, or can you make at least a partial payment today?
Customer:I dont have a copy of the invoice.
Collector:Ill fax the invoice over right now. Will you be mailing the check today?
Arm Yourself with the Facts
At a minimum, be sure to have the following in front of you before you make the call:
- Exact amount owed
- Other open invoices, even those not yet past due
Know Who Youre Calling
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How Will A Debt In Collections Affect My Credit
Unfortunately, a debt in collections is one of the most serious negative items that can appear on credit reports because it means the original creditor has written off the debt completely. So when a debt is sent to collections, it can have a severe impact on your credit scores. Thats why working hard to get current before an account enters collections can help your credit recover faster from a late payment.
Additionally, lenders also may consider frequency of debt collections. For example, someone whos had only one debt transferred to collections may have an easier time getting approved for credit than someone whose credit report shows multiple debt collections.
If you already have debts in collection, the good news is that the impact on your credit scores will diminish over time. And eventually the debt collection will fall off your credit reports completely. Generally, an account in collection will remain on your credit reports for seven years.
What You Should Do If You Know Youre Being Scammed
If you receive a call from a debt collector and decide that you are being scammed do not freak out and start yelling, calmly ask who they are and what company they are working for and then make an excuse and hang up right away. Your scammer will probably give you a legitimate name but now you need to figure out if they are actually the person they said they were. Do some research online and find out whats going on, whoever your scammer is pretending to be, youll be able to verify the real identity of the name they gave. Call the agency they said they worked for and ask questions, its your money so do what you need to do.
Just remember the two most important things you can do are stay calm and do not under any circumstances hand over any money. Do some research and verify all the information you have, making sure if its a scam or a legitimate debt collector before you make any payments is extremely important.
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