Check Your Credit Reports For Collection Accounts
Its important to know how old any legitimate debts you owe are. Thats because negative information like debt owed typically stays on your credit reports for seven years.
Items like a past due account or late payment will have a negative impact on your credit history. In fact, payment history is the biggest factor in calculating your FICO® and VantageScore, so delinquent accounts with a past due balance can really harm your scores.
The Fair Credit Reporting Act lets all Americans check each of their three credit reports at least once a year for free. If you get a copy of your free credit report from each of the major credit bureaus Equifax, Experian and TransUnion you can check to see if you have any collection accounts.
Keep in mind that even if you pay off any debt showing on your credit reports, it may stay on those reports as a paid collection for up to seven years.
Withholding Information About A Debt
Debt collectors cannot legally withhold information from you about a debt. They are required to notify you in writing within five days of their first contact with you that you have the right to dispute the debt. In addition, you are entitled to request the name and address of the original creditor.
You also have the right to request verification of the debt. The debt collector must provide you with the name and address of the original creditor, along with how much money you owe. If they cant provide this information, they cannot legally pursue payment.
Fair Debt Collection Practices Act
This federal law applies only to collectors working for professional debt collection agencies and attorneys hired to collect a debt. It is similar to Texas law, but also prohibits:
- “Unfair or unconscionable means to collect or attempt to collect a debt”
- Any conduct to harass, oppress, or abuse
If you are being subjected to harassing, abusive, or fraudulent debt collection tactics by professional debt collectors and you want to stop further contact with you notify the collector in writing. Keep a copy of your letter and send the original to the debt collector by certified mail.
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Strategies To Deal With Collection Agencies Collection Agencies
Getting into financial trouble that results in debt collection is not an easy challenge to deal with for anyone. Whether financial management has been an ongoing battle or a few small missteps here and there led to the issue, receiving a call from a debt collection agency can be jarring. Unfortunately, the strategies for dealing with debt collection agencies are not well-known. Many feel as though they have no choice but to accept the calls, and in some cases, respond to the berating demands for money from the other side of the line.
However, debt collection agencies that are licensed to provide collection services to third parties have a strict set of rules they must follow when interacting with consumers. If you have been contacted by a debt collector, here are five steps you can take to eliminate some of the stress you may experience.
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If You Find An Error In The Report Dispute The Collection
Errors on your credit report can be removed or corrected. In most cases, you have to initiate this process. For incorrect information, you can file a dispute with the credit bureaus to have the accounts investigated. Your dispute letter should include:
- Your contact information: Complete name, address, and telephone number
- A clear list of each mistake with account numbers
- An explanation as to why and how the information is incorrect
- An explicit request for the information to be removed or corrected
- A copy of your credit report with the erroneous items highlighted
- Supporting documentation proving how the information should be reported
There are many ways you can contact and dispute items on your credit report. The Consumer Protection Bureaus guide on disputing credit report errors contains the following directory of each the credit reporting agency and where to send disputes:
According to the Fair Credit Reporting Act , credit reporting agencies and furnishers must investigate and respond to disputes within 30, and sometimes up to 45, days of receiving your . If the information is found to be correct, then it will remain on your report. Otherwise, it will be removed or updated.
Collection Agencies Are Skilled At Negotiation
Collection agencies specialize in finding creative solutions that work for both parties so that a satisfactory outcome can be reached without the need for legal action. For businesses facing theft by dispute situations specifically, they provide much-needed assistance and guidance throughout the entire process.
They use their experience and expertise to negotiate with debtors on behalf of business owners and ensure that all disputes are properly resolved. Additionally, many collection agencies even offer bonding services which can help protect businesses from potential losses due to theft by dispute scenarios or other similar issues.
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How To Improve Your Credit When You Have Collections
If you have legitimate collection accounts on your credit reports, theres nothing you can do to get them removed before their expiration dates. But you can take steps immediately to start rebuilding your credit and reversing the damage those collections have done to your credit score:
When it comes to accurate collection entries on your credit reports, theres nothing you can do to get rid of them except wait for their inevitable expiration date. So dont fret over past mistakes instead, try to avoid future missteps, improve your credit habits and rebuild your credit in the process.
How To Negotiate With Creditors The Right Way
Although you can negotiate directly with your creditors, a debt management tactic that works especially well for medical bills, well focus on negotiating down your debt once its been sent to collections. If you follow these steps, you should be able to negotiate your debt to an amount that works best for you.
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When A Collection Agency Contacts You
The first time a collection agency contacts you, it must give its name and address, and the name of the original creditor . It must also tell you in writing the amount of the debt and any fees which have been added, such as interest or collection fees. You must also be informed of your right to dispute the information.
- A collection agency cannot call or write to you more than three times a week. Only one of those calls can be at work. You cannot be called between 9 pm and 8 am
- A collection agency cannot harass, intimidate, threaten, or embarrass you
- A collection agency cannot threaten violence, criminal prosecution, or use offensive language and
- If you send a written statement requesting a collection agency to stop, it cannot continue to call or write to you to demand payment.
If You Dispute A Debt
If you dispute the legitimacy of something in your debt collector’s file, you must give the collector written notice. Simply calling the collector won’t cease collection activities.
If possible, send your dispute letter by certified mail so you know it was officially received by the collector. The collector then has 30 days to determine whether or not the disputed item is correct.
If the disputed item is correct… The debt collector can continue collection activities.
If the disputed item is incorrect… It must be corrected. The debt collector must notify anyone who has already received a report containing the incorrect item. If, at the end of 30 days, the debt collector has not been able to determine whether the item is correct or not, they must make the change you requested and notify anyone who received a report containing the incorrect item.
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Debts They Can Collect
Debt collectors work with lenders to collect on all sorts of debts. A debt collector can call you about:
- Unpaid utility or phone bills
According to Nolo, the two types of debt most likely to be sent to collections are credit card debt and unpaid phone bills. Other common types include utility bills, car loans, and medical debt.
How To Pay Off Collections
The first option is to offer a lump sum payment. If youve got the money, you can pay the collector in one go this is the cheapest option because getting rid of the debt will get rid of the accumulating interest too. Naturally, paying everything off like this will increase your credit score almost immediately.
The second option is setting up a payment plan. Most collectors will accept to restructure your payment terms just be realistic with what you can pay and make sure to get all the tiny details in writing.
The third option is to try and settle for less. You can send a letter to your collectors saying that you cannot pay the full amount but are willing to take care of 80% of the debt with one lump sum payment. However, this will hurt your credit even more and theres no guarantee that the collectors will agree to your proposal.
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Try A Balance Transfer Card To Get Out Of Debt
If your debt has not gone to collections yet, one option to help you save tons on interest and pay it off more quickly is to use a balance transfer credit card that offers 0% interest for a certain length of time . The options below all require at least a good credit score, so they are usually only effective to use before your debt falls into delinquency.
The Citi Simplicity® Card lets you pay off debt over a long period, with a 0% intro APR for 21 months on balance transfers from date of first transfer . There is an introductory balance transfer fee of 3% or $5, whichever is greater for transfers completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer .
File A Complaint With The Ftc & Cfpb
Once you have proof, file a complaint with the Federal Trade Commission or the Consumer Financial Protection Bureau . You can also file a complaint with your state attorney generals office.
The FTC keeps a list of debt collectors that are banned due to illegal collection activity. At the time of this writing, there were more than 100 firms on the list. If one of these firms is contacting you, they are in clear violation of the law.
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What To Know About Debt Collection
What types of debts are covered under the law?
Your credit card debt, auto loans, medical bills, student loans, mortgage, and other household debts are covered under the FDCPA. Business debts are not.
Can debt collectors contact me at any time or place?
No. Debt collectors cant contact you before 8 a.m. or after 9 p.m., unless you agree to it. They also cant contact you at work if you tell them youre not allowed to get calls there.
How can a debt collector contact me?
Debt collectors can call you, or send letters, emails, or text messages to collect a debt.
How can I stop a debt collector from contacting me?
Mail a letter to the collection company and ask it to stop contacting you. Keep a copy for yourself. Consider sending the letter by certified mail and paying for a return receipt. That way, youll have a record the collector got it. Once the collection company gets your letter, it can only contact you to confirm it will stop contacting you in the future or to tell you it plans to take a specific action, like filing a lawsuit. If youre represented by an attorney, tell the collector. The collector must communicate with your attorney, not you, unless the attorney fails to respond to the collectors communications within a reasonable time.
Can a debt collector contact anyone else about my debt?
What does the debt collector have to tell me about the debt?
What if I dont think I owe the debt?
What are debt collectors not allowed to do?
Ask The Debt Collection Agency To Validate Your Debt
As mentioned above, you have the right to get all the information pertaining to the debt. Within 5 days of contacting you, the debt collection agency has to verify details around the original debt like the name and address of the original creditor, amount, date incurred, etc. They should also have your correct contact information connected to the debt to make sure that its actually yours.
If you dont believe the debt is yours, you have up to 30 days to dispute it. While the collector is confirming the validity of the debt, they cant engage in any collection activities. If the debt cant be verified, the collection agency has to stop collection activities and remove it from your .
Need help coming up with the best letters to communicate with debt collectors? The Consumer Financial Protection Bureau has a number of debt collection letter templates you can use to send to the collection agency.
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Consider The Snowball Method Of Paying Off Debt
This involves starting with your smallest balance first, paying that off and then rolling that same payment towards the next smallest balance as you work your way up to the largest balance. This method can help you build momentum as each balance is paid off. Understand the pros and cons of this debt pay down strategy by reviewing the Snowball versus Avalanche methods of paying down debt.
What Collection Agencies Can Do
The above story is fictional for this blog, but it is a reality for many business owners. We know collection agencies are companies that you never hope to use as a small business owner, but they can be efficient venues for recovering debts you are rightfully owed. They can also help you when you become the target of malicious consumer behaviors.
As a business owner, you understand that dispute resolution is an unavoidable part of doing business. You have probably already established some appropriate systems to manage those disputes as well. However, many business owners face a unique challenge when it comes to theft-by-dispute.
This situation arises when customers take advantage of the dispute resolution process by disputing legitimate charges with the intent of stealing from you. Unfortunately, this type of theft can be difficult for businesses to detect and recover from.
Fortunately, collection agencies can help business owners navigate this situation. In this blog post, we examine how they do this and what you should do next if you feel youre being targeted in a theft-by-dispute situation.
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Types Of Debt Collectors
There are three main types of debt collectors:
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Right To Know The Debt Collector Or Debt Collection Agency
Under the FDCPA, debt collectors are required to identify themselves when they attempt to collect a debt as well as note that any information you give them will be used in an attempt to collect the debt. They also must give you the name of their company or agency. Legitimate collectors should be able to give you a business address and contact information, too.
If a debt collector has given you their name and identifying info but youre still suspicious, you may be able to find more information about the collector via your states attorney generals or consumer affairs office.
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How To Get Out Of Paying Debt Collectors
Were going to be real honest here: You cant get out of paying a collector. If you borrowed money, you need to pay it back .
Learning how to negotiate with debt collectors is for your emotional and mental protection . . . not a free pass to skip out on money you actually owe. You need to get your bills paid .
Debt collectors can refuse a payment plan. Theyre not under any legal requirement to accept smaller payments over a period of time. Usually theyre going after the full amount, because obviously, debt collectors gotta collect. But this doesnt mean they wont work with you.
