Conquering Collections

Dealing with collection agencies can be a very daunting task. Especially if you are not sure what to expect or even what to do about the situation. You may even get yourself worked up just imagining what type of person you will get over the phone, will they be nice or a big jerk! The problem is, it will not just go away and it will not get better without you taking control of the situation. But you got this! Take a deep breathe and read on for how to conquer collections.

Don’t Ignore Them

Firstly, as much as we want to, ignoring them will not make them go away. In fact, it will only make them worse. After a while of trying to reach you to collect their money, they will reach out to your place of employment to garnish your pay. Depending on where you work, you may care how this will affect your professional reputation.

While you are not obligated to talk to them, they do have the right to take legal action to collect the debt. However, it is important to make sure the debt does belong to you and that the information is correct.

Confirm the Debt

According to the Consumer Financial Protection Bureau, the debt collector must be able to provide details about the money they are claiming you owe. As soon as you receive that first letter or phone call, you have 30 days to request proof of the debt. It is in your best interest to request this in writing. Once you send in your request, the collector is not allowed to contact you in any way until you have received proof of debt in writing.

If the debt collector attempts to reach you before you have received the proof in writing, they are in violation of the FDCPA(Fair Debt Collection Practices Act).  You have the right to file a complaint with the attorney general’s office in your state, the Federal Trade Commission or the Consumer Financial Protection Bureau.

Know your Rights

• You are not required to give any of personal information to a debt collector. They may ask for information to “confirm” your identity. However, information such as your social security number and date of birth is not required.

• Collection agencies are not allowed to speak to your friends and family about your debt. They can call them to find out how to locate you, but that is the extent of the conversation they are allowed to have.

• You can tell them, in writing, to stop calling you. This will not help in any way to get rid of the debt. But if you feel that they are harassing you and constantly calling, submit a request in writing for them to stop calling you. The collection agency will then only contact you to inform you of any actions they are taking to collect the debt, such as filing a lawsuit.

Garnishments

Every State has different laws concerning if a debt collector is allowed to garnish your wage. If this is a concern of yours make sure to check your local laws. If you7 live in a state that does not allow for garnishments, it is illegal for the collection agency to threaten garnishment of your pay.

However, garnishments never come out of nowhere. A collection agency can not just start garnishing your wages. They do have to go through the court system and file a judgment against you. Please keep in mind this does not apply to student loans and mortgages.

Your Credit Score

Unfortunately, once an item is sent to collections it is on your credit report. It will remain there for the next 7 years. So do not think that paying in full will make the account disappear from your report. However, don’t let that be the reason you do not pay it either. If you are ready to pay the account balance off or negotiate with the collector, send a request, always in writing, to the collection agency. You can request that in acceptance of the payment, they will remove the debt from your credit score. Be sure to receive their response in writing before you make the payment.

Your Options

So what are your options for dealing with the debt? Unfortunately, at this point, the debt collector has more of a say. But you know the saying “it never hurts to ask”, it most certainly applies in this case.

1. Option 1: If you have half or the majority of the debt in collection, ask the agency about a settlement. Offer to pay half of it right away in exchange for the account being cleared and removed from your credit. Remember to always get their response in writing before making a payment.
2.  Option 2: Don’t have the money to make a large payment? You can request to set up a payment plan. Make sure you are able to follow up with the payment plan and do not miss a single payment.

Legally, debt collection agencies do not need to allow you to do either of these options. It really will depend on who you end up dealing with.

Get your Hustle On

If you don’t have any extra money to put towards the debt, it may be time to bring in extra income. Consider a second job for a few months. Look into ways to make extra money on the side. You may find it beneficial to keep hustling after your debt is paid and use it to start building an emergency saving. Already strapped on free time? Look for ways to drastically reduce your spending. Use the money you save every month to apply to your debt.

Just remember you got this!! Request everything in writing and don’t let them bully you! I would love to know if you found any of this useful or have anything more to add.