How to Work with a Debt Collection Company
If you owe a debt to any company and you are unable to pay, in certain situations, that company may ask a third party to collect that debt on their behalf. In other situations, they may actually sell the debt to a third party altogether.
For consumers who find themselves being contacted by a third party, it can be a little unsettling.
If you are contacted by a collection agency (CA), you need to protect yourself. Before you enter any agreement with a debt collection company, it is really important that you get some important facts out of the way before you begin paying back a debt.
Some important pointers are as follows:
- Proof that the CA is assigned to collect the debt by a creditor.
- Detailed payment history starting with the original creditor.
- Copy of the original signed debt agreement or application (as with a personal loan or credit card company).
- If the reply is not satisfactory, inform the CA that they have not supplied you with sufficient information to allow you send any payment to them. Also, make sure that you request they remove any reference on your credit report and if they fail to do so, you reserve the right to seek legal advice through the free legal aid service; FLAC.
- If the CA validates the debt and it turns out that you owe the money, then you need to contact the creditors. Request them to pull your account back from the collection agencies.
- If you have enough money offer lump sum payment to the creditors.
- If you don't have enough money, make your creditors aware of your inability to pay off the total debt and offer them an alternative payment plan.
- If your creditor doesn't pull back the account from the CA, negotiate with the collection agency with calmness and determination.
- Avoid sending cash and make the payment in such a way that you get a receipt. Don't forget to mark your envelope as "Payment enclosed". Also, in such cases, it can be worth your while to send all correspondence via registered mail, make sure to request a delivery receipt.
- Don't miss payments and make sure that your cheque doesn't bounce while paying the collection agency.
- Try to clear the debt account in time so that you don't have to deal with the CA again.
In case you aren't comfortable dealing with creditors/CAs, you can avail of the services of a professional debt management company. In this case, you will have to pay some fees and debts may be paid off quicker or take longer, depending on how much you owe and how prepared the creditor is willing to negotiate.
If you have experienced a reduction in wages or other setbacks that have affected your ability to pay your bills, you are not alone. Lots of people face a similar difficult financial situation. In such situations, it would be wise to use the MoneyCoach personal budgeting planner to help you prepare your case to the creditor or collection agency.
Even if you do not have debts with a debt collection company, using a personal budget planning tool it is a great starting point to help get your finances back on track and keep them there.
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