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Educational Consumer Tips

Collection Agency-Credit Counseling-Facts For Consumers

Author: Better Business Bureau
Category: Service

Debt can be a very stressful subject for consumers but it is important not to panic if contacted by a collection agency. When dealing with collection agencies, consumers should not ignore them, but rather take precaution in order to resolve any issue in a timely manner. Collection agencies must uphold to the Fair Debt Collection Practices Act so an ethical collection agency should not be difficult to deal with.

Tips for Dealing with Collection Agencies: 

Understand the Fair Debt Collection Practices Act.  This act prevents collection agencies from harassing consumers and using unfair treatment towards whoever they are contacting about specific debt. Collection agencies are forbidden from: 
Using threats and profane language Publishing the names of consumers who have not paid their debt
Repeatedly calling (The collection agency should only call a maximum of three times during a seven day period.)
Contacting consumers before 8:00 am or after 9:00 pm unless given permission
Contacting consumers at work if consumers have asked them to refrain
Contacting outside parties about the debt, unless it is to find location information

Get Everything in Writing.  Once a debt collector contacts a consumer, a written statement must be sent within five days notifying the consumer of how much they owe and the name of the creditor where the debt is owed. If a consumer suspects they do not owe the debt, the information sent should provide instructions on how to take proper action. When challenging the debt, send the collection agency a certified mail response within 30 days of receiving the collection notice. A collection agency may contact the consumer again if the creditor supplies proof of the debt.   

Keep All Records.  Keep track of all calls received by the collection agency. Never give out personal or financial information until you are sure the collection agency is legitimate. Write down the collection agency that is calling, when they are calling, and the total amount of debt they say is owed. Make sure to save all written statements that are received from the collection agency, as well as, sent to the collection agency. Consumers are able to send a letter to the collection agency to stop being contacted by the debt collectors, but this does not erase the debt that is owed.

Try to Negotiate.  If the debt is proven, try to negotiate if the amount cannot be afforded. Ask to work out a deal to pay a smaller percentage of the owed debt or ask to pay on a monthly schedule. If the collection agency agrees to another offer make sure to get all the details in writing. Save the documentation of resolved debt as proof the debt has been paid.  

If the Debt is Not Paid.  When a consumer does not pay the debt, a creditor can take the consumer to court to sue for the debt. If the court rules the debt must be paid, the creditor can order the bank or other third parties to give funds from an account to pay the debt. Do not ignore any lawsuits; you will forfeit the right to fight the case. Make sure to respond to the lawsuit by the date that is given.

Problems with a Collection Agency.  If the collection agency has violated the law in any way, you can report the problem to your Better Business Bureau, the state’s Attorney General, or the Federal Trade Commission. Consumers have the right to sue a collection agency for violating a law within one year of that date.