Medical or personal emergencies can quickly become a seemingly insurmountable debt, when you are unable to pay and are turned over to a collection agency. None of us are immune to financial stress in this difficult economy, so read on for our 10 tips to beat the collection agencies at their own game:
- 1. Be Proactive
As annoying as it can be dealing with debt collectors, the sooner you tackle the issue the better. Waiting will only rack up your bill, as interest, collection fees, and legal fees will accumulate.
- 2. Verify the Debt
The collection agency has to provide proof that you owe the debt within 30 days of the date of your written request for verification.
- 3. Dispute the Debt
If you are disputing the money owed, do so in writing. Collection agencies then have to report it to credit bureaus as such.
- 4. Request Itemized Statements
Insist on an itemized statement that shows exactly what part of your payments goes toward legal fees, collection fees, interest, and principle. This shows, if a payment has been applied incorrectly.
- 5. Protect Your Credit
Collection action has a significant negative impact on your credit score. Check your credit on www.annualcreditreport.com with a free yearly report. You can also dispute false account information on the same website.
- 6. Keep Your Personal Life Private
If you don’t want a collection agent snooping around in your personal information, lock down your social media profiles. It’s the easiest way for collection agencies to find your private information.
- 7. Know Your Rights
The Fair Debt Collection Practices Act (FDCPA) protects consumers. For example, a collector can’t verbally abuse you, share information with third parties, threaten you with arrest, call too early or too late, or harass you at work. To learn more, visit www.ftc.gov.
- 8. Cease And Desist
If you want debt collectors to stop contacting you, write a cease and desist letter. The collection agency will contact you once more to inform you of their next steps. After that they are only able to communicate with you through an attorney or the court system.
- 9. Legal Suit
If a collection agency files a legal suit against you, you will be served with papers. If you file an answer, the court might schedule a mediation to find a compromise between the parties. If you don’t file an answer, the collection agency is likely to be granted a default judgment.
- 10. Follow Up
After an account has been paid off, request a receipt in writing and keep it with your records. It can take up to three months for a payoff to reflect on your credit report. Follow up with the collection agency, if you don’t see the account status changed after 90 days.
Educating yourself and following these 10 tips will go a long way in beating collection agencies at their own game.