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Jan 27, 2017

How to Deal with Debt Collectors

We’ve already explained the process of how debt collection works; beginning with the first bill you miss and then to if you get sued. What if you are one of the 80% of Americans who has accumulated debt in your life?

According to a 2016 NerdWallet.com study, the total debt owed by U.S. consumers for credit cards was $747 billion, with an average of $16,000 per household that balance-carries credit card debt. Here are some other notable 2016 debt numbers: total mortgage debt was $8.35 trillion, total auto loan debt was $1.14 trillion, and total student loan debt was $1.28 trillion. (NerdWallet.com Study)

If you’re one of the millions who have debt, you may have already been contacted by a collection agency about paying off the debt. The efficiency of the debt collection process is largely dependent on your behavior as the debtor.

When a Collection Agency First Contacts You

Upon first contact, collection agencies usually focus on informing you of a debt you owe. It’s very important to be calm, reasonable and willing to discuss the claim; the process will go a lot smoother if you ensure your willingness to pay off the debt as soon as the agency provides adequate proof. Be sure make records of all calls and letters sent to you: this includes their phone number, the time they contacted you, the name of the agency, the name of the person who spoke to you, and the said amount you owe (WikiHow.com).

“The worse approach is to call up ranting, raving and basically being rude,” said Joy Baird, Director of Prestige Services, Inc. Sometimes it’s tough to face the realization that you have debt, but you should be careful not take your financial problems out on collection agencies. “We are infinitely less inclined to deal with a debtor if they have a poor attitude, do not take responsibility for the claim or attempt to blame others for the debt.”

How to Pay Off Your Debt

Once the collection agency provides adequate proof of your debt, work out a payment plan with the agency and request the collection agency send you a statement explaining the agreed amount you will pay to cancel the debt. Make copies of all documents agreed by you and the agency.

“We are willing to work with a debtor on a payment plan as long as the plan is reasonable and finished within a reasonable period; say 6 months to a year max,” said Joy Baird, Director of Prestige Services, Inc. You can request a “pay for delete” deal, which means you agree on an amount to pay and the agency will remove the collection item from your account (MagnifyMoney.com).

When paying the agreed amount, consider setting up an account with a separate bank than your normal bank. Putting the agreed amount of debt payment in the separate bank account will ensure the collection agency doesn’t have access to your normal bank account. Use a bank check or money order to pay the agreed amount and remove the debt item from your record (WikiHow.com).

Sources

NerdWallet.com Study: https://www.nerdwallet.com/blog/average-credit-card-debt-household/
WikiHow.com: http://www.wikihow.com/Deal-With-Collection-Agencies
MagnifyMoney.com: http://www.magnifymoney.com/blog/consumer-watchdog/debt-in-collections

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