Dealing with Creditors and Collection Agencies

Dealing with Creditors and Collection Agencies

Guidelines & FAQ

Always remember the following values when dealing with collection agencies:

  • Always keep your composure
  • Never stoop to their level
  • Tell the truth

Your priorities

Collection agencies will try to make you believe that paying the debt is the only thing that matters. Maybe to them, but not to you. Your priorities are:

  • Food
  • Basic clothing
  • shelter, including utilities
  • transportation
  • insurance (homeowners, vehicle and health)

Once you have these taken care of, make room in your budget because you should pay off the debt.

5 Steps for Dealing with Collection Agencies

  1. Check your credit report. Make sure the debt is yours! You’d be surprised at how many weird things show up on a credit report.  You can get 3 free credit reports every year from www.annualcreditreport.com. We’d be happy to assist you with reviewing your report.
  2. Know your rights. The Fair Debt Collection Practices Act (FDCPA) gives rights to consumers and regulates the practices of collection agencies and creditors. Become familiar with what creditors can and cannot do. If they violate any of these rights during the phone call, tell them specifically that they are violating the FDCPA and if they continue to do so, you have legal options. Then end the call.
  3. If the debt is really old, try to negotiate a settlement with the creditor. If you do come to an agreement for a settlement amount, get the agreement in writing.
  4. Protect your information. Some creditors have been known to abuse access to bank accounts, should this happen to you, contact us.
  5. Make a plan to pay off your debts. A plan can help you maintain focus when talking with individual creditors. Contact us today to learn how.

FAQ

Will Center for Financial Education help me with collection agencies?

  • Yes. We deal with collection agencies frequently. Contact us today to see how we can help you.

What can I negotiate?

  • Center for Financial Education recommends asking for:
    • a lower interest rate
    • accrued interest to be waived
    • late fees, penalties, and/or legal fees to be waived
    • the loan to be extended or restructured, giving you a “grace period”—contact us for assistance.
    • a payment plan that would allow you to pay off the amount currently owed, but with no added interest or fees added in the future—contact us for assistance.
    • a “lump sum” settlement (sometimes as little as 35 to 50 percent of the total owed)—contact us for assistance.

You may or may not have success, but it doesn’t hurt to ask.

Q. What do I do if I am being harassed with phone calls?

A.  Under the FDCPA, you can demand that the phone calls stop and have them correspond with you only in writing.  This request has to be made in writing via certified letter (so you have proof it was received).  They will have 72 hours to comply.  If they don’t, you have significant negotiating leverage.