6 Things to Know If Your Debt is Sent to Collections
All hope is not lost if your debts are sent to a collections agency. It is still possible to work with them amicably to reach a settlement, to consolidate your bad debts, or to devise a payoff plan that works for you. Nonetheless, collections agencies are notoriously difficult to deal with, aggressive, and not shy about contacting you often to ask for payments. That said, it is important to understand your rights when it comes to dealing with collections agencies.
Here are six things you should know if your debt is sent to collections.
#1: If you think your debt is invalid, speak up.
Within 30 days of the first contact from the collections agency, write a letter (certified, return receipt requested) disputing your debt. In the letter, you will need to explain that you believe the debt is invalid and request that the collector ceases and desist any and all attempts to collect it. You should also request that the collector submit concrete proof of the debt’s validity. If you fail to take these steps within the 30-day timeline, you will lose the opportunity to dispute the debt unless and until you end up in a lawsuit — and at that point, fighting the debt will be an uphill battle.
#2: If you dispute the debt and the collections agency provides proof that you believe is invalid, you should contact the CFPB (Consumer Financial Protection Bureau).
The CFPB has handled more than one million consumer complaints, helping them connect with creditors to obtain more direct, timely responses about issues with disputed debts. If you believe the collector’s proof is invalid or incomplete, contact the CFPB, providing them with as much documentation as possible to support your claim. Doing so will not only connect you with professionals who can get you a quicker response from your collector, but will also give you a paper trail if you need to take the issue to a court for resolution.
#3: You can opt to dispute the items with credit bureaus.
You can dispute your debt online through Transunion, Equifax, and Experian. The process is fairly straightforward, and it shifts the burden of proof to the collector. If the collector fails to provide the required proof within 30 days, the information can be erased from your credit bureau.
#4: You have rights.
Collections agencies are notoriously aggressive: Their sole priority is to collect the debt. However, they do not have free rein to contact you any time of day or night or to use any means available to get you to pay. Creditors are strictly regulated by the FDCPA, or Fair Debt Collection Practices Act, which places strict limits on the means and manner by which they can contact you. For example, creditors cannot contact you by phone before 8 AM or after 9 PM; they cannot contact you directly if they know you are represented by an attorney; they cannot publish your name on a “bad debt” list; and they cannot use abusive or profane language when communicating with you.
If you feel that your collector is being exceedingly aggressive or even abusive, cease all communication with the agency and immediately engage an attorney to inform you of your rights and to help you enforce them.
#5: Try to pay your debt if they are valid
If your debt is delinquent enough to be assigned to a debt collector, it means that the creditor has shifted focus from getting you to pay all of your debts to paying something. A lot of times you might have a good opportunity at the collection stage to work out a favorable deal with the collectors to payoff your delinquent debt. Exercise caution when doing this, and if you are not sure how much and which creditor and collector to pay the first contact a debt relief professional.
#6: Doing nothing is the worst option
Sometimes collection agencies make you want to bury your head in the sand and hope that your debt problems will go away. Unfortunately, not only will your debt problems not go away but it can get worse as you might eventually get sued for not paying your debts. Circumstances in life can cause people to fall behind in paying their debts, but the best thing to do is to start paying your debts as soon as your financial situation allows it. Do not wait until you get sued as attorney fees and court costs can double your debt balances.
If you’ve run into issues with a collections company or creditor, know you have options — and you have rights.
