Main Points:
- A comprehensive guide to effectively handle collection calls from collection agencies.
- Collection agencies represent creditors in collecting outstanding debts and must adhere to regulations against harassment.
- Important tips for negotiating with debt collectors and dealing with lawsuits.
Table of Contents:
1. Understanding Collection Agencies: A Guide to their Operations
2. Debt Collection Agencies: An Overview
3. Validating Your Debt: Confirming the Amount Owed to the Collection Agency
4. Determining if it's an Old Debt: Checking the Statute of Limitations
5. Negotiating with Collection Agencies: Helpful Techniques
6. Dealing with Harassment from Debt Collection Agencies
7. Addressing Lawsuits from Collection Agencies
8. Managing the Impact of Collection Agencies on Your Credit Report
When it comes to missing payments on credit cards or medical bills, you can expect to be contacted by a collection agency through calls or letters. Coping with debt can be stressful, and the pressure from debt collectors only adds to the difficulty. However, by equipping yourself with knowledge and understanding, you can effectively handle collection agency interactions.
Article Contents:
- Introduction to Collection Agencies: How They Operate
- Overview of Debt Collection Agencies
- Validating Your Debt with Collection Agencies
- Checking if the Debt is Old: Statute of Limitations
- Tips for Negotiating with Collection Agencies
- Dealing with Harassment from Collection Agencies
- Handling Lawsuits Initiated by Collection Agencies
- Managing the Impact of Collection Agencies on Your Credit Report
Understanding Collection Agencies: How They Operate
Collection agencies are private companies that work on behalf of creditors to collect overdue bills and debts. These debts can include loans, medical bills, credit card balances, utility bills, and even delinquent child support. Typically, after 30-60 days of delinquency, creditors report late payments to credit reporting agencies, who label them as delinquent. At this point, creditors may choose to handle the debt internally or pass it on to a third-party collection agency. Some third-party agencies act as intermediaries for the original creditor, earning a fee for their services. Alternatively, debt buyers may purchase past-due balances at reduced prices and actively pursue debt recovery through negotiation or legal means. It's important to exercise caution when dealing with debt collectors, verify the legitimacy of the agency, and avoid sharing sensitive information without proper verification.
Debt Collection Agencies: An Overview
If you receive calls or letters from a collection agency, it's essential to understand who they are and how they operate. The following is a list of well-known debt collection agencies, as covered by Bills.com:
- Alltran Financial
- ARS National Services
- Avante USA
- Capital Management Services
- Cavalry Portfolio Services
- CKS Financial
- Client Services, Inc.
- Convergent Outsourcing
- Credit Control LLC
- Credit Corp Solutions
- Glasser and Glasser
- Glass Mountain Capital
- Gurstel Law Firm
- Javitch Block
- Jefferson Capital Management
- Midland Credit Management
- MRS Associates
- National Enterprise Systems
- Nationwide Credit Inc
- NCB Management
- Northstar Location Services
- Portfolio Recovery Associates
- Radius Global Solutions
- Rausch Sturm
- Real Time Resolutions
- Resurgent Capital Services
- Velocity Investments LLC
- Weltman Weinberg & Reis
- Zwicker Associates
Validating Your Debt: Confirming the Amount Owed to the Collection Agency
In most cases, if you receive a call or letter from a collection agency, it's likely that you owe them money. However, since you may not recognize their name as someone you borrowed from or received a service, it's crucial
to validate the debt. Collection agencies, along with original creditors, must comply with federal and state laws governing debt collection practices. As a debtor, you have the right to request validation of the debt within 30 days of being contacted. Send a debt validation letter via registered mail, and the collection agency is required to provide you with verification, including details such as the name and address of the original creditor, a statement confirming the debt's validity, the original debt amount, and any relevant supporting documentation. If the agency fails to validate the debt, they have no legal basis for collecting it.
Checking if the Debt is Old: Statute of Limitations
The age of the debt can impact the options available to collection agencies and your negotiating power. However, it's important to be cautious about inadvertently resetting the clock on an old debt. Each state sets its statute of limitations (SOL) for debt collections, typically ranging from 3 to 10 years. After this period expires, the original creditor can no longer sue you, although they may still attempt to collect the debt through non-legal means. However, if a third-party creditor has purchased your debt, they may not be allowed to sue you once the SOL expires. Avoid making voluntary payments or acknowledging the debt to prevent inadvertently re-aging it. Determining the actual age of the debt and the applicable laws can be challenging, as collectors may interpret expiration dates differently and pursue lawsuits. Consulting a lawyer with experience in consumer law can provide guidance on how to handle a lawsuit from a collection agency.
Tips for Negotiating with Collection Agencies
Most collection agencies purchase debts at significantly reduced prices, sometimes as low as 1 to 10 cents on the dollar. They aim to close accounts quickly, even if they act as agents for the original creditors. Debt collectors employ various tactics, such as calls and emails, to pressure debtors into paying as much as possible. Given that many consumers fall behind on payments due to financial hardships, most collection agencies are willing to reach an agreement. Negotiating with collection agencies requires patience, persistence, and effective communication. Remaining calm, clear, and convincing during negotiations is crucial. Sending a debt negotiation letter can also be an effective strategy. In cases of substantial debt, engaging professional debt negotiation companies, like Freedom Debt Relief, can be beneficial due to their experience in dealing with original creditors and collection agencies. These companies possess extensive databases of past settlements, allowing their negotiators to have an idea of acceptable payment ranges. Their large teams and digital systems enable them to efficiently negotiate a settlement with the collection agency.
Dealing with Harassment from Collection Agencies
The Fair Debt Collection Practices Act (FDCPA) strictly regulates the actions of third-party debt collectors and debt buyers, prohibiting harassment. Collection agencies are not allowed to engage in actions such as using the telephone to annoy or harass, threatening arrest, using abusive or threatening language, contacting relatives or friends who are not responsible for the debt, calling at unreasonable hours, contacting consumers at their workplace, seeking unjustifiable amounts, and more. If you believe your rights have been violated under the FDCPA, you can file a complaint with the Consumer Financial Protection Bureau (CFPB), Better Business Bureau (BBB), or your state attorney general. It's also advisable to consult with a consumer rights attorney who specializes in your area to discuss the possibility of filing a lawsuit against the collection agency. This legal action could potentially result in debt cancellation and awarding of damages.
Handling Lawsuits Initiated by Collection Agencies
If your debt is in collections, and the creditor believes you have the means to pay, they may pursue a lawsuit against you. If successful, they may employ various legal remedies such as wage garnishments, bank levies, and liens on personal property. Collection agencies cannot make empty threats about
suing you, but if they genuinely intend to do so, they may mention it during a call. They often file lawsuits against debtors they perceive as having the ability to pay or those who disregard their collection attempts. It's crucial to consult with a lawyer in your state who specializes in consumer law when faced with a lawsuit. Filing an answer to the summons and complaint is essential to avoid losing the lawsuit by default.
Dealing with Collection Agencies on Your Credit Report
Negative tradelines, such as delinquent accounts, can remain on your credit report for seven years from the date of delinquency. Bankruptcies can stay for ten years, while judgments may last longer if renewed by the creditor. If you notice incorrect items on your credit report, including unfamiliar collection agencies or companies, you can file a dispute with the credit reporting agencies. Many agencies, such as Experian, TransUnion, and Equifax, provide online dispute forms for this purpose.
Remember that this information provides general guidance and understanding about collection agencies, but it is not legal advice. For personalized assistance with your specific situation, it is recommended to consult with a lawyer specializing in consumer law or a financial professional.
