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COLLECTION AGENCIES
A collection agency is an independent business set up to collect bad debts for a
creditor who has been unable to reconcile the debt using their standard billing and collection procedures. Once a creditor has exhausted it's efforts in collecting a past-due account, they will in most cases turn it over to a collection agency, who specializes in collecting debts.
Collection agencies are commonly paid in one of two ways by creditors.
Agencies may buy your debt at a discounted price from your creditor. They then keep all amounts collected from you for themselves. Or they may work on a commission basis, collecting a percentage of the money that they have collected on behalf of the creditor and forwarding the balance to the creditor.
Collection agencies may use aggressive means to pressure you in repaying what you owe, regardless of the difficulty which caused the initial problem.
This is because the collection agencies financial welfare depends on their success on collecting debts.
There are legal controls on the practices used in which to collect a bad debt for a
creditor. This law is the Fair Debt Collection Practices Act, a federal law specifically passed to reduce collection agency harassment of consumers. The law was initiated by Congress once it realized that because of some desperate harassment by collection agencies, many people were declaring bankruptcy to get relief. Since this was in nobody's best interest, they wrote this law which controls and regulates the measures used by collection agencies and attorneys who collect bad debts on a regular basis.
Some of the violations by collection agencies are:
Calling you before 8 a.m. or after 9 p.m..
Communicating with you in an abusive manner.
Calling you at work after you have notified them in writing not to do so.
Embarrassing or threatening to embarrass you on the job.
Contacting family members or neighbors about your debt.
Calling you repeatedly, despite your request to leave you alone.
Threatening you with police arrest if you don't pay the bill.
If any of these practices have been used against you, the collection agency is in violation of the Fair Debt Collection Practices
Act. You do not have to put up with any of this!
Many people, unfortunately, do not know their rights. Collection agencies count on this and in some cases still regularly train their personnel
on how to intimidate you into paying your bills. Don't let this happen. Insist on your rights when dealing with collectors.
The law gives you the right to stop collection agencies from contacting you.
All you need to do is write a letter telling them to stop. (Make sure to send it via certified mail, return receipt). After that, the only time they can contact you is to inform you of some specific action that is being taken by them or your creditor to recover the debt. In most
cases this would be some type of legal action through the courts.
If you have retained an attorney, the law states that the collector may no longer
contact anyone but your attorney. If you have no attorney, the collector may only contact other people in an attempt to locate your residence or employment. They may not inform those people about your debt, and also no person can be contacted more than once, even for limited information. Until you write a letter to the collection agency, they do have the right to contact you repeatedly within reasonable limits until such request is made in writing.
The best practice for dealing with collection agencies is to follow these basic guidelines:
Make detailed notes when you get contacted by an agency.
Immediately ask for the persons name who is calling.
Log the date and time of the call, the agency name, what was said to you and in what manner, and how you responded.
You may also let them know that you are logging this information.
If you have been threatened or treated in an insulting manner, calmly tell the agent
that you know your rights and that you will file a complaint. If that doesn't work, then write a formal letter of complaint to the Federal Trade Commission. You want the FTC to take whatever steps necessary to investigate and act upon your complaint. Do not forget to send a copy of this letter to the collection agency itself. Always send your correspondence via certified mail, return receipt.
Furthermore, if the collection agency has caused you severe damage, like creating such emotional stress that you are having difficulty functioning normally or has resulted in you getting fired from your job,
contact an attorney and file a lawsuit right away.
The bottom line is, you're not even obligated to deal with the collection agency when trying to repay a bad debt.
Work directly with the original creditor. If the collection agency bought the debt at a discount, any adjustment to be made will have to be between them and the creditor. You are not bound by their arrangement.
Contact your original creditor, we recommend the credit manager, and tell them you wish to clear your debt. Explain to them your financial set back which caused the problem in the first
place, your now back on your feet and want to show good-faith in paying off your obligation.
Tell them you are prepared to pay out a full lump-sum settlement or arrange a payment plan in an attempt to regain good standings. If they want more than you can presently afford let them know what you can afford based on your new budget, and by requiring more, that was what got you into trouble in the first
place. Make sure you conclude the arrangement made with a letter of agreement. Be sure that your agreement includes that your credit rating will be adjusted accordingly.
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