Collection Agencies
How do you tell if your account has been turned over to collections? Your credit report is an excellent place to start. If you haven’t already done so, getting a copy of your credit report is crucial. To obtain a copy of your credit report, you may contact the credit bureaus at their websites:
http://www.experian.com
http://www.transunion.com
http://www.equifax.com
If a collection account is not listed on your credit report, then I assume you are reading this document because an agency has either called or sent you a letter, demanding payment.
Debt Settlement steps – Collection Agency
As with the debt settlement techniques we gave you when dealing with the original creditor, let’s just break this down into manageable steps. You need to determine:
1. Identify debts
2. Check statute of limitations
3. Who to contact
4. How to contact the collection agency
5. How much to offer
6. Tips on paying once you arrive at a number
7. Negotiating your credit rating
Before you attempt to settle a debt, check the statute of limitations
Collectors only have a certain amount of time to sue you for payments. The first thing you should do is to determine if the statute of limitations for
collecting a debt in your state have past. If the debt is older than the statute of limitations, you tell the bill collectors they are wasting their time by harassing you for an uncollectible debt, as the original creditor or the assigned collection agency cannot take you to court to get a judgment.
Can the debt still be reported on your credit report?
After 7 seven years (in most cases), a debt will disappear from your credit report. If the reason you want to pay this debt off is to clean up your credit to purchase a home, and you can challenge the debt on your credit report, why pay this off? Your creditors have not bothered to sue you until now, it’s likely that they won’t in the future, either. Credit repair is beyond the scope of this book, but most types negative information come off after 7 years. You can challenge this listing on your credit report and it will come off.
Who do you contact?
The best place to look for information on contacting a collection agency is your credit report. We gave the website addresses in the section above.
If you’ve been unable to get the address and/or fax number for the collection agency, here are some on-line resources:
The Better Business Bureau – http://www.bbb.org
http://www.millcbs.com/search.asp
http://www.411collectionagencies.com/AGENCIES_US/
http://www.residentagentinfo.com
Identify your debts
Other than accounts for which you’ve directly received letters and/or phone calls, you can identify collection accounts from your credit report. Once you get your credit report, find the debts on the report that you are interested in settling. The report will say next to the account:
�� Account turned over for collections, or
�� Account sold, or
�� Account charged off
�� Will say nothing at all, but give late payment dates
How to contact a collection agency
Never contact a collection agency by phone. Never! Collection agents are not trained to settle with you, they are paid to collect money, and they will say anything to get you to pay. You are opening yourself up to possible abuse, which though it is illegal, is extremely common. If you say the wrong thing to a collector in the heat of the moment, it could ruin your chances for a good settlement in the future.
Letters are the best way to contact a collection agency. You want to send the letter certified, signature required so you have a paper trail to follow during the settlement procedures.
How much to offer
First of all, make sure you can back up any offer you make with real cash.
To give you some background, most bad debt companies pay or receive literally pennies on the dollar for the debts on which they are trying to collect. The amount that companies pay for bad debt depends on the type of account and its age:
Source: Sean McVity, portfolio broker at Keefe, Bruyette & Woods.
With this in mind, you should always start your offer at 25% or less. Let's understand the math here. If your debt is $1000, let's say at the most, the collection agencies have paid or will collect 7 cents on the dollar, or $70. If you offer them $250 (25%), they are still making a profit of $180. Remember, the credit card companies are out of the picture at this point. This money goes directly to the collection agencies.
Tips on Paying Once You Have Agreed On a Number
Payment plans
Keep in mind that most collection agencies will insist on payment in full. They will negotiate a payment plan if that’s the best they think can get, but it’s not to your advantage. Usually you can pay on it forever and never make it disappear. This is because the collection agency will keep tacking on interest and fees. In addition, collection agencies are terrible at keeping track of payments. On purpose maybe? I’ve talked to numerous clients who made over a year’s worth of payments and their balances did not go down at all.
If you can’t come up with a cash settlement, I would suggest sending the collection agency a debt validation letter or cease and desist letter to keep them off your back until you can scrape together the money. It’s really not a good idea to make payments to a collection agency over an extended period of time.
Negotiating your credit rating on a collection
If you are dealing with a collection account, you want a complete removal (a deletion) from your credit report, however, NOT a “Paid As Agreed”. Any notation on your credit report from a collection agency is considered negative, so even if the listing read, “this person has the best paying record we’ve ever seen”, it would hurt your score.
http://www.experian.com
http://www.transunion.com
http://www.equifax.com
If a collection account is not listed on your credit report, then I assume you are reading this document because an agency has either called or sent you a letter, demanding payment.
Debt Settlement steps – Collection Agency
As with the debt settlement techniques we gave you when dealing with the original creditor, let’s just break this down into manageable steps. You need to determine:
1. Identify debts
2. Check statute of limitations
3. Who to contact
4. How to contact the collection agency
5. How much to offer
6. Tips on paying once you arrive at a number
7. Negotiating your credit rating
Before you attempt to settle a debt, check the statute of limitations
Collectors only have a certain amount of time to sue you for payments. The first thing you should do is to determine if the statute of limitations for
collecting a debt in your state have past. If the debt is older than the statute of limitations, you tell the bill collectors they are wasting their time by harassing you for an uncollectible debt, as the original creditor or the assigned collection agency cannot take you to court to get a judgment.
Can the debt still be reported on your credit report?
Who do you contact?
The best place to look for information on contacting a collection agency is your credit report. We gave the website addresses in the section above.
If you’ve been unable to get the address and/or fax number for the collection agency, here are some on-line resources:
The Better Business Bureau – http://www.bbb.org
http://www.millcbs.com/search.asp
http://www.411collectionagencies.com/AGENCIES_US/
http://www.residentagentinfo.com
Identify your debts
Other than accounts for which you’ve directly received letters and/or phone calls, you can identify collection accounts from your credit report. Once you get your credit report, find the debts on the report that you are interested in settling. The report will say next to the account:
�� Account turned over for collections, or
�� Account sold, or
�� Account charged off
�� Will say nothing at all, but give late payment dates
How to contact a collection agency
Never contact a collection agency by phone. Never! Collection agents are not trained to settle with you, they are paid to collect money, and they will say anything to get you to pay. You are opening yourself up to possible abuse, which though it is illegal, is extremely common. If you say the wrong thing to a collector in the heat of the moment, it could ruin your chances for a good settlement in the future.
Letters are the best way to contact a collection agency. You want to send the letter certified, signature required so you have a paper trail to follow during the settlement procedures.
How much to offer
First of all, make sure you can back up any offer you make with real cash.
To give you some background, most bad debt companies pay or receive literally pennies on the dollar for the debts on which they are trying to collect. The amount that companies pay for bad debt depends on the type of account and its age:
Source: Sean McVity, portfolio broker at Keefe, Bruyette & Woods.
With this in mind, you should always start your offer at 25% or less. Let's understand the math here. If your debt is $1000, let's say at the most, the collection agencies have paid or will collect 7 cents on the dollar, or $70. If you offer them $250 (25%), they are still making a profit of $180. Remember, the credit card companies are out of the picture at this point. This money goes directly to the collection agencies.
Tips on Paying Once You Have Agreed On a Number
Payment plans
Keep in mind that most collection agencies will insist on payment in full. They will negotiate a payment plan if that’s the best they think can get, but it’s not to your advantage. Usually you can pay on it forever and never make it disappear. This is because the collection agency will keep tacking on interest and fees. In addition, collection agencies are terrible at keeping track of payments. On purpose maybe? I’ve talked to numerous clients who made over a year’s worth of payments and their balances did not go down at all.
If you can’t come up with a cash settlement, I would suggest sending the collection agency a debt validation letter or cease and desist letter to keep them off your back until you can scrape together the money. It’s really not a good idea to make payments to a collection agency over an extended period of time.
Negotiating your credit rating on a collection
If you are dealing with a collection account, you want a complete removal (a deletion) from your credit report, however, NOT a “Paid As Agreed”. Any notation on your credit report from a collection agency is considered negative, so even if the listing read, “this person has the best paying record we’ve ever seen”, it would hurt your score.
For The User
******Usman ahmed owner of this blog created this post with his knowledge.All content provided on this blog is not copied from any other blog and site and is for informational purposes only and The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.
No comments:
Post a Comment