Debt Help: How To Deal With Debt Collection Agencies

It is easy to see how nerves can become frazzled when debt collection agencies begin a constant barrage of phone calls and intimidating letters. Many people do not realize that they have various forms of protection and options available to deal with debt collectors.

The Fair Debt Collection Practices Act sets guidelines for what debt collection agencies may or may not legally do when attempting to collect a debt. They can't, for example, call before 8 am or after 9 pm. In some states it's actually illegal for debt collectors to threaten garnishment of your wages or to harass you with continual phone calls once you tell them to stop.

As a result of the Fair Debt Collection Practices Act, you have several options. You can simply refuse to take the call. Most answering machines allow you to screen calls before picking up. If you have caller ID/call blocking you may also be able to filter the calls out entirely.

If you choose to answer the phone call, you can insist that you not be contacted any more. The agency is legally obligated to stop calling, provided you have sent them a 'cease and desist' letter. Sending this kind of letter through a lawyer can be expensive so let's look at other options.

If you do owe the money and can pay the debt then pay it. You borrowed the money, and the creditor is entitled to be paid. If you're seriously short of funds, you can include this situation when negotiating for a reduced rate. (More about this below.)

By following through on the commitment you made, the phone calls will stop. Despite their sometimes unpleasant attitude, bill collectors are just performing a service for which they get paid. Once an agreement is in place, they will simply move on.

Be sure you keep a diary of any calls made or accepted and make notes about any new terms you have agreed to. Also make notes if you've insisted they stop calling you, especially if you have been called at work.

You can tape the call if that is legal in your state. (Sometimes you may be required to notify the other party that you are doing so.) Debt collectors will seldom make any statements that are out of line once they know they are being recorded.

Most debt collection agencies have the authority to accept substantially less than the total amount of your debt. Naturally, since they get paid a percentage of what they collect, they're going to try to keep the settlement amount as close to the original as possible. They will accept less if you ask to negotiate, as they know that 50% of your debt repaid is better than 100% of nothing.

Your new agreement should include a commitment from the debt collection agencies not to put any negative comments (beyond what may already be there) on your credit report. Consider taking that one step further: Insist they commit to quickly reporting the payments you make and the adjusted amount you owe to the credit reporting services. Be sure to get that commitment in writing before you send more than a token payment of good faith.

Sending some money will demonstrate and prove the sincerity of your commitment to the agreement, but sending too much gives the debt collection agencies little incentive to comply with the terms you have both agreed to.

Be patient and realistic. Staying calm during discussions with debt collection agencies will help make a challenging and unpleasant situation less stressful and can actually help resolve the conflict more readily.

The full text of The Fair Debt Collection Practices Act and the guidelines governing debt collection agencies can be found here.

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