If one of your debts has gone to collections, you will hear all sorts of things from the person on the other end of phone call. Not everything they are telling you is true. Here is what happens if you don’t pay a collection agency and some of your options to end the constant calls.
Ending Up at Debt Collection
If you have not been able to pay your debt for the last three to six months, the creditor may sell your debt to a collection agency. At that point, you no longer deal with that original creditor and your credit report will note that you have been sent to collections.
You still owe the entire amount. If you absolutely can’t repay the entire amount, the collections agency would rather collect some money than nothing. This may allow you to negotiate a deal.
Will it hurt your credit to negotiate? Yes, but so will defaulting on a debt.
What to Expect If You Don’t Pay
If you cannot pay a debt collector, the following may happen:
- You’ll be reported to credit bureaus, damaging your credit and ability to get loans
- Someone will write or call you regularly
- Assets may be repossessed or a lien placed on it – home, car, rent-to-own items, etc.
- You may be sued – always respond!
- You may be reported as in default or delinquent
- You may end up at a different collections agency
Working with A Collection Agency or Debt Collector
The first and most important thing to know is that you have federally guaranteed rights and many states have similar rights. Here is what a debt collector cannot do under the Fair Debt Collection Practices Act (FDCPA):
- Contact you between 9 p.m. and 8 a.m. without your permission
- Threaten violence or using profanities when speaking to you
- Contact third parties (family, friends and employers) about your debt or otherwise embarrass you
- Speak to your employer except under limited conditions
- Pretend to be a government official or an attorney
- Send letters that look like attorney or governmental letters but that are not
- Send derogatory messages about you to a credit reporting agency
- Send information on a postcard or via social media
- Attempt to collect an expired debt
- Hire an unlicensed credit collection agency
- Communicate with you if you are represented by an attorney
There are a few things that you SHOULD NOT do:
- Make a good faith payment. This payment can restart the expiration clock
- Be rude to a collector. It can work against you if the phone calls are replayed in court
- Let your contact information get out-of-date (the debt collection agency can contact third parties to track you down)
- Admit that it is your debt or promise to pay – it can be construed as a contract
- Give out financial information like your social security number or the value of a property
There are things you SHOULD do:
- Take notes when you speak to a debt collector. Write down date and time, debt collector name, which debt, and what the debt collector says
- Keep all mail, copies of texts, etc
- Tell the collector if you legitimately can’t pay. They may try to work with you
- Tell the collector if the debt is not correct
- Give them your current contact information
- Consider telling the collector to stop contacting you. If you want to work towards a settlement, you may not want to take this step
What Steps Can You Take Once in Collections?
There are several options to get a debt collector to go away.
Ignore the debt and calls. You may end up in court or the collectors may give up. This is not a good option.
Set up monthly payments – Because the debt collector bought the debt for less than it is worth, they may be willing to negotiate. If you want to try this, offer to pay 40 to 50% of the total amount. Make sure the get the following in writing:
- The amount you agree to repay and what you are repaying – are you paying against what you owe or settling the bill once you pay
- The name of the debt – make sure you are paying off what they think you are paying off.
- The collection agency should have the name of the original creditor and account number.
- The exact day the payment is due.
- The exact name of the collection agency since debt can be sold
- The effect on the account after payment. Will it be reported to a credit agency, etc.
Debt consolidation requires you to take out a loan to pay the original debt. It may not be possible to get a loan if you are in collections.
Debt management includes working with a credit counseling agency to learn to better manage money and pay off debts
Bankruptcy is a last resort to handle your bills. It is expensive and you need legal advice and representation.
Debt settlement includes signing up with a debt settlement company like Pacific Debt, Inc. If you qualify, a debt settlement company with negotiating with your debtors while you build a fund to begin repaying debts. You can also do this on your own, but it takes determination.
Pacific Debt, Inc.
Pacific Debt, Inc offers a free consultation. Our debt specialists will perform an in-depth analysis of your debt and advise you on your options. They ensure that you understand all options and all the program details.
Depending on your financial situation, Pacific Debt, Inc works with you to have you debt free in one to two years. We do not make money unless your debt relief program works for you. You have nothing to lose and every to gain by contacting Pacific Debt for your free consultation.
For more information, talk with one of our debt specialists today.