We previously posted a blog article on the rights granted to debtors under the Fair Debt Collection Practices Act. This time, we’ve consulted the experts to give you some tips for dealing with collection agencies when they call:
President of the National Association of Retail Collection Attorneys Bob Markoff recommends talking to the collection agency or attorney to let them know your circumstances. Markoff says, We might be able to talk to you and find a way to set up something that fits your budget. The consumer has the right to pay whatever they can pay.
Personal financial reporter Michelle Singletary for The Washington Post writes, If you do answer, don’t be pressured to pay an amount you truly can’t afford. Only agree to a payment plan that you can really stick with.
Markoff also warns that those in debt should not try to avoid the debt entirely. As Markoff points out, debt collectors aren’t fools. They are able to access your credit files. They can look and see if you’ve bought a new home or car, have cable service, or have made recent purchases on credit. Markoff also says that in many cases, you can negotiate to settle the debt for less than you owe. The key to negotiations is cash.
Singletary offers this example of how a debt negotiation might occur: Let’s say you have an old debt that has ballooned to $5,000 with fees, interest, etc. Offering to pay $10 a month probably isn’t going to fly. But if you offer $1,500 in a lump sum, you have a better chance for a settlement. Once you negotiate the settlement, Singletary warns, be sure to get all the details in writing before you send a penny to the collection agency or attorney. Keep a record of all payments and correspondences. Keeping all of this information is especially important in case you receive phone calls about the settled debt years later.
Some other tips from the National Association of Retail Collection Attorneys include:
1. Don’t be intimidated into paying a debt that is not yours! “You have the right to request verification of the debt. If there has been a mix-up or you are the victim of identity theft, be prepared to show proof. For example, with identity theft, you will probably be asked for a police report. That’s why it’s important to file such a report in identity theft cases.”
2. If you have an attorney, have him or her contact the collection agency. Once this step is taken, the collection attorney can only communicate with your attorney, not directly with you.
3. Don’t ignore a court summons. According to Markoff, if you contact the creditor before the court date, you may be able to avoid legal action by working out a payment plan.
For more information about dealing with debt collection agencies, you can also visit the Privacy Rights Clearinghouse website . The PRC is a nonprofit consumer information and advocacy organization. Their website is funded by a grant from the Consumer Federation of America.