Ten years ago my special needs daughter passed away. The medical bills were staggering, and I ended up getting a crash course on how demonic collection agencies are. The debts were real, and I needed to pay them, that wasn't the issue for me. What I had a problem with is the disgusting behavior and low down tactics collection agencies use to try to scare you. I was fortunate enough to have a friend in the legal field, and she filled me in on some information that was instrumental in getting things under control. If you have collections, I feel your pain, so I'm going to share what I learned with you now.
Fact One: Liar, Liar pants on fire
Thinking that the general public doesn't know any better, collection agencies will use multiple scare tactics in an attempt to collect funds from you. They'll tell you that they're going to serve legal documents at work. They'll threaten to garnish your wages. They'll simply say that they're going to freeze your bank account. Collection agencies can't do any of these things to you. Only a court-ordered judgment, which is signed by a Judge will allow access to your income or assets.
Fact Two: Work is a safe zone
Collection agents are not allowed to call you at work. They will call you once at least, but, if you advise them that they are not authorized to contact you at work, they cannot call again. When you do get the call, write down the date, time, company name and full name of the person who called. You can use this information to file a complaint with the FTC if they continue to bother you at work.
Fact Three: Profits are huge
Collection agencies purchase debts from creditors for pennies on the dollar. They are of course going to try to get as much from you as possible, but, the reality is they'll almost always settle your account for less than the original total. It is very common for collection accounts to settle for 50% of the original amount. When you're ready to pay the bill, you can use this to your advantage.
Fact Four: There are time limits
The laws are a bit different from state to state, but here there is a 10-year statute of limitations on debt collection. Once the 10-year mark has passed, a collection agency is not allowed to come after you or attempt to collect funds from you. That practice is called zombie debt collection. If you get a call out of left field for an account you have no clue about; it's very likely a zombie collector trying to stiff you for an expired account.
Fact Five: They'll disguise themselves
You will never see the name of the collection company on your caller ID. Never. All collection companies spoof their phone numbers, and they'll do so every time, without fail. If you start seeing unknown phone numbers appear on your caller ID, it's them. The best practice to deal with this is if it's not blatantly obvious who's calling you, don't answer the phone and, let it go to voicemail. It's a complete waste of time to spend time on the phone with them unless you're ready and prepared.
Fact Six: They have to document the debt
Collection agencies are not allowed to collect accounts arbitrarily. They must prove to you which debt they are trying to recoup. And, they must provide you the documentation showing who the original creditor is. If a collection company is contacting you, and you have no idea what account they're talking about..., make them prove to you what it is.
Fact Seven: If it's valid, you need to pay it
Even though collection agencies are demons, the reality is, they're only doing their job which is to collect funds owed to their corporate clients. Are they bastards for their tactics? Yes absolutely. But, if you indeed owe the money you need to work on getting it paid off. Once you've recovered and healed from the circumstance that created the collection in the first place, it's time to buckle down and work on getting rid of these accounts one by one. Now is when the seven facts above come in. Knowledge is power, and now that you know the facts, you have total control.
Gather your collection notices, or, pull your credit so you can see who you owe and how much you owe. Pick the account with the lowest dollar amount and determine what you're willing to pay on it. Is the balance $300? Be prepared to offer $150 today for a complete settlement. Then make the call and tell them that you're willing to pay $150 today, right over the phone, to settle the account. 90% of the time they'll accept your offer! Repeat this step with the next collection that has a small balance. Continue this process until all of your negative accounts are paid off.
Important tips: Never call a collection company asking for a settlement unless you have the money to settle with them right then. They will not accept less than the total due if you're letting them know you're not going to pay it for 30 days. They are greedy, remember?
Once you have the small accounts paid, it's time to figure out how to handle the larger ones. For example, a $1000 collection could be paid $100 per pay period if that works for your budget. If you make this sort of arrangement, there's nothing wrong with that, but be sure to obtain it in writing before you start the payment arrangement.
I hope this has been helpful information. If you need direction on how to deal with your collection accounts, don't hesitate to let me know.
If you have questions about any part of the mortgage process, feel free to contact me. I'd be happy to help!
Contact Wendy 7 days a week for more information:
Phone or Text: 321-794-5626
Facebook Messenger: @aloaninthesun