A Quick Primer for Dealing with Collection Agencies

I just spent a long time on the “HELP I owe money to a collection agency” part of the Internet, and just so you know, it’s dire. And rather complicated! Especially once you get to the “HELP I just got served papers and am being sued by the collection agency” part of the Internet. For now, what to do if a collections agency is up in your grill:

1. First of all, if you ignore them, they won’t go away. So forget that right now.

2. But you can screen their calls and hang up on them until you’re ready to talk (perhaps while you are gathering a sum of money to offer them).

3. To get them to stop calling you, write a cease and desist letter.  (Google “cease and desist letter” and copy one of templates.) Actually go to the post office to send this so you can get a notification of receipt (annoying, but crucial). They have to listen! The Fair Debt Collection Practices Act is on your side.

4. When you do finally talk to them, don’t listen to anything they tell you. They can’t garnish your wages or kidnap your baby or send you to jail (yet). Though if it’s a car loan that you’re defaulting on, they can totally take your car. That’s called repossession, and that’s legit.

5. Try to negotiate! Talk to them on the phone and say: “I can’t pay X, but I can pay Y, where X is the total balance and Y is a really tiny percentage of this balance.” They’ll say no to Y, but will hopefully say yes to Z, which is also a percentage of the original balance, maybe not tiny, but larger. If you can’t pay Y or Z, ask about a payment plan. They don’t get paid unless you pay something, so say you want to pay something. Bat your eyelashes, over the phone. Try to work it out.

6. If that doesn’t work, they might sue you. They can do this, and it is not a joke! But the good news (“good news”) is that once the courts get involved, you no longer have to deal with the collections agency. In fact, it’s no longer an option! If you get a court summons, the only way to deal with it is through the court. And ignoring it is not an option. I know I said that before, but that time it was an option, kind of, an option that led to your court summons. If you ignore the court summons, it will lead to police people taking you away for failure to appear in court like this lady.

7. Respond to your court summons. It will have a deadline on it. Meet that deadline. Again: If you ignore this, someone will put you in jail, and it will be terrible. You still might not have to pay (I think?); it seems that way. There are ways around this. I am not a lawyer. I am not your lawyer. You should probably get a lawyer. Or you can fly solo by following the instructions on this very legit looking website.

1. Pay your bills
2. If you can’t pay your bills, offer to pay part of your bills
3. If you can’t pay part of your bills, get on a payment plan
4. Hang up on debt collectors, but also negotiate with them
5. Do not ignore the U.S. court system, or you will go to jail


Photo Credit: flickr/mybulldog


7 Comments / Post A Comment

moelac (#550)

also – first! check with the company/institution the collections agency says you owe money to. it might be a mistake. this happened to me with a hospital. i do (kinda, maybe, still working it out) owe the money, but it should not have been passed on to collections.

Also check your state’s statute of limitations for collecting bills. Each state is different, but say it is 3 yrs…after 3 yrs they can’t collect or take u to court. It will prob kill your credit tho.

mouthalmighty (#165)

I’ve had multiple bills (incorrectly) sent to collections. It’s the worst. The first time it happened, I dealt with the collection agency, but as soon as they started blowing up my cell, I sent a and they sent me back a letter saying, “Your debt has been cleared”. The next few times, I went straight to the original biller (my medical provider, who are collection agency happy in a way that should probably be illegal).

orangezest (#317)

If they’re calling about a federal student loan, remember all bets are off. They CAN garnish your wages and take your tax refund and even pick away at your Social Security if, god forbid, you still owe the government by then. And they will. The good news is it’s a lot easier to wipe a screwed-up student loan off your credit report than most other things.

navigateher (#555)

I don’t really get why people hate “them” (=collection agencies) so much and act as though their rights have somehow been violated when collectors call. I didn’t get the “hang up on debt collectors” part of the advice, because you’re only harming yourself if you do that. They won’t mind – they only get more money in interests and fees when they actually get to you. It’s money you owe, and money you had a chance to pay to the original debtor, but you didn’t. The longer you drag it, the higher the interest and fees on top of the original bill, so yes, don’t try and ignore the collectors.

I worked at a Collections Agency right after college as a receptionist. Most collectors worth their salt won’t pull our their “bad cop” if you show a willingness to work with them to pay the debt off. Try not to hang up on them, but instead ask if you can speak with them at a later time, when you feel more prepared to take the call. Also, make sure to have them send you a breakdown of the debt. Sometimes the company pursuing the debt will tack on extra fees because they know that they will have to turn over some of the returns to the collection agency and want to recoup more of their losses. You can often negotiate those extra charges away and just pay the original bill.

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