The right way to deal with collection agencies

Most people think the worst thing that could happen to them is to lose their job and be out of work for an extended period of time, depleting their savings. However, things can (and do) get worse; once savings are depleted, bills often have to go unpaid in order to meet day to day living expenses.  When this happens, people fall behind on credit card and other revolving credit payments.  As if this didn't cause enough stress, after a period of time they discover that they need to learn how to deal with collection agencies who are now in charge of collecting their debt.

Initial Communication Matters

When you are initially contacted by a collection agency, you should find out who the original creditor is, the amount owed and the date of your last payment. Use this information to validate that the information is correct.  Another important thing that you should do at this time is request that the collection agency not contact you at work.  If you request this, they cannot do so.

Validating Debt

Before you agree to begin any type of payment arrangement, check your personal records to validate that the debt does belong to you and that the amount is correct.  If there is any discrepancy you should immediately notify the collection agency in writing as well as the three credit bureaus.  The three credit reporting bureaus are:

Equifax
P.O. Box 740256
Atlanta, Georgia 30374

Experian
P.O. Box 9554
Allen, Texas 75013

TransUnion
P.O. Box 6790
Fullerton, CA 92834

Make sure that you include a copy of the notification that you received from the credit collection agency with all communication.  You should also include your name, address and the last four digits of your social security number. All correspondence should be done in writing via certified mail (or registered mail) so that you have proof that you have contacted them.

It is also important that you know that you are entitled to a free copy of all three of your credit reports one time every twelve months.  Do not fall prey to the websites that offer you a free report only after signing up for a service. Free credit reports may be obtained from Annual Credit Report.

Stopping Telephone Calls

Regardless of whether you have made payment arrangements with the collection agency or not, you are entitled to request that they not contact you by telephone. This must also be done in writing.  Once you make this request, you may only be contacted by phone in the event that the agency is no longer pursuing collection attempts or in the event that they are intending to take you to court.

It is critical that consumers understand the rights granted to them under the Fair Credit Reporting Act.  This is a federal law and is the minimum protection offered to consumers. Your state may have additional legislation that protects you even more.  State websites often provide links to the office of the Attorney General where you can find additional information.  A well informed consumer will quickly learn how to deal with collection agencies.