Debt collection agencies want only one thing from you—your money. If you are not tactful, you can give away money way more than you owe. Sometimes, you may end up paying off a debt you don’t even owe, so you have to be careful.
Here are a few tips for dealing with debt collection agencies.
Keep an open line of communication
Respond to calls and messages from debt collectors. Ignorance is not always bliss. Sometimes, when you coordinate with them directly, they are happy to work out a suitable deal. There are tons of sample letters you can use to negotiate with debt collectors. You can get them online.
Request them to validate the debt in writing
Before you make payments, it is essential to collect as much information as possible on the debt. Send a written request to debt collectors to validate the debt in writing. As per the FDCPA laws, debt collectors are required to give you information on the debt within 5 days of initial communication.
As per the federal law, debt collectors are supposed to give you the following information to you:
- How much you owe
- When you have to pay it off
- How you can dispute it
- Original creditor’s name
What if debt collectors fail to validate the debt within the deadline? You can send a cease and desist letter via certified mail and be done with it.
Check the SOL period
The SOL period is the timeline within which debt collectors can sue you. Look at the Statute of Limitations (SOL) period on your debt in your state. Usually, the SOL period starts from the date of the last payment on your debt. If the SOL period has expired, you don’t have any legal responsibility to pay off debt. In fact, you should avoid paying a penny if the SOL period has expired. If you make a payment, the SOL period will kickstart again. You will be legally liable for the debt again.
Settle your debt
What should you do if the debt is valid? Well, you can try to make a debt settlement agreement with debt collectors. Usually, collection agencies buy accounts for pennies on the dollar. So, if you can somehow convince them that you are in financial distress, they can agree to lower the overdue amount in exchange for a lumpsum payment. Request them to waive late fees and penalties.
Ask for paperwork
If debt collectors agree to settle your debt, ask for a written debt settlement agreement. Read the agreement carefully. Check the final payment date and the deadline. Are there any hidden fees involved? If all the terms and conditions are perfectly acceptable, sign it. Arrange the money and make the payment by the deadline.
Final note
If, god forbid, debt collectors file a lawsuit against you, make sure you attend the court hearing. Answer the court summons within 21 days with valid documents. Otherwise, the court may pass a default judgment against you. In that case, the court may garnish your wages or impose a lien on your property. Try to negotiate and settle debt out of the court.
