Dealing with Collection Agencies- Tips on Handling Collection Agencies

Dealing with collection agencies is not the most pleasant experience one can have. I hope you have not been in this unfortunate situation, but in case you find yourself talking to a collection agency; these tips on how to handle collection calls maybe helpful. If you have a large amount of debt I suggest you look into debt reduction strategies before things get bad.

Understanding Collection Agencies

In order to deal with collection agencies effectively you have to understand them and how they work. When it comes to collecting debt through a collection agency there are two different types; 1st party and 3rd party collection.

1st Party Collection

Collection Agency Help

This is when the original lender hires a collection company to collect on an outstanding debt; the collection agency is only acting on behalf of the lender and you can still negotiate with the original lender. It is usually fairly easy to handle these types of calls.

3rd Party Collection

This is when the original lender writes off your debt and sells it for pennies on the dollar to a collection agency. The collection agency hopes to collect the outstanding amount for a profit; the agent’s income depends for the most part on collecting on the debt and for this reason

3rd party collection calls can turn nasty most of the time. The original lender will no longer be able to help you in this situation. These tips can help you in dealing with collection agencies.

Important Rules

  • Collection agencies may not make harassing telephone calls of such as repeated calls to you while you’re at work. If you believe a collection agency is harassing you, keep a record of the time, date and frequency of the calls. In most provinces and states they can only call 3 times in any 7 day period.
  • They may only call between 8am and 9pm on Monday to Saturday and on Sunday between 1pm and 5pm. No calls are allowed on statutory holidays.
  • Collection agencies may not contact third parties such as your friends, relatives, neighbors or employer for any information other than your address or telephone number (Location information).

Tips Dealing with Collection Agencies:

  • All communication should be in writing. Sending everything in writing provides you with documentation that you may need later on if you decide to report the collection agency. Insist, in writing, that the collection agency only deal with you in writing as well.
  • Check the statute of limitation in your province or state, some debts have a certain time limit, after which the debt is no longer collectible. There can be no legal action taken against you after this time. Make sure you know the statue of limitation before you pay, because making a payment causes the statute of limitations to restart. This is why sometimes the agent may tell you to make a small payment to avoid “further proceedings”.
  • Negotiate with the collection agency; they can always reduce the amount owed sometimes by as much as 70% or more. Some may also allow you to make a payment plan to pay off the debt. Do this in writing and keep all your receipts.
  • Do not admit to debt you are not sure about, ask the collection agency to prove the debt and their right to collect. They have 30 days after the receipt to prove this. Again make sure it’s in writing.
  • You may ask the collection agency to cease communication.  They will only be able to contact you to let you know that they are not pursuing your debt any more or that you are subject to legal action. Make sure you do this in writing.

These are just a few tips that I hope can help you when dealing with collection agents, in USA review the Fair Debt Collection Practices Act and understand it, this regulates debt collection agencies (not the original creditor). In Canada there are similar regulations put in place by your provinces, so check with your province for details.

Collector’s can NOT threaten you in anyway, if you feel harassed or threatened by a collection agency file a complaint with your Consumer Affairs office.

UPDATE (Sept. 01, 2009) I would also recommend you check your credit report and credit score to ensure the information is correct, check out basics on credit scores and reports.

I hope you will never have to deal with this situation, but if the unfortunate happens than these tips may help you.

Do you have any tips you would like to share?

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Comments

  1. Ben says

    I had a problem with purchase I never made on a card a thought I had canceled. I started getting phone call after phone call. After several letters to the original creditor and getting now where I was on the verge of going to small claims court. My biggest problem with the debt was the negative impact on the credit and the $150 of fees and interest was a mere annoyance. I decided on a whim to the to BBB.org just to check out the rating of the company. I found they have a dispute resolutation form. I filled it out and in about 2 weeks I got a letter with a resolution and the problem was solved. works well with top rated companies.

  2. Ray says

    @Ben, thanks a lot for sharing Ben. BBB is definitely a good place to look into.

  3. Deborah says

    My wife recieved a letter from ALW trying to collect a nearly ten year old (before we were married) medical debt. It was not a large amount but within 5 days I sent a response letter requesting validation of the debt. The same day I sent the response she recieved another letter from ALW. It was an attempt to collect the same debt but the ALW account number was different. When collection agencies send followup letters do they typically change the account numbers? Should I simply request validation to the second letter as I did for the first? Should I suggest they check their records for clerical errors. Any harm in accusing them of fraudulantly attempting to collect multiple times on the same debt and threatening to report them?

  4. says

    @ Deborah, a couple of things to note: 1. It could be just an error or maybe a different debt, but the best thing to do as always is ask for validation which you have done. First I’d try to find out what the issue is before threatening if you do find in fact they are trying to collect twice than contact consumer affairs.

    2. Not sure where you live but 10 years almost certainly puts the debt out of the statue of limitation period. Although still your debt, there is no legal action the agency can take to collect on the amount (however please do check the statue of limitation period in your state/province). You can pay the debt in full, settle it with the collection agency or just ignore it.

  5. Katherine Morse says

    On 8/15/09 my veh was broken into and my purse stolen. Everyone, with the exception of one company, has been very understanding and I cooperated with all of them sending them police report, letter from my bank, notarized letter from me, etc.
    I mailed most of this out 9/17/09. One company said they never received it, so I faxed it the next day. Now they say they never received the fax copy (I told them my fax report indicated they got it) and I faxed another one today (12 pages) and asked for
    a fax receipt or email receipt of the fax I sent. They are calling and mailing me multiple times (this check was for under $25. when the total amount of checks so far is up to $6,000. What can I say to them to get them to leave me alone?
    My lesson, of course, is never leave puse in car (in church parking lot) and not to carry checkbook in purse.

  6. says

    @katherine Not sure exactly what is going on, but i suggest you mail things registered so that you have confirmation they received it and how received it.
    Second Maybe talk to a lawyer in your area? I am not exactly sure what is going on and how a $25 bill went up to $6000.

  7. Ali Norouzi says

    Hi
    My name is Ali and more than 10 years ago I recived tiket for selling HOTDOG in the city propert and not having licence to sell food. (about 1700.00)
    and now I reciving call from colection agency regarding my tiket, he is telling me : CIty is owne by CROWE (E2) and there is no statute limitation, But I do NOT see any thing in my cradit report.
    What should I do? Who sould I belive?
    Ali Norouzi
    North Bay, Ontario

  8. Bobbi says

    Over the last few years my father was alive and certainly since his death, my mother has used her credit to help with the expenses associated with Dad’s long battle with Alzheimer’s and then to make up the short fall in her income (it was cut in half after Dad died in 2001). When her cards were maxed out, she repeatedly used the equity in her home to pay them. I am not attempting to justify this, but neither can I excuse the behavior of a bank that would knowingly lend an eighty year old woman who was clearly losing her faculties and living on social security, seventy five thousand dollars on a first mortgage, twenty five thousand on a second mortgage and then supply her with a series of credit cards that had as much as a twenty thousand dollar credit limit. Her latest credit card account has been turned over to a collection agency and there is no place left to borrow. They are demanding a lump sum payment of the 12,400.00 owed or the balance split into three payments… neither of which is possible for her or for me. What is the best course of action to take and does the law provide legal recourse to take action against a lender if we believe their lending practices to be unethical? She lives in North Carolina and I am concerned that she will lose her home.

  9. steve says

    In 2000 my mom got me a Visa she co-signed…. after 3 years I moved out, but gave her the card back. No owings. My father used it, and got it to $10000. Feb 4th 2011 A creditor has a claim against me from the bank, and Court. That I owe 10G. How do I go about this? Limitation?

  10. Elena says

    Hi. My husband had a bank account that was closed on his request. After about a year, a collection agency put a posting on his credit report. When he found out that this was the amount they were collecting for the outstanding charges after the account was closed, he negotiated the settlement and made the payment. We got receipts and release form. About a year later the same collection agency contacted him again asking for more money. They are quoting the same bank but different reference number without providing the actual account number. Since he only had one account, we are assuming they are collecting the difference from the settlement. We’ve sent copies of the receipt and release form and asked them to provide more details twice. Did not get any response back but still getting the calls almost on the daily basis. Now we are thinking of changing a phone number just to stop these calls. I understand that by statute they can’t collect the same debt after the settlement was made. Do you have any input on this?

  11. Eddie Edwards says

    When paying a debt should I give the company my routing number to my bank account to take out payments every month?

    • Adam says

      NEVER give a debt collection agency access to your bank account directly or (by sending a check) indirectly. Pay using a money order sent by certified mail.

  12. Bill says

    Hey, I got a call from a CA claiming i owed on a exsisting cell phone bill, i was sure i payed this bill back in 68. The CA said no way and said you owed about 2.50 then , but now with intrest it’s at 974,000. So i paid it off, should i have? Can i sue to get it back?

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