Dealing With a Collection Agency

There are many myths and misunderstandings surrounding the issue of collections. As a consumer it is important to understand the truth about collections and dealing with a collection agency.

There is no standardized time period that a creditor must wait before sending an account to collections. It is up to the discretion of each individual company but it generally takes 3 to 4 months. If payment has not been made creditors usually chose to write off the balance as bad debt and transfer the account to an independent collection agency. It is important to note that sending a small token payment each month will not legally prevent a company from sending an account to collections.

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Tips for dealing with collection agencies

• Creditors are often willing to negotiate. Contact them and explain your situation. If possible pay the money you owe and the account will be cleared. If this is not a viable option the agency may be willing to forgive a portion of your debt and create a payment schedule.

• Keep records of all contact with the agency. Record names, dates, and times of all correspondence. If you have agreed upon a negotiated settlement then obtain a copy of the agreement in writing. This will offer some personal protection if there is future disagreements.

Dealing with a collection agency does not have to be a distasteful experience. They are simply in the business of collecting the largest percentage of the original debt as possible. However, it is important to realize that if payment is refused or if a negotiated agreement is ignored they often chose the option of litigation. In order to prevent this scenario it is important to deal with a collection agency head on and once an agreement has been reached it is important to abide by the agreed upon terms.

One final note: There are government guidelines that regulate collection agency behavior. It is important to have a correct understanding of your rights under the law.

Mark Carney is a professional consultant with First American Debt Consolidation and Loans, a debt consolidation service specializing in financial education, credit counseling, and debt management services nationwide.