Receiving that first phone call or message from a collection agency can send your mind into a tailspin and make you feel like you're drowning. Living on a budget, managing bill payments, trying to stay afloat and all while working to do so is a struggle that most of us know too well.
Sometimes it's an unexpected expense that can send your debt over the edge and sometimes it's a culmination of life's never-ending expenses that become too much to handle. Before talking with a collector and committing to any sort of payment plan, first you need to gain as much knowledge about the collections process as possible. You may have more options than you think; consider these 5 tips before settling your debt:
1. Debts are either assigned or sold
If your debt is assigned to a collection agency, it means that the original creditor still owns the debt and the agency is working on their behalf to collect payment. If your debt has been sold, this means the collection agency now owns the debt.
2. Try to settle assigned debts with the original creditor
When the debt collector calls you, the first thing you should ask them is who currently owns your account. Were they assigned the account? Or did they purchase it? This is important information and should dictate your next steps. If your account was assigned, there's still a chance you can negotiate or set up payment with the original creditor.
3. Debts have a statue of limitation
Do not pay a partial amount of your debt before consulting with an experienced attorney. The statute of limitation on a debt is based on the inactivity of an account. As soon as you pay even a partial amount of the debt, the statute of limitation starts over again. Your attorney will be a great resource to use, as they will be able to evaluate your financial situation and help decide what your best options are.
4. You can negotiate payment for sold debts
Don't let them fool you. A collector's goal is to collect 100% of payment or as much as they possibly can, but you have the right to negotiate with them. Your goal is low and their goal is high, after examining your budget, decide what you can afford to pay and then you can begin the negotiation process.
5. Get it in writing
When the collectors begin contacting you they are obligated to send you a written notice with the amount of your debt and the name of the creditor. It is important to keep these documents for your personal records; they will come in handy if legal action is pursued.