Your first collections notice has just crashed your mailbox, along with your mood, but don’t freak out yet. Federal statistics show debt collection tactics lead the list of senior citizens’ complaints. How you respond depends on the situation, and if you owe a large amount of money, it might be worth learning more about obtaining legal representation. Here are a few pointers to remember:
1. Demand proof that you owe the money.
You have the right to ask for a validation letter detailing the amount owed, the original creditor, and the way to dispute it, Forbes magazine states. This way, you’ll weed out third party companies or scammers that buy old debts and try to collect them.
2. Dispute any factual errors or inconsistencies.
Collectors are notorious for shading the truth, so don’t admit any responsibility until you’re sure there’s no other option. Many consumer debts carry a statute of limitations, so check out your state’s law. If the game clock has run out, you may get off the hook, the Simple Dollar website states.
3. Do all your business in writing.
Stick with this tactic throughout the process, including any settlements that you try to negotiate. This way, you’ll avoid getting into heated phone conversations with debt collectors, and control how you express yourself.
4. Evaluate whether you’re better off paying the debt.
In some cases, you’re probably better off paying the debt, especially if it’s a single- or double-digit amount. Also, it makes no sense to let that outstanding movie rental fee linger on some collector’s plate, because even minor debts can severely damage your credit. As credit.com indicates, the amount is less important than the fact it’s gone to collections.
5. Get the best deal you can, if you do pay.
As Forbes notes, collection agencies typically buy debts for pennies on the dollar, so don’t assume that you’ll have to pay the full amount. Generally speaking the older the debt, the higher the chance of snagging a favourable settlement. In many instances, you might score one for 50 percent of the original amount. Just make sure all terms and conditions are in writing before you proceed.
6. Never pay a debt out of your checking account.
Instead, open an account dedicated specifically to paying the debt. Giving up your account details to a collection agency could leave you vulnerable to a raid on your account, which could be hazardous to your financial health.
7. Never pay a partial amount without a written agreement.
Legally speaking, any payment, no matter how small, is considered an acceptance of the debtor’s terms and creditors. Going this route may feel like a good faith attempt to get an agency off your back? However, you may wind up locking yourself into a deal that could break your bankbook, or leave you less wiggle room in your monthly budget. Don’t do it.
Whatever you do, remember that debt collection agencies wield less power than they want people to believe. Treat any encounters with them as a business transaction, with one major goal: getting the best deal that you can wangle. With a little bit of calm, and common sense, you shouldn’t any trouble pulling it off.