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2014-06-16 17:17:53

How to Deal with Collection Agencies

Sometimes life happens, and even a diligent bill payer can find himself behind on payments.  If this happens you can find yourself faced with collection agencies, which can be a very stressful time.  Here are some tips for negotiating your way through such a situation

 

  1. Prioritise Your Debt – Not all debt will be treated the same. Taxes, Student Loans and secured debts like mortgages are tough to get out of.  They rarely cut deals, so if you fall behind you are going to have to find a way to pay it all.  If you can only make some of your payments, make these. Other debts can often be negotiated down to a partial payment.

 

  1. Find out who is calling – most creditors only try to collect their own debts for the first 6 months.  After that they turn the case to a collection agency, and eventually possibly sell the debt.  The creditor will want full repayment, but collection agencies and debt repurchasers are much more likely to accept a negotiated partial payment.

 

  1. Legal Action ? – Only original creditors are likely to sue you directly.  If the debt has already been turned over to a collection agency going to court is very unlikely.  Only 1 in 10,000 consumers end up in court through collection agencies.

 

  1. Know your rights with respect to calls – creditors have a right to call you, but they don’t have a right to harass you. Each Province has different rules as to where and when they can call you.  In BC you can request all communication in writing and the collection agencies must abide by this wish and stop calling you.

 

  1. Negotiate a Deal – Many companies will negotiate a deal on old debt in order to at least recover some of their losses. Try to negotiate a payment plan and make sure to get it in writing before you commit.