How to Deal with Debt Collections

Better Credit Network

Learn how to "Deal with Debt"

Gone are the days when you waited patiently and saved vigorously for that new car, wedding, holiday until you could buy it outright. The immoral phrase “buy now, pay later” is a motto for millions. Yet while in some instances this can help, the majority leave you dealing with debt. Many can handle it, but many cannot.

Stop Debt Collectors from Calling

If you are currently being contacted by a collection agency, the feeling can be awful. With the calls and letters coming in most every day, it probably seems as if there is no end in sight. However, there are some simple and effective measures that you can take to stop the contact for good. In this article, let’s take a look at how to deal with a collection agency.

The most obvious method for getting rid of a collection agency is to simply pay off the debt. However, the fact that the debt has reached a collection agency is probably a good indication that you are unable to. If you have a trusted friend or family member, maybe you can explain your situation and borrow the money from them. The simple fact is that the sooner the debt gets settled, the sooner the collection agency will stop contacting you.

O.K., let’s assume that you do not have the finances or the resources available to pay off the debt. Now what? Well, the best advice regardless of your situation is to never ignore the letters or the calls. It may be scary having to actually speak with the collection agency, but ignoring the contact will only make the situation worse. Most of the time, a collection agency will be very interested in hearing your side of the story, and they will be more willing to make arrangements that you will be able to meet. Let them know that you are not avoiding the debt, and that you are committed to paying the debt in time. The collection agency will then work with you to come up with a viable payment plan. Better yet, if you are able to follow through with the plan, it is guaranteed that the calls and letters will stop completely.

What happens if you are contacted by an aggressive collection agency that is not willing to make an arrangement? Let me assure you; these agencies are few and far between. The days of browbeating a debtor are nearly extinct. This is due to the FDCPA (Fair Debt Collections Practices Act), a law designed to protect consumers from harassing or abusive collection methods. However, if you still find yourself faced with a collection agency that is unwilling to work with you, take note of the practices they employ. They could very well be in violation of this act. If that turns out to be the case, make sure you document all calls for impropriorties, and contact a lawyer who deals in such matters. It should be mentioned that just because a collection agency won’t make an arrangement or payment plan, this doesn’t necessarily mean that they are in violation of the FDCPA. It only means the possibility exists, because most quality agencies are willing to work with a debtor to get the debt resolved.

Now that you know how to deal with a collection agency, you can work towards ending the calls and letters once and for all. Think of how great it will feel to have the situation behind you, and do your best to meet any arrangements made in clearing your debt.

So often, those burdened with too much debt feel that they have no way out. Out of desperation, they jump at the very first solution that comes their way. Many Americans are drowning in debt. But there are several solutions that can help. The key is to step back and consider your options based on how much debt you have and your spending habits. Take your time in making a decisions, and you will make the right one. Rush in, and you will often find that you haven't helped your situation at all.

The first option you have is self-help. Personally, I feel that this is something you have to do, even if you pick another option. You need to take control of your financial situation. Start doing this by assessing your income and expenses. Create a budget that shows exactly what you spend each month. Then start eliminating the non-essentials

Look closely at your debt situation. You should list your debts from highest interest rate to lowest interest rate. Start calling your creditors and asking for a lower interest rate. I've done this without being in debt trouble and easily received a lower interest rate. Simply remind them that you are a good customer with good credit. If you have bad credit, this won't work.

Now set up a plan to start paying these cards off. You may find that you were able to free up $150 out of your budget. Put this towards your highest interest rate debt. When it is paid off, move that $150 plus the amount you were paying for the first debt down to the second debt. It will be paid off all the faster. And just go down your list. Yes, it takes time and sacrifice. But it is worth it.

You should also put all of your extra money to paying off your debt. Bonuses, gifts, tax refunds -- they all go to the debt. If you find that you are getting an amount close to the total of one of your debts, go ahead and pay it off and get it off the list, no matter where it is on the list. This simply feels good to pay something off and keeps you motivated.

Another option you have is debt consolidation . This is something you can either do on your own or with the help of a debt consolidation agency. Most debt consolidation is simply the use of a home equity line of credit or a second mortgage to pay your debt and lower your payment. You don't need to pay a company to arrange this for you. You can do this on your own.

If you don't own your own home or have very little credit, you might consider enrolling in a debt management plan through a reputable credit counseling agency. But you must be careful here. Check the agency out thoroughly with the Better Business Bureau and the state attorney general's office. Make sure that they have been in business in your area for quite a while and are well-known. A good agency will never ask for money in advance and will be willing to lay out a plan with you before asking for a payment. They are handling the payment of your bills, you want to be sure that they are legit.

Your third option comes in play when nothing else really works for your situation. This is your final option and should be reserved as thus. Bankruptcy offers a fresh start to those in a bad debt situation, but it takes years to recover from. Bankruptcy can remain on your report for up to 10 years and makes it difficult to get credit, buy a home or even get affordable life and auto insurance. New bankruptcy laws have made it harder to file for bankruptcy. If you pass the "means test," you will have to file for Chapter 13 bankruptcy, where a trustee will set up a re-payment plan for your debts and you will be allowed to keep certain secured assets. Chapter 7 means that your assets will be liquidated and your debts will be discharged. The laws are fairly complicated, so it will do you good to have a good lawyer on your side.

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Resources

Stop Debt Collection Calls
There's no law that says you have to communicate with a debt
collector by phone. If you hang up on a debt collector there is
nothing they can do about it. But, if the collector continues to call you repeatedly even after you have hung up on them, they are in violation of the FDCPA.

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Credit Consolidation
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