Unfortunately debt collectors are often less than ethical. This has caused the government to pass legislation to protect you from unethical collection methods.
If the account they are contacting you about is accurate then you should ask for debt validation. This should be done in writing.
If you neglect to do this and ask for validation over the phone 99% of the time it will be completely ignored. Additionally send it certified mail so you have proof that they received your validation letter.
If you account is validated and is within the statute of limitations in your respective state then you can negotiate payment. Limitations are typically seven years from the first date of delinquency.
When negotiating a settlement payment you should never pay the full amount. This is because your account has been bought from the original creditor for just pennies on the dollar. We suggest you start your settlement offer at 50% of the balance.
The agencies will always accept partial payment. This is because there only way to recoup the money they spent on your account is by accepting your payment or selling it for a fraction of what they paid for it to another agency.
When you and the agency agree on a settlement payment you must get in writing from them that in exchange for your payment they will not report any negative information to the bureaus. If you fail to do this you will stop the phone call but you will have a whole new set of problems because of a damaged credit score.
If you just pay the debt it will be recorded as a paid collection. This is still a derogatory mark on your credit and will not improve your score.
Again, you must get in writing that negative information is not going to be posted to your report regarding the debt. Occasionally that negative information has already been reported you must get them to agree to remove it from your report.
If you do not do this there is no benefit to paying the collection. Additionally always pay with a paper check and no other form of payment. Just so you know you can actually use the memo line to repeat the agreed upon contract regarding the bureaus reporting, and once the check is cashed you will have a binding contract.
If you are being harassed by a collection agency you are not alone. Additionally they only can legally do so much. The Fair Debt Collections Practices Act says that a debt collector can not;
– Threaten legal action (arrest, jail)
– Constant harassing calls
– Call your job (once asked not to)
– Claim to be anyone they are not
– Threaten to sue (unless they are taking legal action)
– Threaten to garnish wages or seize property (each state is specific about what is legal, often a court order is needed)
– Call your neighbors or family members and speak with them about your debt
– Only call between 8am and 9 pm
– Call you if you have said to them that you will not accept calls regarding this debt.
Often these regulations are ignored. If you have been a victim you should report the agency to the FTC and the Attorney General. A majority of collection agencies have been fined because of violation of the FDCPA.
Additionally you can file a lawsuit against the agency and be awarded monetary damages. Make sure to keep all communications in writing in case they are in violation.