10 Tips For Dealing With A Collection Agency

It’s not fun dealing with a collection agency. Agents can be overpowering and manipulative and you can feel cornered or like a school kid getting scolded. The thing is, though, if you failed to pay a debt you legally owed, and you let the debt go to collections, you don’t have much choice but to deal with them. It’s human nature to want to resist when people are pestering us for things we don’t want to give up or can’t afford. We can get angry, or ignore the phone calls and letters, but it’s really not going to make the problem go away. it's certainly not going to help with credit building.

Instead, consider these tips for dealing with a collection agency. They aren’t going to make the experience enjoyable, but they’re going to reduce the level of discomfort you go through. Here are ten tips for dealing with collection agencies, if you accept that you owe the debt they are after:

1. Don’t avoid the agency

Avoiding debt hasn’t worked for credit building so far, has it? It’s not as though the collection agent gives up after 5 phone calls. They will keep hounding you for the money until the statute of limitations is up, and maybe not even then. During that time, your credit score is going to be horribly affected by it. You probably won’t be able to borrow money for at least six years, likely longer. That means no house, no ability to finance a car. You’re not going to win by avoiding the phone calls and letters, so you might as well just face them.

2. Don’t get defensive or angry

You made the mistake here and the person on the other end of the line is just doing his or her job. Getting upset with people in this situation is not going to move things along or improve your credit score. It will just prolong the uncomfortable bits. Your mom always said you catch more flies with honey, and she was right, even when dealing with a collection agency.

3. Ensure the agency is legitimate

Ask for the agency’s name and location and do some research to ensure it is a real collections service.

4. Ensure they actually have the right to collect on the debt in question

In Canada, you have to have received a debt verification letter letting you know that the debt has been taken over by the collection agency. The agency must wait a week after sending that letter before contacting you again. If you did not receive the letter, request that they send it out to you to ensure the debt they are trying to collect is legitimate. If you’re ever in doubt, the best avenue to take is to call the financial institution or credit issuer to whom you owe the debt and ask them if they’ve handed it off to a collection agency.

5. Cooperate as much as you can

Once you’ve verified that the agency is real, they are in charge of the debt and that you do, in fact, owe it, the only way to get the best possible outcome is by working with the agency, rather than against them. This can be your easiest route to better credit.

6. Ask for everything in writing

Get any payment agreement or offer from the collection agency sent to you in writing. In big, bureaucratic companies, it’s not always easy to keep track of everything that’s been said or offered to you by the various different representatives you may have spoken to. Always ensure you can prove what’s been offered to you by requesting it in writing.

7. Always get the name of the person you’re speaking to

Ask the agent’s name whenever you speak to someone. That way, you can at least attempt to keep the conversation going with the same person from call to call, or you can refer new representatives you may speak with back to your other contact, should they question what you claim may have been said previously.

8. Take notes and keep records

For each phone call, write down the date and time, as well as the number on your call display, the agent’s name and notes from the call. This can come in handy in some many way, but the most important is that you protect yourself should the stories change from one representative to another.

9. Negotiate

Never be afraid to negotiate. For the collection agency, collecting some of the debt is better than recovering none of it, so try your hand at negotiating before you agree to a payment plan. This could be your first step on your way to a good credit score.

10. Come up with a reasonable payment plan

Make sure it’s something you can actually do, otherwise you’re just going to default on that, too, and the collection agency will be hounding you once more.

11. Carry out the payment plan

Once you’ve agreed upon a payment plan that you can actually handle and you get the agreement in writing, stick with it. Even if it makes things tight for a while, just stick it out, because if you don’t, you’re right back where you started again.

Of course, the best tip of all is to avoid dealing with a collection agency altogether by keeping all your accounts in good standing and maintaining a good credit score.  If you’ve made some mistakes or hit some bumps in the road along the way, and you’ve found yourself being hounded by collections, these pointers are going to help you get back on track. You have to remember it’s not the end of the world. There is life after a bad credit score and you can rebuild it. Consider signing up for Refresh Financial’s credit rebuilding loan - a credit rebuilding loan requires no money up front and it’ll have you well on your way to a better credit score in no time. Click here for more information regarding our credit rebuilding loan.