Many of us have been in the situation where a bill has gone to collections. This is particularly true if you have had a catastrophic medical issue, which is the most common kind of bill to go to collections. Thirty million Americans have medical bills in collections alone, and that’s not counting the folks who face other issues.
Here’s what you to expect and what you can do if your debt ends up in collections.
Your bill will usually be sent to collections after missing a payment three to six months after the original bill was due. After that, your bill may be bought up by another debt collection company if the first one fails to get it paid.
Ignoring the Debt Collector Isn’t Bliss
The first thing many people want to do is hide from the debt collections agency once they start hearing from them. This is perfectly natural, because it’s disheartening to be harassed over your debt. You’re also probably facing a lot of financial problems beyond the debt itself, because otherwise, you wouldn’t be in this situation.
Unfortunately, ignoring the bill isn’t going to help you. In fact, it’s one of the worst things you can do. It’s time to face the music.
Dealing With the Collection Agencies
If your debt goes to collections, the first thing you can expect is a lot of phone calls. The individuals who work at debt collections agencies are often paid by the phone call or letter, which means they have a lot of incentive to contact you again and again in the hopes of convincing you to pay your debt. However, they cannot call you at all hours of the day, especially at inappropriate times – such as late at night. According to the FTC, you can also tell them verbally or in writing they can’t call you at work, and legally, they have to respect that.
But, while you don’t want to ignore the calls, it’s best that you talk to the collection agencies only in writing.
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If you have the funds to negotiate a payment plan or settlement, then that will be your best option in dealing with the debt. Ideally, you can call your original creditor rather than a collection agency, especially if some time has passed. Offer to pay an amount you are comfortable with. Start by offering 20% (or even 10%) of the original debt and see what happens. Once you reach an agreement, make sure you get it in writing.
If you do find yourself dealing with the collection agency, you can do the same. Daily Finance offers an important tip about timing your call to make your negotiations more advantageous for you. Collection companies are paid by the creditor for the amount of money they are able to bring in, and since they’re trying to earn more business, the debt collectors have monthly quotas they have to fill. This means they’ll be more receptive to negotiating debts and payment plans at the end of the month so they can meet the quotas. Try calling them the last day of the month. If you don’t succeed the first time around, try again.
Here’s an important tip about payment plans (if you choose to pay in installments). Make sure you can actually afford the payments. Look over your budget and see what makes sense for you. It won’t do your finances any good to make promises you can’t keep, especially when it comes to debt collectors.
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