If you’re one of the approximately 70 million U.S. adults who have debt in collections, you might already have a pretty good idea of what this means. Regardless, it can be good to fully understand the process, especially if you’ve just had your first account picked up by debt collectors.
When people borrow money and don’t pay it back, there are various mechanisms for retrieving the owed amount. Oftentimes, the full sum will never be recovered. With a house or car, lenders can repossess that asset in order to compensate for their loss. But what happens with unsecured debts, such as credit cards?
People who let their credit card bills go delinquent will most often be contacted by a debt collection agency. These are organizations dedicated to the practice of recuperating unpaid debts. Essentially, original lenders—such as a credit card company—will sell delinquent debts to collectors for a large discount. This allows the lender to immediately cut their losses and move on, while giving the debt collector an opportunity to profit if they can find a way to get the money now owed to them.
Due to this derivative nature of debt collection, agencies in this field tend to be incredibly headstrong in finding ways to get payment. Anyone who is just realizing they have a debt in collections might be wondering if they can negotiate with a debt collection agency. And if so, what does this entail?
How Can You Negotiate with a Debt Collection Agency?
In short, yes, you can negotiate with a debt collection agency. Generally, this is a pretty common occurrence if you do indeed owe the money. At the same time, there are some other things you should do before negotiations begin—especially if you think there’s an error.
The first step when debt collectors contact you is to ask them to prove you actually owe the money. You should do this regardless of whether you think you really do or not. Oftentimes, documentation will get lost or mixed up in the shuffle between the original lender and the debt collector. If the collector is unable to procure validation of your debt, they can’t force you to pay it. Some states also have laws regarding statures of limitations on collecting debts. It’s essential to look over these rules before acting. These points are a huge part of the reason why you should take a pause before jumping into negotiations.
If the debt is in fact yours, and the collection agency can prove this, then you’re going to have to figure out your best course of action. Ignoring the issue will probably lead to you getting sued by the collectors, who will almost certainly win the judgement in court if they have hard proof. This will likely lead to wage garnishment or other negative outcomes for you.
While no one wants to pay back a delinquent debt, sometimes you just have to face the music and work out a plan with the collection agency. Being proactive about the process is will almost always serve you better than hoping it goes away.
What Are Your Rights as a Consumer Facing Collections?
Dealing with debt collectors is an exhausting process, as they’re generally quite intimidating. Whether you’re negotiating, or have just been contacted for the first time, you want to know your rights as a consumer. The FDCPA (Fair Debt Collection Practices Act) lays out some of the things collectors can and can’t do. For instance, they can’t call you in the middle of the night (unless you say that’s okay). They also can’t threaten or harass consumers. You should take a look at all the rules present in the FDCPA to get a better idea of your rights.
At the end of the day, it’s likely negotiation will be part of dealing with your debt in collections. Make sure you do some work to understand this process and the rules surrounding it to improve your outcome.