Deal With Collection Agencies

Whether it's because of illness, unemployment, or unexpected financial disasters, you might someday have to deal with a collection agency. This won't tell you how to avoid paying off your old debts; it will tell you how to deal with the phone calls in a way that you and the collection agency representative will both be satisfied.

Video
This video provides advice for dealing with collection agencies in Canada. The laws may vary in your area.

Tips

 * You must keep a calm, reasonable and well-modulated tone of voice. Any yelling, name-calling or other verbal tactics will erode the image you're working to project.
 * If they speak to you in any way that you find objectionable, give them one warning, as mentioned in your opening statement. The second time, ask to speak to their supervisor. When you're connected, start again from step one.
 * Write down everything--the date and time of the call, data on the rep calling you, what they want, what you're offering, etc.
 * Many times the names of the collectors are not their real ones. One way to figure it out is to send the signature receipt letter addressed only to that one person.  If they sign back with their signature on the letter, they must be that person (otherwise it becomes a federal offense of mail fraud).
 * Sometimes you just can't win, they won't listen to reason or acknowledge that you legally are not obligated to the debt. In this case, establish a long paper trail indicating that they did not wish to collect on the debt in good faith.  When they file your collection with the credit agencies, mail copies of your paper trail to all three, with documentation that they violated the Fair Debt Collection Act and demand removal of the claim from your credit report immediately.
 * Be very careful about making any payments if the debt is past the statute of limitations or about to be since that may restart the clock and you may then owe the full amount even if the collector told you that you would only have to pay a small amount and then they would leave you alone.
 * Debt collectors start acting a lot more reasonable when they think they are going to collect something. So, if the debt is valid, start out by telling them that you just got a large paycheck, tax return, etc, and that you want to clear up your credit. Then tell them about other, preferably larger, more important debts that you also owe, (rent, utilities, etc) and how much you have left to pay off your remaining debts - like the one they are collecting. With that out of the way, you can demand simple politeness and certain concessions.
 * Record the call: if they get belligerent despite your completely reasonable attempts to resolve the debt, you can use it against them later.
 * Call a debt negotiation firm that specializes in dealing with debt collectors. www.debtend.ca is a very good place to start.

Warnings

 * Remember, your goal is to take, and keep, control of the conversation so that you can both get what you want. By losing your temper, sounding panicked, or whining, you are giving control of the phone call back to them.

Things You'll Need

 * A complete script, as described in step one
 * Paper and pen by your telephone (or in your pocket, in case of a cell phone)
 * A telephone with a recording device. Radio Shack has some good options.

Related Tips and Steps

 * How to Deal With Zombie Debt
 * How to File Bankruptcy
 * How to Get Out of Debt
 * How to Maintain Your Credit Rating
 * How to Lower Your Monthly Bills
 * How to Build Good Credit

Sources and Citations

 * http://credit.about.com/od/debtcollection/qt/validationltr.htm - Source of sample debt validation letter.