Ask The Money Coach

Posts Tagged ‘collection agency’

You probably already know that it’s in your best interest not to ignore phone calls and correspondence from debt collectors, but what do
you do when a bill collector continues to ignore you? If you’ve been trying to negotiate a debt or want to be considered for a new payment plan, you’ll need to make sure you’re talking or communicating with the person who can actually make some changes to your account. Trying to get in touch with the debt collector who was originally assigned to your account may prove to be too difficult, so you’ll need to turn to someone else at the collection agency or organization to help.

You can also take the following steps to manage your debt:

Contact the Creditor Who Turned You Over to Collections

If you were turned over to a collection agency because a creditor no longer wanted to deal with you, try contacting them to see if you
can negotiate the outstanding balance from there. Some creditors may be willing to work with you if you can offer a lump sum payment that clears your account. Just make sure you get everything in writing if you do agree on a payoff amount or new terms.

Consult a Tax Specialist if You Settle for Less than You Owed

If you do manage to come to an agreement with your creditor or your debt collector ends up negotiating with you to confirm a new payoff
amount, make sure you understand the tax implications of the new arrangement. When you settle certain debts, like credit card balances that were due, the amount you settled could be considered “forgiven income” and thus it’s taxable to you. So you will need to set up an appointment with a tax specialist (even the volunteers at the VITA program can help) to determine how much you could owe in taxes based on the new account balance.

Don’t Sign Any Agreements You Don’t Understand

If the debt collector has been ignoring all of your letters or phone calls, and then sends you a letter stating new terms or some type of
settlement, don’t sign it until you’re absolutely confident that you understand the terms of the arrangement. Your debt collector may end up listening to you if you hold off on signing an agreement they’ve extended. Get professional advice from a consumer law attorney if you can. Alternatively, try doing a Google search for a local free legal aid clinic in your area.

Hire an Attorney

A consumer law attorney may be able to step in and negotiate on your behalf. If you don’t have strong negotiation skills and can’t seem to find a person at the collection agency who will cooperate, hire an attorney to handle your case. A professional attorney will review your situation and may be able to work with the collection agency directly. Only hire an attorney if it’s financially worth it — in other words if the debt you owe is well into the thousands of dollars. It probably doesn’t make sense economically to hire an attorney to try to negotiate over  debt of a few hundred dollars or so.

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If you had asked me before today if you could get get locked up for having outstanding credit card bills, I would have said: Absolutely not. After all, debtors’ prisons in the United States were abolished in the middle of the19th century. Unfortunately, however, a frightening and little-known occurrence is taking place in cities all across America: People are, in fact, being put in jail simply because they can’t afford to pay their creditors.

This chilling article in the Minneapolis Star Tribune details how common the practice is in various parts of Minnesota, and how it’s also taking place throughout the rest of the country, too. For the most part, those getting thrown in jail for being in debt have two things in common: First, they obviously didn’t pay their creditors as agreed. Equally important, though, they failed to show up at court hearings about their debts, which resulted in debtor warrants being issued for their arrest.

If you’re being hounded by debt collectors, read my article ‘5 Tips if You’re Facing Court Action from a Debt Collector,’ as well as another piece I wrote called ‘Why You Should Answer a Summons on Debt Collection.’

Read the rest of Lynnette’s article on BlackVoices.

Related articles

• 3 things you should never say to a debt collector (askthemoneycoach.com)
• Consumer Legal Resources to Fight and Beat Debt Collectors (smarterotti.com)

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