What to Do If You Were Sent to a Collection Agency

Improper contact with collection agencies can upset any consumer who is unaware of his rights. Correct planning and negotiation skills will allow you to resolve credit issues in a way that is satisfactory and beneficial to you, your family and your pockebook. By utilizing the laws in place to protect you as a consumer you will know what to do when facing collection agencies.

Debt Validation

Determine how long the collection agency has had your account. Based on the Federal Debt Collection Practices Act, regulated by the Federal Trade Commission, a collection agency must contact you within 30 days of first receiving your debt. Determine if the data is valid. Request that the collection agency provide in writing via certified mail information that this is indeed your debt. This method is most effective if you challenge the collection agency within 30 days of receiving notice that the agency has your account. If you are unsure that the debt belongs to you, do not admit liability of the debt until you know for sure. Admitting the debt is--or could be--yours automatically binds you to the debt. If it is past 30 days, determine the accuracy of the debt by contacting the three credit bureaus--Equifax, TransUnion and Experian (See Resources).

Repaying the Debt

Contact the original creditor directly to determine if you can pay off the account. Sometimes an original creditor has written the debt off as bad in the accounting books and cannot work with you any further. It is worth a try anyway to settle the debt directly with the original creditor because the power always lies in the original creditor. Though the collection agency purchased the debt from the original creditor, the creditor can pull an account from the collection agency at any time if you speak with and resolve the matter with a representative willing to help.

Settling the Debt

If the debt is proven to be yours, create a debt repayment plan or settlement amount for the debt. Go over your current finances, income and budget to determine how much, if any, of the debt you can repay. Since the account has reached a collection agency, you are not always required to pay the full amount. Contact the collection agency via certified mail or over the phone to negotiate your debt repayment plan or settlement amount. When you reach an agreement on a settlement or repayment plan, get all the details in writing and ensure both parties sign the document. Do not make any payment until the document is written and signed.

Cease and Desist Tip

If you do not want to correspond with the collection agent over the phone, send a cease and desist letter to the collection agency. Based on the Fair Debt Collection Practices Act, collection agencies may not contact you by phone if you opt for them not to do so.