5 Effective Ways to Pay Collection Accounts

  

March is Credit Education Month and a time to learn valuable information on credit and credit scores.

A collection account is a late account that has been forwarded to an agency (also known as asset recovery agency, debt buyers, collection agency or collection agent) for lack of payment.  An account is forwarded to a collection agency usually when an account becomes 90 to 120 days late. 

Collection accounts are purchased from the original creditors for a fraction of the original amount owed.  Creditors send accounts to collection agencies to remove them from their accounts receivables records and then write-off the full debt owed as a loss.  Creditors benefit in two ways, one for writing off the debt as a loss on their taxes and two when the money is collected which can be recorded as a profit or accounts receivable.  

A paid or unpaid collection account remains on your credit report for seven years from the date of first delinquency. Unfortunately many collection agencies re-age the account changing the date of first delinquency to the date they received the account which extends the time the account remains on your credit report.

A collection agency holds a collection account for a few months, it they are unsuccessful in collecting on the debt owed, and the account is forwarded to another collection agency. This process continues until the account is paid or legal action is taken against the consumer.

Many times when you provide a date when the bill is paid they will ask you why, why not now or similar questions trying to use psychological tactics to get you to pay the bill while they are on the phone.   Remain calm throughout the conversion.  A collection agent may ask you to repeat what you just said or write it down. These are all tactics to make you powerless and confused.  Here are 5 tips to help you deal with collection accounts.

1. Keep Records. Keep all copies of your credit reports (current and old).  If you have made any late payments or have neglected to pay any delinquent accounts compare you old credit reports with your current credit reports to verify all information on your credit report and pay close attention to the dates for collection accounts, bankruptcies, accounts included in bankruptcies and other delinquent accounts. 
2. Verify. When you receive a letter from a collection agency verify the company is licensed to collect money or delinquent debts, verify the company is a reputable company and that the company has a legal right to collect money or your debt.
3. Cease and Desist. You may request that the collection agency contact my mail only (use the term cease and desist).  A collection agency's goal is to get the money owed paid as soon as possible.  They will continue to ask why you can’t make arrangement today. 
4. Keep Your Word. Whatever arrangements you make with a collection agency stick to it, don't let the collection agency change your mind about what you can afford, use emotions, or scare you into doing something you don't want to do.
5. Confirm.   Confirm everything in writing and followup each phone conversation with a letter.  Send all correspondence certified mail with a return receipt and keep the receipts. Keep a creditor log and get the names of everyone you talked to and their titles. Record the dates and times they called you and what was said. This is helpful in the future if you have to dispute the account or the company takes you to court.

How to Protect Yourself From Debt Collectors

The Federal Trade Commission (FTC) defines a debt collector as any person who regularly collects or attempts to collect a debt owed including a creditor who uses a third party to collect a debt.

Consumers should learn their rights regarding credit and debt collection to prevent harassment, prevent paying additional fees or money that is not owed and to protect their credit. The main act that protects consumers regarding debt collection is the Fair Debt Collection Practices Act (FDCPA) which can be found on the FTC website at ftc.gov/os/statutes/fdcpajump.shtm.

The FDCPA covers individuals, families and debt owed for medical bills, mortgages, car loans and personal credit cards. The act does not cover debts business debts owed. A debt collector can only contact you between 8am and 9pm. They can contact you at any number you provided on your credit card or loan application unless you tell them in writing or over the phone to stop contacting you at that number. A debt collector can contact other people to get your contact information if they are unable to find you or do not get a response from you. They are prohibited from contacting third parties more than once.

According to CNN Money the number of complaints against debt collectors threatening to use violence or using violence increased by more than 50% since 2009 to 2,517. Complaints against debt collectors using abusive language increased to 35% in 2009.

Debt collectors cannot ask for more money than what is owed, threaten violence, legal actions, jail, job loss, or property seizure. A debt collector must sent a written letter stating how much you owe within 5 days from the first time they contact you and must include the name of the original creditor owed, and the process to follow if you feel you do not owe the debt.

If you feel you do not owe the debt, send a written response with a return receipt within 30 days of receiving the letter requesting proof that you owe the debt. A debt collector cannot contact you again until proof has been sent. Here are some highlights of what debt collectors cannot do:

Debt collectors cannot: harass you with threats of violence or publish your name, use profanity, make obsessive phone calls, make false statements or send false documentation, misrepresent the amount owed or the company they work for, cannot state you will be arrested if you don't pay your debt, may not give credit information about you to anyone including a credit reporting company, may not collect fees or other charges on top of the amount owed unless the contract states so or contact you by postcard.

If you do not pay a debt owed, a creditor or debt collector can: sue you or garnish your wages. However, debt collectors cannot obtain garnishments from: social security, SSI or veterans, military, railroad retirement, foreign service or disability benefits, merchant seamen wages or FEMA disaster assistance.

If you feel a debt collector has violated the FDCPA you can sue them in a federal or state court within one year from the date the law was violated. If you win, the judge can require the debt collector to pay you for damaged incurred up to $1,000. Complaints can be filed against a debt collector with the FTC.

5 Ways to Handle Collection Accounts

A collection account is a late account that has been forwarded to an agency (also known as asset recovery agency, debt buyers, collection agency or collection agent) for lack of payment. An account is forwarded to a collection agency usually when an account becomes 90 to 120 days late.

Collection accounts are purchased from the original creditors for a fraction of the original amount owed. Creditors send accounts to collection agencies to remove them from their accounts receivables records and then write-off the full debt owed as a loss. Creditors benefit in two ways, one for writing off the debt as a loss on their taxes and two when the money is collected which can be recorded as a profit or accounts receivable.

A paid or unpaid collection account remains on your credit report for seven years from the date of first delinquency. Unfortunately many collection agencies re-age the account changing the date of first delinquency to the date they received the account which extends the time the account remains on your credit report.

A collection agency holds a collection account for a few months, it they are unsuccessful in collecting on the debt owed, and the account is forwarded to another collection agency. This process continues until the account is paid or legal action is taken against the consumer.

Many times when you provide a date when the bill is paid they will ask you why, why not now or similar questions trying to use psychological tactics to get you to pay the bill while they are on the phone.

Remain calm throughout the conversion. A collection agent may ask you to repeat what you just said or write it down. These are all tactics to make you powerless and confused. Here are 5 tips to help you deal with collection accounts.

1. Keep all copies of your credit reports (current and old). If you have made any late payments or have neglected to pay any delinquent accounts compare you old credit reports with your current credit reports to verify all information on your credit report and pay close attention to the dates for collection accounts, bankruptcies, accounts included in bankruptcies and other delinquent accounts.

2. When you receive a letter from a collection agency verify the company is licensed to collect money or delinquent debts, verify the company is a reputable company and that the company has a legal right to collect money or your debt.

3. You may request that the collection agency contact my mail only (use the term cease and desist). A collection agency's goal is to get the money owed paid as soon as possible. They will continue to ask why you can’t make arrangement today.

4. If you setup payment arrangements and fall behind on your arrangement the collection agents are advised to refuse to extend time between payments, shorten the time between payments, and refuse to reduce the monthly account.

5. Whatever arrangements you make with a collection agency stick to it, don't let the collection agency change your mind about what you can afford, use emotions, or scare you into doing something you don't want to do.

5 Ways to Pay Down Medical Debt

Medical debt is one of the reasons why Americans file for bankruptcy. Every year many Americans file for bankruptcy due to medical debt. In 2008, 46 million Americans did not have any health insurance coverage.

Many people are uninsured due to the high costs of medical coverage. Many employers only pay a small portion of healthcare costs leaving the remaining expense for the employee. It is expected that 1.4 million Americans will file for bankruptcy this year, and some will be due to medical debt.

Health care costs continue to increase each year. According to the National Coalition on Health Care, in 2008, total health care costs increased approximately 6.0% - almost twice the rate of inflation. In 2008, employer health insurance premiums increased by 5.0%. The annual premium for an employer health plan covering a family of four averaged nearly $12,700 versus $4,700 for individual coverage. Retiring elderly couples will need $250,000 in savings just to pay for the most basic medical coverage.

Many Americans file bankruptcy for various reasons such as job loss, illness, death of a loved one, disability, loss of coverage, divorce, and the additional medical fees associated with health care coverage such as co-payments, deductibles, prescription costs, COBRA costs, etc.

The problem is the lack of mandated regulations in the health care industry, industry fraud and billing errors. Health insurance companies over charge patients fees for services and if you do not have health insurance coverage you might as well sign over your child to pay for the medical costs because when you don't have insurance you can basically be charged whatever fee the doctor or hospital chooses. When you have health insurance you can only be charged a certain amount for services.

We claim to be the most powerful country in the world yet we are the sickest developed country in the world. We have the highest incidents of high blood pressure, diabetes, heart attacks, stroke, and cancer.

We should demand that full health insurance coverage is provided to all Americans no matter what their income or lack of income. You should not get better treatment or additional services simply because you have a higher income or can afford better coverage. Every human life should be valued but based on our health insurance industry it is not. We must fight back and force Congress to develop better laws to improve our health care industry and provide insurance for all Americans because we deserve it. Here are 5 Ways to Pay Down Medical Debt

1. Ask for an itemized list of all services to ensure you are not being charged more than once for services you received
2. If you had health insurance at the time of service, verify which charges are covered under your insurance
3. Negotiate with the service provider (doctor or hospital) to get fees reduced or eliminated in exchange for paying the debt
4. Setup a payment plan with the service provider to pay down the debt
5. Adjust spending to gain extra money to pay towards the medical debt