7 Smart Ways to Ensure You Are Paying the Right Creditor

  

              

Many consumers do not know that once a delinquent account is reported to a collection agency a consumer has a short amount of time to pay the bill.  This is because collection accounts are put on a nationwide registry and each collection agency in the country gets notified of a collection account.  However, only one collection agency has a legal right to collect money on a delinquent account.

It can be very difficult trying to make payments on a collection account because a collection agency holds a collection account for a few months, it they are unsuccessful in collecting on the debt owed the account is forwarded to another collection agency. This process continues until the account is paid or legal action is taken against the consumer. 

Collection agencies don't want you to know that as a consumer you have a legal right to question the validity of a collection agency which is called debt validation.  Many consumers have paid money on delinquent accounts to a particular company only to find out that the company did not legally have a right to collect money on that account.  As a result the consumer still owed the money on the delinquent account. To prevent this from happening to you, here are 7 ways to validate a debt and ensure you are paying the right creditor or collection agency:

1. Request the creditor, collection agency or attorney to provide documentation that the company is authorized to collect on the debt. Ensure the name and address of the collection agency appears on the documentation which should be on company letterhead.
2. Ask for proof of the total amount of the debt including payment history from with the original creditor and status of the account. Verify the documentation against your own records.
3. Request the collection agency to provide the original contract or other documentation showing the agreement you made with the original creditor including the name and address of the original creditor.
4. Ask the creditor to provide a copy of their business license to prove they are licensed in their state to collect money on delinquent accounts. However this varies from state to state.
5. If the creditor use profanity, harasses you, is rude or threatens you inform the collection agency that they are subject to the Fair Credit Reporting Act (FCRA), they might argue and say they are not but they are considered debt collectors and are covered under the act.
6. If the creditor cannot verify the debt they cannot collect any money owed on your account and is not allowed to contact you about the debt.  They also cannot report the account on your credit report.
7. A creditor may respond to your debt validation letter by sending you a summons to appear in court. This is a scare tactic and is illegal.  A creditor has to validate the debt before they can file suit against you.

Keep records of all documentation you receive and all documentation you mail.  Send all documentation via certified mail with return receipt.  If you find that the creditor or collection agency is violating the FCRA you can file a complaint with your local small claims court, notify the credit bureaus and file complaint with the Federal Trade Commission, www.ftc.gov.

9 Reasons You Can't Hide From Your Debt

                                                            

Technology has allowed creditors, debt collectors and some state taxing authorities the ability to search for consumers on the internet use social media networks such as Facebook, Myspace,Twitter, Linkedin and other sites to find consumers.  This seems extreme but it is legal.  

According to the Fair Debt Practices Collection Act, debt collectors can contact your family and friends to find your location or get other personal information such as your address, email address or phone number.  If you posted your contact information including your current employer on your social media profile you may soon be getting emails, phone calls or visits from your debt collectors. What if a debt collector contacted someone who is listed as a friend on your social media profile? How embarrassing would that be?  With the frequent consumer data breaches and lack of strong security protections on Facebook and other social media profiles it is not too hard to find anyone these days.

If you use social media networks and are in debt, you presence on them can increase your chances of your creditors and debt collectors finding you.  The IRS has not confirmed whether they use social media networks to find taxpayers who owe back taxes but I assume they probably do.  However, tax agents cannot friend a consumer who owes back taxes on a social media site but that probably doesn’t stop them from doing it.  Here are some ways you can be found on the internet:

1. Internet search engines
2. Motor vehicle records
3. Chat rooms and forums
4. Social media networks
5. Employment records
6. Tax records
7. Bank records
8. Public inquiries at local businesses such as groceries stories, barbershops, church meetings, social and civic meetings, etc.
9. Posts you made about an article or video or post you made on a website

Contact your creditors and debt collectors before they contact you to setup a payment plan or request a financial hardship.  Follow-up with a letter confirming the agreement and stick to the agreement.  It is better to be safe than sorry.

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.