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There are only a few things worse than getting a call from a collection agency demanding that you repay some kind of owed debt. For many people, the immediate reaction would be one of embarrassment, soon followed by either aggravation, or the need to settle the matter right away. Most collection agencies would like you to pay whatever it is that they ask as soon as possible so as to give you little time to think about the situation at hand. It is their hope that you will be caught off guard by the call, and will provide any and all information that they request without considering your rights in such a case. For these agencies, the less you know, the better. Whether you’ve dealt with collection agencies in the past or not, it is important that you know your rights, and have a good understanding of all the things that they don’t want you to know. By considering the following data points, you’ll increase your knowledge regarding interactions with debt collectors, and will be able to avoid stress, and also save yourself time and money.

You don’t really need to make a big initial payment

Most collection agencies will insist that you make a big immediate payment to rectify your unpaid debts. They will come up with a wide variety of reasons as to why you must pay a large down payment against your debt in order to pressure you to do so. Such reasons may include preventing even greater fees in the future, or that the agency’s manager requires a large payment in order to go about the process of eliminating the debt from record. While these debt collectors may seem very convincing, the truth is that you don’t need to make a huge upfront payment unless you want to help pad the agent’s commission check for the month. As you can probably now guess, most debt collectors are paid through commissions on the size of the down payments that they receive from the people that they contact.

You can break off communication with collection agencies.

Over the years, people have tried all sorts of tactics to avoid calls from collection agencies. Fortunately, there is now a federal law that states that if you request in writing for a collection agency to no longer contact you, the agency must abide by your request. In fact, if they ignore your request, and do continue to contact you, then you can sue them for a substantial amount of money as outlined in the law. It is important to clarify, however, that requesting a cease in contact does not eliminate the debt that must still be paid. The request simply gives you the opportunity to pay off the debt without harassing phone calls coming in on a consistent basis.

There is no such thing as a payment deadline

Many debt collectors will insist that you pay your debt within a certain timeframe. Some may even go as far as making threats of potential repercussions that may result in not paying the debt before the so-called deadline. The truth is that all the talk of a deadline is entirely fabricated, and is actually used as a scare tactic to coax you into paying the debt as quickly as possible. The debt collectors know that their best bet to collect the full amount owed is to make sure it is paid in a very timely fashion. The longer that they have to wait to receive full payment for the debt, the less likely it is that debt will actually be completely paid.

Their threats are exaggerated

The debt collector will want you to react to their call in fear; as such an emotion may drive you to pay your debt sooner than later. In order to scare you into making a larger payment, or even paying your debt in full, a debt collector may make exaggerated threats. They may threaten to destroy your credit score, or even cease all of your possessions. While these threats may seem scary, the truth is that the collection agency can’t really act upon them. The threat to your credit score is often made with the hope that you haven’t taken the time out to check it periodically on your own. If a collection agency is calling you, that means that your credit score is already severely damaged, and there is little to nothing that they can do to damage it even more than it already is. With respect to repossessing your possessions, such an action is illegal in many states, and is actually more costly than it is worth for the collection agency.

A debt collector must disclose his or her identity

If you receive a phone call from a debt collector, they must immediately provide full disclosure as to their identity. They absolutely cannot call you anonymously so as to make it impossible for you to avoid their calls. In fact, if they fail to fully disclose their identity when they contact you, you then may have justifiable grounds to sue the collection agency for a nice amount of money.

Conclusion

Collection agencies often act on the premise that the less the debtor knows, the better. They are in business to get your money, and will do whatever it takes to make that happen. Many people fall into their traps, causing them to pay unnecessary fees, and deal with harassing phone calls because they aren’t aware of their rights. By knowing all the things that collection agencies don’t want you to know, you’ll be prepared to best handle their phone call.  If you are interested in settling these debts check out my CuraDebt review.

As observed, many societies nowadays are heavily dependent on credit and many as well find themselves in debt crisis due to such dependency. Charge off, a familiar word for many, causes credit users in a problematic situation.
A “Charge off” is when an account is being removed from the credit card issuer. This usually happens for delinquent accounts. What makes this painful for the creditor is that he will get the worst credit rating from his issuer thus affecting his credit reports and score.

It does not end there; the debtor still owes the issuer since the debt is still legitimate despite being charged off.  Don’t think you go off scott free. Oftentimes, the lender sells the debts to collection agencies and it will then be the agencies’ right to look for measures to collect such debt.

Having been regulated by the Fair Debt Collection Practices Act or the FDCPA, collection agencies often result to questionable tactics for collecting debts such as:

o The use of abusive language and even threatening;
o Harassment at your home and/or workplace through telephone calls
o They even bother your family, friends and even coworkers in;
o Frightening the debtor with illegal imprisonment;
o Pretending to be lawyers or court representatives;
In the US, there are more than million people filing for bankruptcy every year and most of these filings causes lenders charge off accounts.

Charge offs definitely play a negative effect on your credit score since payment history is a crucial factor to your credit report. Once your report shows that you were charged off, that would imply that you no longer have the financial stability that will lead to lower credit scores and higher interest rates.

There will still be higher interests given to you despite having a perfect and good payment history once you are charged off. Higher interests are given to make up for the losses that the creditor has caused.

However, you could also choose to negotiate with the lender who declared a charge off to your account by having it reclassified as “Paid as Agreed”. In that way, your credit report will be cleared from the charge off.
In order for you to avoid charge offs, take time to inform yourself about what it is, what are its causes, how affects your credit score and most of all, how to avoid having one.  Don’t worry though if you have a charge off your credit can still be fixed.

Collection agencies are grouped into two kinds: In house collection and third party collection. The first kind, In house collection agencies acts as the billing department of a credit agent or credit company. They function as money collector a strategy to keep the collection costs down. If you are in debt they will be the one that you will encounter first. The second kind of collection agency is the third party or outside agencies which are hired by a firm to collect debts that are past due date. They work for percentage from the debt that you owe or for an hourly rate charging all of this to the original collector.

Collection agencies are notorious for trying to increased the amount that you owe so that they can get a higher percentage of payment. They would pressure you to immediately settle your debt at a compromised amount. If the collection agency cannot collect the debts from you they will sell this to another agency to break even so that they can move on to other better accounts than yours.

Collection agencies have several known methods of collecting a debt and this could be through the form of a letter or letters, direct contact, directly reporting the debt to the credit bureaus and suing you for the debt.  The collection agency has a special arrangement with your original lender to sue you in court if necessary. The first two methods are the most commonly used one by these collection agencies since they avoid suing since this is considered as time consuming and does not bring in the result that they are hoping for.

Some collection agencies can go as far as harassment to get their point across. Any additional fees that these collection agencies may add to your debts must be provided in the form of detailed contracts  which are typically about attorney’s fees or payment collection costs. There is a prescriptive amount of time that any collection agencies can pursue you. This can vary from each state from 2 to 7 years depending on whether the contract is a written one or verbally conducted.

Agencies as mentioned previously can place a report to the major credit bureaus for up to 7 years from the time that you incurred the debt, 10 years for bankruptcy cases. Thanks to the Fair Debt Collection Practices Act they cannot legally harass you or make a violent move against you by calling on late hours of the night or during inconvenient hours while you are at work. They are only limited to pursue you with legal action.

Some other restrictions that the said law has placed on them are that they cannot threaten to take your property if it falls under the exempted category, only your principal place of residence can be taken from you if you don’t cooperate with them. Collection agencies often offer flexible payment plans and may even offer a discount option where you as the debtor can pay half of the debt owed to settle their account once and for all.