Debt collection calls can be scary and overwhelming, especially if you’ve never dealt with a debt collection company. If you’re contacted by a debt collection company, the best thing you can do is work with them to resolve your debt. If you want to know more about handling debt collection calls and the benefits of resolving your account, continue to read this guide below.
- What is Debt Collection?
- How Do You Handle a Debt Collection Call
- Collection Call FAQs
- Wrapping Up: How to Stop Collection Calls
What is Debt Collection?
When an individual doesn’t repay a debt in a certain amount of time or pays less than the minimum amount due, the creditor may sell that debt to a debt collection company. Debt collection companies typically buy debt for less than its total value, which is how they earn money. Creditors are able to recoup a portion of the debt, and debt collectors can make money when they collect a debt.
Another important thing to remember with debt collection calls is that it often impacts your credit report. The sooner you take control of your debt and repay your debts, the sooner you may be able to clean-up your credit report.
How Do You Handle a Debt Collection Call?
If you recently received a debt collection call, you might be wondering what steps you should take next. Fortunately, debt collection agencies are willing to work with you to help you find a way to repay your debt. One of the best things you can do is work with debt collectors to create a budget and payment plan that work for you. Here’s what you should do if you recently received a call from a debt collection agency.
Be honest
Debt collection agencies aren’t out to get you — they simply want to collect the money they’re owed. Be honest when you receive a debt collection call, and take the time to explain your situation and what you’re able to pay. Debt collectors are willing to work with you as long as you’re making a genuine attempt to repay your debt, so discuss your situation and what you’re able to pay. From there, you can create a plan that works for you to help you regain your financial freedom.
Communicate with the owner of the debt
Once a debt buyer has purchased your debt, they become the legal owner of that debt. If you want to resolve your debt and get your finances in order, communicate with the debt collection agency that you received a call from. As we mentioned previously, debt collectors are willing to work with you to get your debt resolved. Even if you’re only able to repay a small amount of your debt at this point, you should call your debt collector to discuss your situation.
Create a plan to resolve the debt
If you want to stay motivated to pay down your debt, it’s important to have a plan in place. Repaying debt can be challenging, especially with living expenses and other bills to pay. By working with your debt collection agency, you can create a plan to settle your debt, including a list of your expenses including your debt and a timeline for repaying your debt.
Create a budget
You don’t want to end up short on rent or another essential bill because you’re repaying too much debt at once. Take the time to look at your financial situation and your current expenses, then figure out how much debt you’re able to repay each month. There’s nothing wrong with taking some time to resolve debt as long as you’re working on it, so create a budget with a monthly payment that’s sustainable.
Negotiate a payment plan
Once you’ve determined the maximum monthly payment you can make, it’s time to negotiate a payment plan. Debt collectors are generally happy to work with you to create a payment plan, so don’t wait to make the call. Setting up autopay can help you save on monthly payments and ensure payments are made on time.
Remain professional
No matter what, you should remain professional when you’re resolving a debt. Debt collectors are happy to work together to help you repay your debt as long as you’re honest and treat them with respect. You should also keep contact information handy in case you need to make any changes to your payment plan or have any questions.
Collection Call FAQ:
What happens if you ignore collection calls?
Your debt isn’t going to resolve itself. Ignoring collection calls may lead to a lawsuit against you, which could result in the seizure of assets and wages to repay debt, depending on which state you live in and the details of your account. In many jurisdictions, a debt collector must inform you if your account is past the statute of limitations, so be sure to read all disclosures to see the status of your account. Even if you can’t repay your debt in full or make a payment at this very moment, answer collection calls and work with debt collectors to formulate a plan.
What happens if I don’t pay collections?
If you don’t pay collections when you receive debt collection calls, you may face potential consequences, such as:
- Reported to Credit Reporting Agencies: Delinquent accounts can be reported for up to 7 years.
- Possible Litigation: If your account is within the statute of limitation, a lawsuit may be filed in order to collect on the unpaid balance.
- Assessed Additional Expenses: If your account is eligible for litigation and a judgment is obtained, courts may award court cost and interest which would increase the amount you owe.
- Enforcement of Judgment: If a judgment is obtained, the judgment may be enforced by garnishing your wages and/or bank account. A lien could also be placed on your qualified property.
Can debt collectors sue you?
Debt collectors may be able to sue you, especially if you have gone an extended period of time without payment. Keep in mind that these lawsuits can be expensive and time-consuming, so debt collectors prefer to work with you to set up a payment plan. That being said, you don’t want to wait around to see if you get sued.
Wrapping Up: How to Stop Collection Calls
If you recently received a collection call that has you overwhelmed, there’s a solution. Working with debt collectors allows you to resolve your debt without lawsuits and wage garnishment. Don’t listen to debt collection myths, and communicate with your debt collector as much as you can.
Need help stopping collection calls and resolving debt? Midland Credit Management can help. Contact us today to learn more about how to stop collection calls and resolve your debt.