The phone rings. You wonder, “Is it a debt collector?” You decide not to answer it because you don’t want to face another troubling call.
Has this ever happened to you?
We take on debt when we need to, and we try to pay it off as we agreed. But there are times when extenuating circumstances keep us from meeting our obligations. When that happens, the businesses we’ve purchased from take action, perhaps by first putting us on their internal accounts receivable list and then ultimately sending us to a third-party debt collection company.
Having a debt in collections can dramatically impact your credit. The collection item appears on your credit report and drags down your credit score, which can make you a less attractive borrowing candidate for lenders.
Dealing With Your Debt Collection Item
One of the most important things to know is: DON’T ignore their calls. They won’t go away and the longer you avoid the calls, the more work you’ll have to do on your credit to regain lost ground.
Draw strength from the fact that this is a temporary situation and deal with it straight on. The sooner you deal with it, the faster you’ll end it.
The next thing to do is determine whether or not you should dispute the debt collection item. There are some circumstances that call for a dispute:
1. If the debt doesn’t belong to you.
2. If you’ve already paid the bill.
3. If you are not sure the amount they are trying to collect is correct, or you think it may be too old.
If none of these are true, and you are indeed responsible for the debt, then the best thing you can do is pay off the debt. Your credit is impacted regardless of whether it’s a small amount or a large amount of outstanding debt, so if you are on a budget then pay off the small amounts and work out a payment plan on the larger amounts.
Be Ready to Talk to the Debt Collector
When you get a call from the debt collector, follow these tips to help you work with them on the phone:
- When dealing with them, be polite and respectful, and avoid becoming defensive or angry. You’ll accomplish much more with a neutral, business-like tone. The debt collectors should treat you with the same respectful, professional tone. If they do not, ask to speak to their manager.
- Research the situation and arm yourself with facts. Facts are so effective at helping you to deal with the situation. Gather invoices, bank statements, copies of checks, and any dates and times and names of people you’ve talked to and what you talked about with them.
- Put together a payment plan and stick to it. If you say you are going to put a check in the mail on a certain day, do so. Be proactive and follow up with the debt collector. Let them know when you’ve made your payment, call them back to ensure they received the check, and follow up to find out when the debt collection item is marked as “paid.”
Debt collection isn’t a pleasant experience but it does happen. When it does, use these tips to help navigate the emotional situation and take charge of your credit.