Debt collection Basics

Collection agencies buy debt from numerous companies ranging from cell phone carriers to hospitals and everything in between. The agency then contacts the debtor to work out payment arrangements. At this juncture the debtor has 30 days to question any disputed facts, so review any documentation received very carefully, specifically the Demand Letter.

Throughout the collection process, it’s very important to maintain a paper trail of the times of conversations, with whom one spoke, and the outcome of the conversation. Once a debt is verified, the debtor then works out a payment system. Note, however, that if there are other outstanding bills that are not overdue by 180 days, pay those first. The collection debt will remain on your credit report for 7 years no matter what you do. So you may want to pay off any other debt first – BEFORE it goes to collection. Debt not in collection is more pressing. When talking to the collection agent, make sure that the financial arrangements for repayment are feasible. Do not agree to a catch-up payment plan that does not fit into your monthly budget. Be sure to look at all your monthly expenses and balance your personal budget before agreeing to a revised payment plan.

Know Your Rights

Video: Get the credit help you need to gain control of your life.

First of all, you have the right to not talk to the collection agency. If you do not wish to speak to a collection agency, you can ask that they only contact you by mail. They cannot insist on talking on the phone, nor can they be rude, threatening or claim that you’ve committed any illegality. This is against the Fair Debt Collection Practices Act. Additionally, debt collectors may not:

• contact a debtor before 8 am or after 9 pm
• talk to family or friends about the debt (they may call one time only as a means of gathering contact information)
• tell you that you owe more than you do
• add interest or fees to the debt unless it’s specifically authorized by the State or was pre-arranged in the creditor’s agreement with the debtor
• threaten to sue
• send paperwork that “looks like” official court documents.

If a collection agent or agency does any of these things, you have the right to file a complaint with the FTC or the State Attorney General’s office. If the breach is serious enough, litigation is an option. Within five days after a debtor has been contacted the agent/agency must:

• provide a written report of the debt, including the total owed and the creditor
• Inform the debtor of the right to dispute

Video: Know your rights and how to use them to stop credit harassment!

If the amount demanded in collection is correct, the debtor and agent (or debtor’s representative) move forward to work out payment details. Any bill that has gone to a collection agency will remain on the debtor’s credit report for 7 years.

Bear in mind that it does not matter how old the debt is; there are typically no statutes of limitations on debt collection. If a debtor refuses to pay an outstanding sum, the collection agency can request a default judgment for a Writ of Attachment that will allow the agency to find assets and garnish them until the sum is repaid. The default judgment is typically a last resort, not only because it costs the collection agency extra money, but also because legally they must have made viable attempts to collect the owed sum with the debtor unsuccessfully several times.

Points of Contact:

Major Collection Agencies

McCarthy Burgess   
440-735-5100

Johnson, Morgan & White  
800-441-9550 

Frost Arnett
615-256-7156
800-264-7156
Fax: (615) 256-0921

James, Wallace & Stewart
800 - 569-1918

Burt & Associates
800-755-7111 ext 210

GCS Services
713-777-4441