What to Do After a Debt is Sent to Collections

When you leave a medical bill or similar types of debt unpaid, they could get sent to a collection agency. This act can stay on your credit report for a number of years, and your credit score will also be affected. Bad credit can be a long road to come back from, but don't be discouraged. The best advice in this situation is to pay off your debts on time or discuss a new repayment plan with the creditor. If you're well past these points, follow a few of these tips:

Deal with the situation immediately 
If this is the first time you've had a debt sent to collections, the first piece of advice is to remain calm and immediately get on top of everything. Throwing away letters and ignoring calls from collectors is the last thing you should do in this situation. Try to talk to the collection agency as soon as possible to make sure that the debt is yours. In rare instances, the collection could be a mistake, so it's important to verify the debt quickly so this negative mark doesn't get on your credit report. Getting this taken care of sooner rather than later can provide you with a little more leeway from collectors. You can discuss with your creditors to get the incorrect debt taken off, but it may take a little extra work.

Know your rights in this situation
You are allowed certain rights from the Federal Trade Commission when it comes to collectors. Understanding these protections can be beneficial and help you deal with your debt. The Fair Debt Collection Practices Act was enacted to prevent collection agencies from making too many calls or threatening you. If you feel that the collection agency is being a nuisance after you have cooperated with them, contact the Consumer Financial Protection Bureau and file a complaint. The FTC said that some of the things agencies can't do include:

  • Calling before 8 a.m. or after 9 p.m., unless you agree to such arrangements
  • Using profane language while having a conversation
  • Lying about the debt or who they are, such as falsifying who they work for
  • Arresting you if you fail to pay the debt
  • Giving wrong credit information about you to a credit reporting agency

Get all the information in writing
You're probably told to get all your financial agreements in writing, and this goes for collection agencies too. If you agree to a payment plan with the collection agency and don't get it documented, it's entirely possible the collectors could relent this promise. Getting everything written down is a great way to make sure that there are no misunderstandings and the process goes smoothly. You don't want to get more stressed out if you find out the deal you agreed upon was canceled.

Keep track of the conversations you have
While you're agreeing to how much debt you have and a repayment plan, write down when and what your conversation is about and hold on to any documents you receive during this time. Jotting down when you agreed to a payment plan and the document that verified this assist you with the process and help you get your credit score back to a good place.

Avoid giving out banking information
You should work with the collection agency in order to make everything seamless, but avoid giving any of your direct banking information, such as your account and routing numbers. A money order is a recommended form of payment, as you're not giving away any personal information and you have documentation that the payment went through.