What to Do if Contacted by a Collection Agency

You’ve seen the scene in countless movies and TV shows. The hero is having financial difficulties. We know this because we see a pile of unopened bills and letters from collection agencies. The hero listens to their voicemail and message after message is about money and they all sound threatening. The hero ignores the mail and the messages and goes about his or her day. This is the point where everyone in the theater should scream STOP at the movie screen.

It’s natural for someone to feel overwhelmed or embarrassed by debt, but ignoring the calls and mail is never the right decision. Getting a call from a collection agent isn’t pleasant, but it can happen to anyone. Many careful bill payers, even people with no financial problems, are surprised by an unexpected bill from the past. Whether you receive one of these calls by surprise, or you’re expecting to receive it, there are five things you should do.

1. Get complete information
   It’s important to understand your situation. Ask the debt collector for a complete explanation of what you owe and when the debt and fees were incurred. Always request the explanation in writing or via email.
2. Keep records
   The laws about how debt collectors can legally operate vary between countries and even within countries, but it’s always a good idea to write down the date someone called, with whom you spoke, and what was said. Also keep a record of any emails or written communication. If a debt collector is harassing you, you may have legal recourse.
3. If you owe it, pay it
   If you know you owe the debt and you can afford to repay it, do so quickly. The sooner you repay the debt the sooner the calls stop, the less you’ll incur in penalties and fees, and the less likely you are to harm your credit.
4. If you don’t owe it, say so
   Debt collectors don’t usually work for the company where you incurred the debt. Instead, they are often outside contractors and are often unaware of the specific details of your debt. If there’s a valid reason you feel you don’t owe the money, explain it. The debt collector may still choose to pursue the debt, but oftentimes, a professional debt collector knows that his or her resources are better spent pursuing legitimate debt.
5. Negotiate new terms
   If you know that you owe the money but you can’t afford to repay it all at once, attempt to negotiate new terms. Do not simply make a “good faith” payment and assume that will satisfy the debt collector. Doing so can actually cost you more money. Make sure you fully understand the terms of any negotiation before agreeing to it.

As with any legal or financial issue, it’s important to know when to ask for help. For a large debt, working with an experienced lawyer may save you time and even money, as the lawyer may be able to negotiate better terms than you can on your own. For smaller amounts, or multiple debts, consider contacting nonprofits that specialize in helping consumers with debt collection issues.

Ignoring calls and letters from debt collectors may seem like the easiest thing to do at the time, but doing so can set off a chain of unfortunate events that may affect your life and credit for years to come.