Everything you need to know when working with debt collection agencies
Receiving contact from a collection agency can be confronting, but it doesn’t have to add insult to injury.
We understand that being in debt can be stressful and overwhelming, but it doesn’t have to be. It is possible to work with a debt collection agency to clear your debts and move forward.
A debt collection agency is a business that specialises in collecting on money owned, otherwise known as debt, to another person or company. This debt often comes in two forms: contingent and purchased debt
Contingent debt is when a company collects debt for another business, on their behalf. Purchased debt is when a company purchases debt from another business, meaning that they legally own the debt moving forward, and you are now indebted to them.
If you receive contact from a debt collector, here are some tips to make the process a little bit easier.
Obtain written notice
If your debt has been purchased by a collection agency, you will have received a Notice of Assignment letter 30 days before they made further contact with you. The notice sets out the amount owed on the debt, along with information on where future payments can be made. Keep this on hand, as it will be useful to reference when working with the collection agency moving forward.
Ensure the debt is legitimate, and your own
If a representative from the collection agency has made verbal contact with you, we recommend doing your due diligence and asking the following questions.
- Name and direct number of the collector you’re speaking with
- Name of the company the collector works for
- Who they’re collecting money on behalf of, or who the debt was purchased from
- The amount that you owe
- How you can pay off the debt
- The date you started to owe the debt
It’s important to get all of the above information on the debt. If you weren’t aware of the debt, tell the collector that you will call them back shortly, and make sure you look into the debt and ensure that it is legitimate, and your own.
Understand your rights
Any reputable, ethical debt collection agency won’t use intimidation or misleading claims to get you to pay the debt. It’s in their best interest to be understanding and empathetic, particularly when dealing with people in hardship.
Collection agencies have highly regulated and specific compliance protocols in place to ensure that they do the right thing by all parties involved. Under the Australian Consumer Law, you have specific rights that collection agencies will face harsh penalties for crossing. For example, they can only contact you between specific hours of the day, and they can’t disclose the name of the debt collection agency they are calling from until you have confirmed your identity.
Receiving contact from a debt collector can make people stressful, emotional, and angry. Take a deep breath and try not to let these feelings guide the conversation that you are about to have. A negative response wiIll not help your situation, nor will it make the collection agency stop contacting you.
If you legitimately owe the money and need to start paying it back, there are ways to make the process easier.
Keep track of all correspondence
Depending on the state you live in, debt collectors can make contact with you at varying frequencies per week. Keep a record of every phone call, email or SMS you receive from the debt collection agency to help you to keep track of the situation, and to ensure that the agency is being compliant in the debt resolution process. Additionally, request proof in writing when making any agreements or changes to your account with the debt collection agency.
Be proactive and find a resolution
The more open you are with your circumstances to the collection agency, the easier the payment process will be.
If you can’t pay off the debt in full, you will be offered to set up a payment arrangement. It’s really important that you pick an affordable amount that works for your budget. If an unforeseen event arises and you can’t make the agreed payment, be proactive and call the debt collection agency to make alternate arrangements. If you are on the front foot, the agency is more likely to be understanding and find a solution that works for you, rather than having to make additional contact after an agreed payment dishonours.
What are my options?
An important thing to note is that you can actually negotiate on your debts. If you are unable to pay back the full amount you owe, explain why, and the collector may offer you a discounted settlement to pay in full.
Treat paying off your debt like a business dealing. Once you’ve established that you do actually owe the money, it’s the debt collectors’ job to organise how you will pay it back. Stick to your budget, stay organised, seek professional opinions and advice, and soon enough, you will feel back in control of your finances. It’s in everyone’s best interest (yours and the collection agency) to find an affordable and sustainable arrangement to repay the debt. We recommend the steps listed in this article to give you the best chance of resolving your debt with the least amount of stress and angst.
At LoanU, we work with people like yourself who have found themselves in debt and need help, but can’t find a responsible creditor to move forward with. We care about your story, and we don’t judge you based off your current financial situation. If you qualify for a loan with LoanU, we can help you to find a better end-financial-position, with loans that reward positive repayment history with interest rate reductions over time, with the ability to rebuild your credit score by having your defaults updated to paid. A LoanU personal loan may be just what you need to help you get back on your feet!
Find out if LoanU is the right solution for you by checking if you qualify for a loan with us, without damaging your credit score.
Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or requirements. Therefore, please consider whether the information is appropriate to your circumstance before acting on it and seek independent advice from a finance or legal professional if necessary. All loans are subject to a full application and assessment by United Loan Solutions Pty Ltd trading as LoanU (Australian Credit Licence number 486303). LoanU is part of the PF Group Holdings Pty Ltd group of companies.
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