Dealing With Debt Collection Agencies
Collection agencies have rules they must abide by.
If you are at a point where you have turned over your debt to debt collection agencies, here are some things that you should know.
Debt Collection agencies are not allowed to threaten you. They are not allowed to publicly humiliate you by sending letters which state on the outside of the envelope that you owe them a debt, or calling your place of employment and identifying themselves as debt collectiors.
They are allowed to go to court to attempt to collect the debt against you.
If you have missed payments, you may be able to negotiate with the debt collection agency. They may agree to lower interest payments, or drop fees against you.
They also may agree to take a payoff for a reduced amount of money – allowing you to discharge your debt for less than what you owe.
However this is not necessarily an ideal solution. There are a couple of reasons for this. One, it is very likely to show up on your credit report, further hurting your credit. And two, the IRS may look on the amount of debt that was forgiven as income, and tax it.
A better solution is to negotiate low enough payments that you can afford to make payments every month. Even if it means that you have to make payments for a longer period of time, you are better off paying off your entire debt then you are asking for a reduced lump sum.
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