The debt collection industry has grown in leaps and bounds over the past few years albeit facing major challenges. The industry has become very competitive, and it also faces increased regulation from governments. In the recent past, there has been an increase in the number of players in the debt collection market which is already a fragmented industry. This has made it all the more critical for debt collection agencies to maximize the efficiency of the collection activity.
Benefits of Debt Collection Agencies
Debt collection agencies play a vital role in a nation’s economy as well as in the local communities where most people do business. Here are some of the benefits of debt collection agencies.
In a survey published by Ernst and Young, debt collection agencies pay millions of dollars in federal and state taxes every year, which trickles back to the local communities in the form of better infrastructure, healthcare, security, and more. By creating employment opportunities, the money they recover for credit companies ensures that there is approximately $600 in household savings per year.
Community Contribution and Participation
While in the eyes of the majority, debt collection agencies are out to scam people off their money, they do a lot of good in the communities they serve. The agencies have CSR activities such as participating in community fundraising events, donating to food banks, seniors’ programs, credit literacy programs, and so much more.
Helping Indebted Individuals
Debt has severe implications in the physical and well-being of an individual and agencies have the responsibility to help them resolve their debt. This is a little-known fact by the indebted individuals. This is often why they play cat and mouse games with collectors.
However, the market is getting highly competitive with new entrants who are looking to make a name for themselves with credit companies. For this reason, many of the debt collection agencies frown upon the above benefits, and that has contributed to the tainted image most people have of the agencies.
Dealing with Debt Collectors
When debt collectors come calling do not panic. No matter the amount of debt you are in, you have rights enshrined in the Fair Debt Collection Practices Act. Here are 3 actionable tips to help you when dealing with debt collectors:
1. Insist on A Written Formal Notice
Debt collection agencies are mandated by law to send you a written notice within five days after making contact. The notice should include the name of the creditor, the amount you owe in arrears, and the action you need to take if you are not sure of the debt in question. If you are sure that you do not owe the creditor any money, respond to the notice within 30 days in writing.
2. Keep A Record of All Phone Calls and Messages
Open a file to record all the correspondence you have had with debt collection agencies. For phone calls, write down the time, and date, the collector’s name, the amount you supposedly owe, and the summary of the call. This will come in handy especially when the collector may break the law. Always keep the conversation as short as possible while staying calm and focused no matter the pressure they try to build on you.
3. Always Negotiate
The economy is a pain in everybody’s backside, and debt collectors are willing to collect any amount they can. This is an advantage for you since you can always work out a deal to pay the amount in installments. However, before you start paying, ensure that the debt collector sends you the agreement in writing, then you can send the payment via a cashier’s check rather than a personal check to avoid giving the collectors access to your bank account.
With all that said, you could also negotiate to have the collector remove the collection amount from your credit report if you pay the full amount. The process is not illegal, but most credit reporting companies dislike the idea and chances are that most debt collection agencies will not agree to it, but it does not hurt to try.
Dealing with debt collectors is not easy, and you have to stand your ground and request that all correspondence be done in writing. However, due to the surmounting pressure from the competition, debt collection agencies will not give the debtors the time to explain themselves, and this is the leading cause of their tarnished reputation.