How to deal with Collection Agencies

Debt Collectors

Collection Agencies

Many folks who had a job loss or lost their business due to the tough economic times we are currently going through are pressured with mounting debts.  Collection agencies and bill collectors are relentless and do not care about excuses.  If you are behind on your bills, you will constantly get collection calls by collection agencies bill collectors and nasty collection letters.  Your credit scores will probably fall in the low 500 or lower category and it will be next to impossible to get any new credit.  You will probably have a tough time trying to get credit or even rent a home or apartment.  These credit collection agencies and bill collectors are so relentless.  These collection agencies and bill collectors want to collect their commissions by collecting the outstanding balance of your past due debts.  There are even collection agencies and bill collectors that stop by your house and post a notice to contact them if you disregard their phone calls.

Collection Agencies can be Ruthless

Nobody wants to stiff a creditor but there are times in people’s lives that they run into financial hardships.  I know of hundreds of families who have become victims of the financial and real estate collapse of 2008.  Most folks that lost their jobs or had to close their businesses are trying to recover and put food on the table and have settled for jobs that only offer a fraction of what they used to make.  I how can they pay their previous large credit card bills, repossessed auto loan deficient balances, or previous installment loans when they can barely pay their utility payments.  Trying to recover is extremely difficult and stressful and having these aggressive nonrelenting collection agencies or bill collectors do not help matters.

Do not volunteer any information to Collection Agencies

Some collection agencies and bill collectors are so relentless that they will even file a lawsuit against you.  If they file a lawsuit, you will get served with a summons to appear in court.  In the event you do not appear, the judge will issue a judgment against you.  Many folks who are going through a financial crisis most likely will have several judgments along with many open collections.  If the collection agencies and bill collectors really want to pursue in collecting the debt, they can even try to garnish your bank account and/or wages.  Most collection agencies and bill collectors will not go to this extreme but if they do, it could make life very inconvenient for you.  There are many options for you in dealing with collection agencies and bill collectors.  Don’t let them depress you or ruin your day.

Collection Agencies can Garnish your Wages

Depending on the severity and aggressiveness of the collection agencies and bill collectors, you have several options.  If they are so relentless where they have gone as far as trying to garnish your wages and bank account, you might want to consider filing for bankruptcy.  The day you file bankruptcy, it halts all collection activities from collection agencies and bill collectors.  There are Chapter 7 bankruptcy protection and Chapter 13 bankruptcy protection.  Consult an attorney for which bankruptcy program best suits your needs.  Bankruptcy protection is a collection agencies and bill collectors biggest fear and enemy.  If you file for bankruptcy, they can no longer chase you for any debt collection.

Debt Settlement with Collection Agencies

Another option you have is to see if you can settle your debt for a fraction of what you owe then and enter into a payment plan.  For example, if you owe a creditor $1,000, see if they will settle the debt for $500 and see if they will take $50 per month for ten months with no additional interest.  Always threaten them that you are contemplating bankruptcy.

Statute of Limitations and Collection Agencies

The final option is to screw them and not make any payments and ignore all of their collection efforts.  Eventually, all of your debts will not be collectible because of the statute of limitations.  Statute of limitations vary from state to state but in most states, the statute of limitations is 5 years for most debts like credit cards.

If you decide to ride out your debts until the statute of limitations kicks in, do make partial payments on any debts in the future because then it reactivates that debt.  Your bad debt will probably be on your credit report for 7 years.  After 2 years, it normally does not have any impact on your credit scores, especially if you are rebuilding your credit with secured credit cards or other types of installment loans like auto loans.

Can you Qualify for a Home Loan with Unpaid Collection Accounts?

You can still qualify for a home mortgage with outstanding bad debt in California, Illinois or Florida.  Although some mortgage lenders might require you to pay an old bad collection account off, there are many mortgage lenders that will approve you for a mortgage loan in California, Illinois or Florida with open collection accounts and charge offs.  If you have any questions, please contact me at Gustan Cho Associates at 262-716-8151 or email me at gcho@gustancho.com or visit us at www.gustancho.com .

Related> Unpaid Collection Accounts

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Related> Debt Collectors: How to deal with them

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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