Many people don't know that they only have a short amount of time to pay a bill after it has been sent to a collection agency. This is because collection accounts are put on a national list, and every collection agency in the country is told about it. But only one collection agency is allowed by law to try to get money from a late account.
Trying to make payments on a collection account can be very hard because a collection agency only keeps a collection account for a few months. If they are unable to collect on the debt, the account is sent to another collection agency. This process will keep going until the account is paid or the consumer is taken to court.
Collection agencies don't want you to know that you have a legal right to question the legitimacy of a collection agency. This is called "debt validation," and it's something you can do as a consumer. Many people have paid money to a company on past-due accounts, only to find out later that the company did not have the legal right to get the money. So, the customer still owed the money on the account that was past due. To make sure this doesn't happen to you, here are 7 ways to confirm a debt and make sure you're paying the right creditor or collection agency:
- If the creditor can't prove that you owe them money, they can't take it from your account and they can't talk to you about it. They can't put it on your credit report either.
- Ask the creditor, collection agency, or lawyer to show proof that the company is allowed to collect the debt. Make sure the name and address of the collection agency are on the paperwork, which should be on company letterhead.
- Ask for proof of the total amount of the debt, such as a payment history from the original creditor and the current status of the account. Check the paperwork against what you have on file.
- If you send a debt validation letter to a creditor, the creditor may send you a notice to appear in court. This is an illegal scare tactic. Before a creditor can sue you, they have to prove that you owe them money.
- Ask the creditor for a copy of their business licence to show that they are allowed to collect money on past-due bills in their state. But this is different in each state.
- Ask the collection agency to send you the original contract or other proof of the agreement you made with the original creditor, including the creditor's name and address.
- Tell the collection agency that the creditor is subject to the Fair Credit Reporting Act (FCRA) if they use bad language, bother you, are rude, or threaten you. They might argue and say they are not, but they are considered debt collectors and are covered by the act.
Keep track of everything you get in the mail and everything you send out. Send all paperwork by registered mail with a return receipt. If you find that a creditor or collection agency is breaking the FCRA, you can file a complaint with your local small claims court, tell the credit bureaus, and file a complaint with the Federal Trade Commission at http://www.ftc.gov.
The article was first posted at EzineArticles.
