Debt Settlement: Dealing with a Collections Agency

Dealing with a debt settlement agency is not something that anyone wants to do. However, sometimes decisions that we have made end up putting us into debt that we can not pay. When that happens, a collections agency will eventually start to call. Here are some tips on dealing with a collections agency and getting rid of your debt. 

Dealing With Collections Agents

When dealing with a collections agent, you will more than likely not want to talk to them. Many of them seem to be pushy and want to do everything that they can to collect the money that you owe. While it might not be a very enjoyable experience for you, realize that they are just trying to do their job. If you can swallow your pride for a bit and be willing to work with them, you should be able to come to an amicable solution for both parties. Let them know that you want to work with them and settle the debt. This is the first step towards solving the problem. Then you can start to look at and consider your available options. 

Minimize Long-Term Impact

One thing to keep in mind before you start working with them is that you want to minimize any long-term impact to your credit score. Regardless of what is proposed, you want to keep your credit score at the forefront of your mind. Ask yourself, if the solution proposed will hurt your credit. While it might sound like a good short-term solution to the problem, you need to consider the long-term ramifications as well. You want to be able to make large purchases on credit in the future. If you damage your credit too badly, you may not be able to. 

Payment Plan

One option that the collection agency is likely to offer is a payment plan. With this type of plan, you agree to make a regular monthly payment to the collection agency in order to retire your debt. This will typically result in you paying off the entire debt that you owe. However, they may be willing to present you with flexible payment options. This gives you time to pay off and the interest will usually be minimal if they charge you anything. Debt collection companies buy your debt for pennies on the dollar from your creditors. Therefore, even if they collect the entire amount without interest, they will still make money. They just want to get you started on a payment plan. This can help you get out of debt and it will help them as well.

Settlement

Another option that you may have is to completely settle your debt. With this type of program, you are going to give the collection agency a lump sum payment in order to close out your account. They will allow you to settle for less than you owe. With this option, you will be able to get out of debt quickly, but it will negatively impact your credit. Therefore, you should consider how much damage it will do before agreeing to this option.

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