5 things to remember when your debt goes to collection

It can be nerve-wracking when a debt collector calls you to inform you that your debt is in the collection, and you need to pay it ASAP, otherwise a legal action can be taken against you.

Still, due to some bad and dishonest collectors, the whole industry suffers and debtors are afraid to work with a collector thinking that they will only make their troubles worse. But that is not the case, you need to understand how a collector works, and also, if you realize that your debt has gone into collection, you need to take immediate action. Don’t know what to do? We will tell you.

Here is what to do when your debt goes into collection.

1. Make sure the debt is yours

If you think that the debt doesn’t belong to you, then you need to take immediate action. Within thirty days of the initial contact, write a letter and ask the collector to send you proof which proves that the debt is yours.

Also, they can prove that the debt is yours; the collection agency will stop all collection activities. Even after getting the documents from the collector, if you believe that the debt doesn’t belong to you, complain to your region's authority that looks after these issues.

2. Know about the statute of limitation

Every state has a statute of limitations, which is the period for which the debt is valid. This period varies from state to state, and you should know about this. It is because when the statute of limitations expires, a collector or the creditor cannot take any legal action like a wage garnishment or so on against you.

Also, there are some states in which you resent the statute just by admitting the debt belongs to you.

Some dishonest collectors will sue you even when the statute of limitations is over. At that time, you must defend yourself in court. Also, complain to the authorities that oversee the rules and regulations that collectors follow.

3. Check your credit report

Take a look at your credit report as if there is any debt against you, the credit report will have all information about it.

4. Plan for paying the debt

Once you realize the debt is yours, and you verified the debt and the statute of limitations, it is time to pay the debt. Don’t ignore it because it won’t go away. If you are financially sound, pay the debt either in lump sum or in installments, the collector will help you with setting up an agreement for the latter.

You can use your credit card to pay the debt or negotiate the amount a bit so that paying is easy for you.

5. File for bankruptcy

If you have tried all methods, but still you are unable to pay, then the best course of action is to file for bankruptcy. It will make the debt disappear, and will give you a chance to start afresh. After 18 months, you can even file for a loan or mortgagee. But don’t fake it, otherwise, there will be legal consequences.

Click here for reviews for Cedar financial services to understand how a debt collectors work and how they can help you, a debtor to manage debts.

Jackson Gilbert is a Blogger. With his skills, he has been helping fellow marketers and brands worldwide. When not glued to his laptop, he can be found making travel plans that rarely happen.