subject: 5 Steps To Take When You Receive A Collection Letter [print this page] Receiving a collection letter in your mailbox is never a welcome event but you should never close your eyes to reality if you find one in your hand.
It is possible that you never expected such a letter to arrive or you were constantly dreading the moment when you actually received a letter you knew would eventually come.
What is most important is that you don't ignore collection letters. At the same time, don't panic and try to think clearly.
Here are five steps to take that are easy to follow and can prove beneficial to you.
#1 - Business-Like Attitude
At first blush, this may seem to be a highly unusual first step to take. However, take a moment to consider the importance of your attitude and you will find this can crucial.
A letter from a debt collector is, in fact, a business letter, and you should treat it as such. So, think of yourself as a party to a business transaction and assume the role of a businessperson.
Think logically and be practical. This means going to your own files, checkbook, bank statements and credit cards to gather as much information as possible regarding your "alleged" debt. It is alleged until the debt collection agency proves it is an actual debt that you must repay.
By taking this approach from the very beginning, you can build your self-confidence and, regardless of the eventual outcome, know that you did your very best to handle the situation in a proper manner.
Step #2 - Verify The Debt Information
An initial collection letter must, by law, contain certain information. This includes the amount owed; the party currently holding the debt; the address of the debt collector; specific notice of your right to dispute a part of the debt or the entire debt; and your right to demand the contact information for the original creditor.
It is always possible that the debt collection agency that contacted you does not own the debt. Perhaps the agency is not even licensed to operate in your jurisdiction.
Step #3 - Keep Detailed Records
Collect all the relevant information you found in step #1 and start a file.
Your recordkeeping should include copies of all written communications, whether letters, faxes or e-mail. In addition, if there is any verbal contact, record the date and time of all telephone calls and the name of the person or people you spoke with. Try to be 100 percent accurate.
Step #4 - Dispute The Collection Notice
If, after reviewing the initial letter and all of your available records, you think you do not owe the amount in question, you must write a letter to dispute the claim. There is an absolute 30-day deadline, starting from the date you receive the collection letter, to respond to the collection agency.
Having carefully followed the first two steps, you should have the information at hand that will enable you to write a clear and concise letter of dispute. In your letter, stick to the facts, keeping it as simple and short as possible.
It is super important to send all your letters via registered mail with a return receipt requested. Post office receipts should be retained in your file.
Step #5 - Negotiate
If you are responsible for satisfying the debt, keep a clear head and remember to act like a businessperson.
Carefully prepare or update your monthly budget. Determine how much you can pay monthly to the creditor.
There are a variety of tactics you can use in your negotiations with the collection agency but emotion should not be one of them.
For example, if a student loan is involved, you may be able to rehabilitate the loan. You can also offer to make an affordable lump-sum payment of a certain percentage of the debt and, as a condition, the creditor agrees to write off the remaining amount as paid-in-full. In addition, as a condition for any agreement, demand a positive report to the credit rating agencies and insist that the debt collector agree to this in writing before you make any payments or sign any agreements.
So there you have it - five steps to take that will allow you to handle a collection letter while minimizing your stress level.
Needless to say, if you think you can't handle it on your own, seek professional help and remember the 30-day response requirement.
