Dealing With a Collection Agency
Stumble It!
Digg It!
Tip It!
del.ico.us
FacebookA reader that I’ll call Mary recently wrote in with the following question about dealing with a collection agency:
We were in a horrible car accident last year and our car insurance just now paid the car towing company. This company turned our bill over to collection agency which listed this on our credit report. Now… Who does what? The towing company tells collection agency to delete record on our credit report? Or do we need to do something?
We actually experienced something similar when a local medical clinic sent to collections a bill that we had already paid. Based on our experience, I would suggest starting by reading up on the Fair Debt Collection Practices Act (FDCPA).
Once you’ve done that, I would then request validation of the debt from the collection agency. A quick Google search turns up numerous sample letters that you can adapt for you own purposes. As part of your request, it wouldn’t hurt to note that you have proof of payment.
Be sure to send this letter via certified mail within 30 days of the collection agency’s initial contact. The collection agency will then have 30 days to respond. If they can’t validate the debt, they’re not allowed to:
(1) attempt to collect it,
(2) contact you about it, or
(3) report it to the credit bureaus
If they don’t respond, send a followup noting (politely!) their failure to comply with the FDCPA. Further state that they will be in violation of the act if they attempt to collect and/or report you to the credit bureaus (or fail to remove the listing if they’ve already reported you).
In our case, this is as far as it went. We sent the request for validation and didn’t hear anything. I then sent a followup noting their failure to validate the debt, and further stating that we consider the matter to be resolved. We haven’t heard anything since.
In Mary’s case, it would also be worth following up with both the insurance company and the towing company and asking for their help. It’s important to be polite but firm, and to not give up until you get a resolution. Take good notes of every conversation, and provide documentation wherever possible/necessary.
What did I miss?
Have any of you successfully navigated this sort of situation, or otherwise dealt with a collection agency? If so, do you have anything to add?
Published on September 21st, 2009 - 7 Comments
Filed under: Credit Cards, Debt Reduction, Mortgages
email this article
- bookmark it
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
Related articles...
» The Accidental Deadbeat» Called by a Collection Agency
» Still Waiting on Debt Validation from the Collection Agency
» Protecting Our Credit From a Wayward Collection Agency
» You Should Be Ashamed of Yourself: Debt Collection Via Embarrassment
» All About the Fair Debt Collection Practices Act (FDCPA)
» Dealing With the (Possible) Theft of Your Personal Data
» Credit Monitoring and Free Credit Reports via TrueCredit
Was this article useful? Please sign up to receive our content via e-mail:
Great deals...
Readers’ choice...
Recent articles...
- Effect of Foreclosure, Short Sale, and Bankruptcy on Your Credit Score
- DIY Garage Kayak Racks: Fast, Frugal, and Effective
- Lending Club $25 Bonus Reminder
- Coupons are a Waste?
- How to Save Money on Pet Care
- Best HSA Custodian?
- Considering a High Deductible Health Plan
- Pay Back the Homebuyer Tax Credit?
- How to Find a Good Deal
- How Much Does Your Debt Cost?
Recent comments...
- Tim Rosen: Pros and Cons: Pros: a.) A systematic discipline to save/invest on a regular basis, for a...
- Matt Jabs: @Tim: Thanks, I hope this article helps get even one person on the...
- Tim Rosen: Excellent Matt! A very practical, real-world plan that I believe anyone can "flesh out"....
- Jerry Robertson: Your article has great information about the large companies going out of business, but...
- laura: I have a foreclosure on my credit from Jan 2007 and my FICO score...
- nickel: Ron: Good question, and I have no idea as to the answer. It could...
- Christina: While foreclosures wreck less havoc on the score than a bankruptcy (according to your...
- Ron: Why do you think those large mortgage lenders are switching over to Vantage? Does...
Most talked about...
- Dave Ramsey is Bad at Math
- $8,000 Homebuyer Tax Credit
- Dish Network Customer Service SUCKS
- How to Claim the First-Time Homebuyer Tax Credit
- $15,000 Homebuyer Tax Credit
- Reduced Credit Limits? Share Your Experience
- Would the "Fair Tax" Gut the Economy?
- Tax Stimulus Rebate Payments to Start Early
- Pay Off Mortgage Early? Or Invest?
- The Best Online Savings Accounts (Updated!)
- Life's Too Short to Drink Cheap Beer
- $7500 First Time Homebuyer Tax Credit
While your advice to look at the Fair Debt Collection Practices Act is excellent, you failed to mention a federal law that is even more on point.
Since Mary’s primary issue is with her credit record you should have also pointed her towards the Fair Credit Reporting Act.
Again… good advice. It just didn’t go far enough.
Comment by Weston — Sep 21st 2009 @ 8:11 amI had the “pleasure” of working with a collection agency for a short while between University and jobs and I learned A LOT from the inside.
In Mary’s case the issue doesn’t seem to be collection agency so much as trying to fix the credit report. (I have a post on dealing with collection agencies http://financialhighway.com/de.....agencies/)
Getting info off credit report can be a challenging and long process, that’s why I recommend checking credit reports quarterly.
Was the payment late? If so than the info on the report may not really be wrong so removing it may not be possible.
Other than that I agree with what nickel says, call both the towing and insurance company and keep calling on weekly bases to resolve the issue. You have to be the proactive one at this stage as those companies will not care a lot. So stay firm and persistence and the issue should be resolved, although it may take sometime.
Good luck!
Comment by Ray @ Financial Highway — Sep 21st 2009 @ 8:12 amWeston: Good point on the FCRA. I was mostly focused on getting the collection agency off her back.
Here’s a relevant link: link
Nice article. Dateline NBC had a nice feature on collection agency under report titles Debt: The next big American crisis? http://bit.ly/UrMWX
Comment by memewithoutdebt — Sep 21st 2009 @ 11:05 amYour reader can also request copies of their credit reports and dispute the item directly through TransUnion, Experian and Equifax. She can order them through annualcreditreport.com for free providing she has not done so in the past year.
Comment by Thomas Fox — Sep 21st 2009 @ 11:07 amThe only thing I would add (and there is an entire legal sub-industry based off of it):
DO NOT IGNORE ANY SUMMONS and/or COMPLAINTS!
http://www.myjourneytomillions.....-finances/
Comment by My Journey — Sep 21st 2009 @ 11:55 amMary asks the question “Now… Who does what? The towing company tells collection agency to delete record on our credit report? Or do we need to do something?”
Regrettably, it’s up to her to do something about it. The towing company will likely do nothing without initiaton from her (it’s a backroom opertation for them), and the credit reporting agency is under no obligation to do anything unless someone contacts hem.
She’ll need to get a letter from the towing company clearing the account, then send a copy to the collection agency and get a letter from them clearing the account. Everything must be done in writing!!!
Only then, with written evidence in hand (including a copy of the check in payment) should she approach the credit reporting agencies. But there are THREE of them, and unless you clear the account on all three, the collection will continue to appear on her credit report.
Unfortunately, removing credit isn’t a consumer friendly process.
Comment by Kevin@OutOfYourRut — Sep 23rd 2009 @ 11:05 am