September 25, 2012 by Rick B
Receiving a letter or phone call from a collection agency can be both a scary and embarrassing moment. It is not uncommon for people to ignore collection letters and phone calls simply because they are uncomfortable with the situation. The truth is no one wants to feel embarrassed; it is no fun at all. (How’s that for some good insight?)
Contrary to common beliefs, there is no “typical” debtor. People from all walks of life and socio-economic classes are susceptible to falling behind on their bills. The inability to pay debts can stem from a variety of causes; job loss, prolonged illness, and unforeseen injuries are three common reasons people cite as the cause of their past-due bills.
Another group of people fall behind simply because they have done a poor job budgeting, or have never been taught the importance of money management.
Regardless of the reason, you’ve fallen behind on your bills and have been contacted by a collection agency, now what?
The first thing you should do: Stay calm.
Remember, you are not alone. Falling behind on your financial obligations is not uncommon in the United States. Chances are a neighbor, friend, or family member has also been sent to collections at some point in time.
A reputable collection agency will work with you, not against you. It is important to acknowledge the collection agency and contact them regarding the debt in question. As a consumer, you have 30 days to dispute certain facts, so it is important to figure out if this debt is yours ASAP.
Once you have established that the debt in question is in fact yours, do your best to make a payment in a timely manner. Not all debts are the same; one bill may be for $60 and another $6,000. If the balance is low, try to take care of it with one payment. Paying off an old bill feels good, and it’s one less thing to worry about.
Now for that dreaded debt you simply cannot afford to pay all at once. For some people this amount may be $600, and for others $6,000. Whatever the number may be for you, it is important to make an effort to pay down your balance. Contacting the collection agency and setting up a payment plan can stop the phone calls and letters, and potentially prevent your credit rating from being harmed.
A recent poll conducted by Harris Interactive found that 57% of U.S. households lived without creating a budget for themselves.
There are some great budgeting resources available online. I suggest finding one of these sites (I like www.askdoctordebt.com), and planning out your monthly budget. You may be surprised to find out how you are spending your money.
If you find yourself behind on your bills or cannot afford to pay them, it is important to be proactive. Rather than sticking your head in the sand, utilize all the resources out there, and work with the agency trying to collect the debt. You may be surprised by how helpful a reputable collection agency can be for you.
Good luck, and remember… it is never too late to improve your credit rating or personal finances.