• Be respectful when talking with a Collection Agency.
  • Be prepared to negotiate.
  • Write down any information they tell you over the phone. You will be asked to repeat it back to them.
  • Be aware of your rights as a consumer.

  • If you have a good payment history your credit card company will waive your late fee.


How Collection Agencies Work 

When owe money on a loan and have not paid in a reasonable amount of time, you will contact by a Collection Agency. It may be the bank or credit union itself that contacts you. These are called primarily collection agencies. They work through letters and telephone calls.


When the bank or credit union decides that they can't get you pay your loan, they may turn over the debt to a third party collection agency. They actually "sell" your debt for a percentage of what is owed, based on the age of the debt and the likelihood of collecting any money. This helps the financial institution recover some of the loss you have caused them. These third-party collection agencies offer their services to credit card firms, insurance firms, healthcare providers, automotive firms, financial institutions, banks and utility service providers like telecom and electric. 

After the debt is sold, the debtor now owes the full amount to the Collection Agency.

Most of the collection agencies have lawyers who file a case at the court to force the debtor to meet his or her obligations. This is done in a hope that the receipt of legal documentations would induce the debtor to make a payment on the debt due or at least make efforts to communicate with the creditor for a repayment plan. Collection agencies try to use all the available resources to track down debtors. The practices used to collect debts are regulated by Fair Debt Collection Act. Their main practices for collecting on these debts are letters and phone calls.

The practices for which they use to collect debts are regulated by Fair Debt Collection Act. 

Some of the things they are NOT allowed to do are as follow:

Collection agencies cannot legally take a debtor's assets, bank accounts, or paycheck unless there has already been a successful lawsuit with the courts awarding this to the collection agency. 

  • Collection agencies cannot legally make any kind of public announcements or disclosures concerning the debt, except to the credit bureaus.

  • Collection agencies cannot legally get a debtor fired from his/her job. 

  • Collection agencies cannot legally make use of physical violence or threats.

  • They cannot legally discuss your debt with anyone other than you or your spouse. Although this will vary based on state to state as some will not even allow them to speak with your spouse. 

Their first letter will include your ability to dispute the debt and ensure the amount is in fact valid. They will do everything within their legal rights to collect on the debt as those you will be speaking to over the phone is mostly commission based. So the more money they bring in the more they earn. This is one of the many reasons collection agencies have a high employee turnover rate.

Be wary of dodging and avoiding collection agencies as they can take you to court to settle the remaining balance plus court costs. You would be forced by the courts to pay the debt. However for small amounts this is rare it is still a possibility.


The biggest question most will have is how to make them stop calling you. For this there are multiple different answers. Of course paying off the debt is one guaranteed method however there is a second method also.

Section 805 of the Fair Debt Collection Practices Act
"(c) CEASING COMMUNICATION., If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except -- 

(1) to advise the consumer that the debt collector's further efforts are being terminated; 

(2) to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or 

(3) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy. 

If such notice from the consumer is made by mail, notification shall be complete upon receipt."
All You Need to Know
About Collection Agencies
Quick Tips
Most debts are only able to stay on your credit report for seven years before you can have them remove it from your credit report. However if there is any account activity they are able to prolong the duration it may stay on your credit report. The guidelines for how long they may maintain a debt on your credit report is regulated by Section 605 of the Fair Credit Reporting Act. 

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