How to Pay off Debt When You’re in Collections
April 30, 2017
Catching up on old bills is not easy. Sometimes you are aware of bills that are past due and the creditor is attempting to collect on them. Other times, just when you decide to purchase a new car, or a new house, or refinance your mortgage, you decide to take out your credit report and you find a new collection item. Collection items are a drag on your financial health. At the best, accounts in collection lower your credit score, and make it impossible to get new credit or improve the credit you have. Even worse, you have to deal with collection calls, letters, threats of lawsuits, and sometimes harassment by collection agencies. If it is a struggle to pay your monthly bills, then collection items are a big straw on your financial back.
It is important to deal with delinquent accounts, because if collection items end up in court and a judgment is issued against you, then you may be subject to wage garnishments, bank levies and liens on your personal property.
No matter which stage you are in the collection process, it is important that you learn your rights. There are different ways to handle your accounts, and the right way will depend on your circumstances. Here are the steps that you need to take to pay off debt even in collections:
Decide if you should pay the debt
We have all heard of cases where fraudulent companies have demanded that people pay for debts that they do not owe. Anytime that you receive a collection letter, and you are not sure if it belongs to you, immediately send out a debt validation letter.
An old debt may not still be collectible. That does not mean that the creditor cannot sue you. However, if the debt has passed the deadline, as established by state and or federal laws, then you will be able to make a defense in court to have the case thrown out.
Choose a method to pay the debt
You next step is to deal with the question of how to pay off debt even in collections. The basic strategies available depend on your financial capabilities and the amount of debt. You can choose between DIY and negotiate a settlement, a debt settlement program, or declare bankruptcy.
Even if you debts have reached collection, you can still deal with them successfully. Be careful, and do not hesitate to use professional help, including a reputable debt settlement company or an experienced lawyer. Collection is stressful, and do let collectors bully you. Your rights entitle you to fair treatment, with honest representations and no harassment.
Validate your debt and check the statute of limitations to see if you really need to pay it off. Then choose the right debt relief program or strategy appropriate to your financial needs.