Credit Repair VS Collection Agency

by : Tristan Andrews

Credit repair and collection agencies are similar, yet different. While consumers may sometimes to escape from their debts by taking advantage of a kind gesture, collection agencies are not nearly as kind as lenders. When you start getting behind in debts, creditors will often begin to contact you for up to four weeks in an attempt to collect the debt themselves. If you fail to respond and have not made any payments, creditors have no choice but to turn the debts over to collection agencies. To avoid being hassled by the collection agency hassles, try and deal with the creditors.

To be able to find a way to stop harassing phone calls and threatening letters, we must first understand how collection agencies work. In a nutshell, collection agencies are third party sources who are hired by creditors after the creditor has made every attempt to collect a debt and failed. Collection agencies will search the globe for you and may even try to play tricks to track you down. For example, if you changed your address a few months ago, but you typed your credit card into an online database somewhere, do not be surprised when you get a call from a collection agency wondering when you will pay your debt.

Collection agencies use all the available resources to try and track down debtors. Collection personnel will search through phone directories and internet databases, make phone calls (often even posing as a friend to try and locate you!), sift through records at the post office, among other methods. They leave no stone unturned when it comes to searching for a debtor. The good news for you if you are a debtor is that many of the collection agencies hire low-wage workers to handle the daunting task of locating debtors.

If you are in a financial bind and it is difficult for you to repay your debts, you must be very careful who you trust and who you leave your contact information (such as address, phone numbers, and city) with. If you get a new phone number, make sure that you request and unlisted number. Do not apply for loans, credit cards, or anything else that requires you to divulge your contact information to an unfamiliar source. If you want to avoid getting those annoying phone calls and letters, it is important to keep a low profile in your new locale.

Running away from your debt should be the solution only in extreme cases, as it will likely catch up to you anyway, sooner or later, no matter how cautious you are. Just make sure you research all the available options before going that route.
One possible solution is negotiation. If you start getting hassled by creditors, you should try sending a letter explaining your situation and asking for an extension (or deferral) for your payments. Then, if you can make timely payments, and chip away at the debt, you are well on the way to repairing your credit.

If you already have debt placed with a collection agency, you also have the option to call your creditor and ask them to take your debts back. If they agree, they will set you up a payment plan to repay the debt and you will continue these payments until your debt is paid in full. In return, the creditors will contact the collection agencies and let them know that the debt is currently in resolve. If you go this route, it is very important that you do not miss a payment. Also, some agencies might deny your request to take back the debt, but allow you to set up payment plans with the collection agency. If they offer, you'd be wise to accept! The creditor may promise to take back your debt after you have paid the collection agency in full and if they do, this would be another step for rebuilding your credit.