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How to Handle Debt Collectors Properly and Save your Credit Score

How to Handle Debt Collectors Properly and Save your Credit Score

Are you getting calls repeatedly from the debt collectors? Well, if you have delayed the payments for a long time, then the collectors may consider you to be defaulter who won’t be paying anymore. Thus, they feel very much scared whether they’ll ever be able to get back their money. This will have an impact on your credit score as when any account goes into the collections, it will hurt credit score greatly. Although it will be best to avoid them, you should know how to manage your debt collectors and thus, save credit score.

How can you deal with the debt collectors?

Read on to know how you can handle debt collectors and also save from hurting your credit score.

  • Send the collection agency Cease Communication letter – If the collectors are harassing you for the debt that doesn’t belong to you, then you may send the agency a “Cease Communications” letter. You need to explain in your letter that you aren’t the debtor and want the company to stop all the collection efforts that are against you. After you file for this letter, the collection agency will not be able to contact you further as per the law.
  • Debt after the statute of limitations has expired- If you’re having outstanding debt after the statute of limitation has expired, then a “Cease Communications” letter is needed that will be pointing out the statute. If the creditor wants to sue you, then you may show it up in the court that the statute of limitations on the debt has already expired. However, you may be repeating this each time your debt is being sold to a new debt collector.
  • Keep in touch with the creditors – In case the debt belongs to you and it is within the statute of limitations and yet you cannot afford to pay it, it is important on your part to keep in touch with the creditors. It is advised that you do not hang up their phone, rather answer their calls in a polite tone. Do not make false promise when you know you won’t be able to pay off the debts. If you cannot manage to make any payment for the time-being, you should inform them about it too. Read these awesome tips on how to negotiate with creditors.
  • Collector should not speak in an abusive language - If you find that the debt collector is speaking in an abusive language and even threatening to arrest you, then you may talk to a supervisor. If that too doesn’t seem to work, then you may consult an attorney to find out what your possible options are.

What happens when your account goes in the hands of the collectors?

If your account goes into the hands of the debt collections and it gets reported on your credit, then your credit score will drop by a certain percentage.

Handle Debt Collector and Save Credit Score

The degree as to how much a collection agency will affect your credit score is related with how high your credit score is when the agency will be reporting the debt. Thus, the higher your credit score is, the more points you may lose.

Apart from this, the amount as to how much your credit score may get damaged is determined by collection amount or the amount you still owe. There are some scoring models that make a distinction between the consumers who have problems related to debt management and the ones who have insignificant accounts in the collections. Thus, if the original amount of debt you owe is not more than $100, then the resulting account in the collections may appear on your credit report, however it will not damage your credit score.

Author Bio: Andy Raybuck is a writer who has expertise in dealing with financial issues. He tries to impart to people the different situations and simple solutions to get out of difficult situations by contributing financial write ups to websites and blogs so that he can help people who are struggling with financial worries. His articles shed spotlight on various personal finance issues like debt, credit and bankruptcy. Here, in this article he has focused on how to handle debt collectors properly to avoid further harassment.