Its 2019 and ‘money makes the world go round’ is too old an adage. Today, the world depends on credit – because let’s face it, no one has that much money. Consumers are so used to credit dealings that they deliberately search for businesses that deal in credit. So, from a business perspective, offering credit terms is a competitive advantage.
However, there is a blunt side to this edge. Credit terms are based on mutual trust and goodwill, but there is a level of uncertainty. Neither lender nor the borrower can completely ensure repayment. While some borrowers deliberately run away from payments, others might run into circumstances that leave them delinquent.
That is why businesses seek help from debt collection companies. These collection companies help recover 20 to 30 percent debt in the US. While it seems like they work only on behalf of the lender, it isn’t entirely true.
Collection companies play a mediating role, and their job is to come up with a solution. Companies that use threatening tactics aren’t always legitimate ones. A good debt collection company will always stay within the legal boundaries.
Since a collection company works with both the parties, both the borrowers and the lenders must learn the right to deal with the collectors.
Here are four effective tips for dealing with the debt collection agency.
Share Every Detail about Your Credit Terms and Policies
When businesses hire a debt collection company, they often hide details that they think may not be in their favor. This happens more commonly in case of small businesses that did not have a proper policy or terms at the time of the transaction. It also happens when businesses have too many hidden terms that actually make the repayment impossible for the borrower.
No matter how shady or incomplete your terms and policies were at the time of the transaction, you need to be honest with your debt collection agency. You should rely on their experience and expertise to help you find a legal and legit solution to get your money back.
Share all the documents and receipts with the collector to help them make a stronger case for you.
Inquire About Their Methods of Collection
Pop culture has made debt collectors sound like a bunch of goons with a baseball bat. Many agencies indeed rely on scare tactics to get the money. However, it is in no way legal and can get a business in trouble. If you are hiring an agency for debt collection, be sure to ask them about their strategies and tactics.
Look around for reviews and take referrals from friend and family. As a business looking for collection, the worst mistake you can make is choosing an agency that uses illegal ways. As a borrower who has to deal with such collection agencies, you have the right to take legal action.
Moreover, you need to make sure the company you are dealing with is a debt collector and not debt settler. There is a difference in how they work. The latter doesn’t guarantee full payment.
Take Your Time to Verify the Information
If you receive a call from a collection company, do not acknowledge the fault right away even if you are sure about it. Take your time to hear them out and see if they have all the proofs. It happens all too often that businesses claim a payment bigger than you actually owe them. There are also cases of identity theft and erroneous attributions of debt.
So, never accept that the debt is yours in your first call or communication. Ask for validation and verify the information you receive. Some collection agencies use smart tactics to make you verbally accept the fault and agree to make a small immediate payment. When you agree to pay even a dollar, it means you accept that the debt is yours.
Ask for more time to verify the information provided to you by the agency. If you find any error or if you think you have a legit reason for the delay in payment, you can seek legal help to negotiate and settle the problem in a way that works for both the parties.
Be Open to Negotiations
Both lenders and borrowers can be quite stubborn when dealing with debt collectors. Businesses that hire collectors don’t want to settle for a penny less, and those who owe a debt keep avoiding contact. This kind of situation doesn’t work in anyone’s favor. If the delinquent party isn’t able to afford the full payment, it is best to negotiate the amount or the arrangement.
There are two ways to settle these issues with the help of a collection company. Both parties can settle for a lower amount paid in a lump sum, or they can agree on monthly installments. The second option will restart the statute of limitations on debt and affect the borrower’s credit. The first option will add the cancelled amount to the taxable amount for the borrower.
Next time you have to deal with a debt collection company, make sure you follow these tips to stay out of any trouble. With the right tactic to deal with the collectors, both the parties can reach a favorable agreement.