There may be times when you do not receive a final billing from an insurance claim, you don’t receive the final reading of a utility account, or you are sure you have paid a bill only to receive a disturbing piece of mail a few months later: a collection letter. If you have ever received a letter notifying you that the account you thought you paid has been turned over to a collection agency, you have probably taken the following actions.
- Called the collection agency to explain your situation.
- Dug through your old receipts and checking account log to find proof that you paid and sent copies to the collection agency.
For many people, those actions will be enough to prove that you did pay the account on time, clear your name, and cease any further action by the collection agency.
How your account gets turned over to a collection agency
A vast majority of accounts, over 90 percent, are paid on time as agreed by the terms of the contract. Most lenders will grant you some additional time to pay an account but, at a certain point, a lender needs to focus on their core business and will turn the account over to a professional business, usually called a collection agency, to collect the debt. The collection agency is covered by the Fair Debt Collections Practices Act (FDCPA).
The collection agency will sent written notice listing the original creditor, date of service, and amount due. The notice will also contain information about how to dispute the debt. There are specific time frames that you need to follow and, in turn, the collection agency has certain time frames that they must follow.
What to do if you receive a collection letter
If you have received a collection letter, the most important thing to do is stay calm. Look through your payment records to see if you did in fact pay off the account. If you did, make copies of your proof and send them to the collection agency to clear your name.
If after fruitlessly looking for proof that you paid the account you realize that you still owe, the first thing you should do is read and understand your rights under the FDCPA. Next, talk to the collection agency. Be reasonable in your payment offers and do not try to get out of the debt by yelling, swearing, or making excuses. Collectors are doing their job and a vast majority of them are good people, trained to collect bills and work with you if you are willing to work with them.
The prize in all this? Knowing all your bills are paid in full and that your credit report accurately reflects your good payment history.