There are a lot of myths about debt collection agencies. One of the most common is that you should never pay them. This isn’t always true – it depends on your specific situation.
This blog post will explain why you might want to consider paying a collection agency and when it’s not the best idea.
We’ll also give you some tips on dealing with debt collectors if you find yourself in this situation!
Why you should never pay a collection agency?
If a debt collection agency contacts you, you should respond with a debt validation letter.
You may not want to pay if your finances are unclear or it’s too late for payments if you don’t owe the debt if you want to settle for less, if the statute of limitations has expired, or if the collector doesn’t own the debt.
Debt collectors can use a variety of unethical methods. They may begin with annoying phone calls and progress to worse things. However, you may never have to pay a debt collector, depending on your circumstances.
Debt Collection Agencies Purchase Your Debt From Lenders
If you fall behind on your bills, your lender may turn to a debt collection agency to recoup the money you owe.
These agencies purchase delinquent debts from lenders for a fraction of the original amount.
The agency then tries to collect the total debt from you, plus interest and fees. This can be a stressful and overwhelming process, especially if you’re already struggling to make ends meet.
However, there are some things you can do to protect your rights and minimize the damage.
- First, know that you have the right to dispute the debt.
- Second, request that the agency only contact you in writing.
- And finally, don’t be afraid to negotiate a payment plan that works for you.
Should you pay a debt collection agency for old debts?
It’s a common myth that old debts go away after a specific time. However, the truth is that old debt can come back to haunt you whether you pay them or not. Here’s how:
If you don’t pay an old debt, it will likely appear on your credit report as unpaid. This can damage your credit score and make it harder to get loans or other lines of credit in the future.
Additionally, the original creditor may sell your debt to a collection agency, which will then try to collect the debt from you. This can be stressful and may lead to wage garnishment or legal action.
On the other hand, if you pay an old debt, you may inadvertently revive the debt and reset the statute of limitations. This means that the creditor can now sue you for the debt, and if they win, they can garnish your wages or take other legal action to collect the debt.
How to Determine Whether or Not You Should Pay a Debt Collection Agency
If you’re dealing with debt collectors, you may be wondering if it’s worth it to pay them off. Here are a few factors to consider when making your decision:
Debt collection lawsuits
If you refuse to pay a debt collection agency, they may file a lawsuit against you. Debt collection lawsuits are no joke. You can’t just ignore them in the hopes that they’ll go away. If you receive a Complaint from a debt collector, you must respond within a time frame determined by your jurisdiction.
For most areas in the US, that time frame is 14-30 days.
Debt Collection Garnishment
If a debt collection agency wins its lawsuit, it may take a number of actions. Debt collectors could, for example, seize earnings to recoup the money.
A garnishment is a court order that takes money directly from a debtor’s wages. This money is used to pay off the debt they owe.
Here’s one more thing to bear in mind. As time goes by, the interest on your outstanding debt will mount.
Advice- Make sure you’re paying the correct individual. If you get a debt collection letter, do your research. Debt collectors frequently buy debts from one another.
It may be a good idea to not pay a collection agency
There are a few different things to consider when you’re trying to decide whether or not to pay a collection agency.
- If you don’t own anything or have no source of income, and you don’t anticipate to in the future. You could be “judgment proof” in this scenario. You are not judgment proof if you intend to ever own anything or receive money again
- If you don’t owe the debt. The first rule in life is to not pay people money you don’t owe them. Send a Debt Validation letter to an agency if they are pursuing you for a debt you do not believe is yours.
- If it is part of your strategy to settle the debt for less. A Debt Validation Letter is a tried-and-true method for saving money on debt payments. This may force the collector to sue you for the debt or to give up. When they sue you for the debt, respond with an Answer to a Summons and Complaint. This may force them to give up or to settle the debt for less.
- If the statute of limitations has expired. The collector may no longer legally sue you for the debt if the statute of limitations has passed. Making a payment on the credit will most likely reset the statute of limitations, which is critical.
- If the collection agency can’t show ownership of the debt. The sale of a debt from a creditor to a collector is frequently non-transparent. A collection agency pursuing you may not be able to demonstrate that they are the rightful owners of your debt. If they can’t, you don’t have to pay them anything.
- If you are morally opposed to paying someone other than the original creditor. If a collection agency is pursuing you, the original creditor may have transferred your obligation. Many individuals feel that it is wrong for creditors to sell obligations. Some people also claim that there’s no moral requirement to pay someone other than the initial creditor.
You may want to pay a collection agency
- If you owe the full amount of the debt and the agency owns the debt.
- If you want to resolve the matter as quickly as possible and have the money to do so.
- If you believe you have a moral responsibility to pay off debts regardless of whether they are actually owed.
Major Debt Collection Agencies 2022
The debt collection sector is one of the most abusive to financially vulnerable consumers. Consumers frequently pay debt collectors money they don’t owe, which only exacerbates their financial difficulties!
Below, we have listed some of the major debt collections agencies across the country
- MRS Associates
- Midland Funding LLC
- Cavalry SPV I LLC
- Credence Resource Management
- Southwest Credit Systems
- LVNV Funding
For most people, it’s a good idea to strive for a settlement. If you’re being pursued by a debt collector for money they are adding on hundreds or thousands of dollars in costs to the debt, that’s an indication that they bought the debt for just about 10% of its face value. These facts indicate that if you paid the whole amount they are demanding, you would be overpaying.
On the other hand, if you don’t pay off your debt before it expires, they may continue to harass you indefinitely. The best approach to negotiate for a low settlement is to utilize the Debt Validation Letter and Answer defense.
These are just two of the many ways that can help you negotiate for a lower settlement and avoid bankruptcy.
Call now to speak with a certified debt advisor and get started on your path to financial freedom.