Nothing! At least at first, there is no reason to worry about a third party collection agency. Why? There are numerous reasons as to why this isn’t as terrifying as it might seem, so not worrying is the first step. Remember, whatever the reason for not paying the credit card company is, the debt is between the borrower and the credit card company, not the borrower and the third party collection agency.
First and foremost, do not have any communication with the third party collection agency. This is important, as they will hound you silly, and no matter what you say to them, it won’t matter!
There are a few important facts to know about third party collection agencies. At the top of the list is the fact that they bought the debt from the credit card company for pennies on the dollar. For instance, let’s assume you owe American Express five thousand dollars, and whatever the reason is for non-payment, health issues, job loss, etc., you can’t pay. American Express will try to collect the debt from you by calling you incessantly for the first six months or so, and when they are unsuccessful, they will then “sell” that debt to a third party collection agency for a very reduced price. American Express will write off the debt and they are done with it, and it’s called a charge off.
Now, the third party collection agency will try to collect on the debt that you owe. But the fact is, you don’t owe the debt to the third party collection agency, you owe it to American Express. It’s important to remember that the reputation of many third party collection agencies are rotten, and there is a good reason for it. Many of these so-called collection agencies have used threatening language over the phone, have broken the rules set by the consumer protection agency, and are basically boiler rooms that will try anything to get money from you. There is a good reason why there are thousands upon thousands of complaints against many of these agencies, and that is the reason why you should have absolutely no communication with them whatsoever!
Let them send letters, let them try to call, and if it gets out of hand them change the phone number, but do not speak to them. Nothing good comes from speaking to them, as they won’t listen to reason and they don’t really care what your financial situation is, all they want is the money. Sending cease and desist letters is all well and good, and legally they are supposed to stop having contact with you, but many of these agencies ignore the rules, and that is why there are so many complaints against them.
Every state has a statue of limitations on unsecured debt, so it’s important to find out what your state parameters are. Some states such as California have a three year limitation, and other states can go as high as five years. This is important because after the statue of limitations has gone into effect, from the time the debt went into collections, it is at that point that the time period is measured. After that time period the debt is essentially null and void.
Forget about those debt repair services that are all over the airwaves! They will promise you that they can “repair” your status with the credit reporting companies. That is a fallacy, and even if you paid the third party collection agency, which you shouldn’t, your credit rating will take a hit. Many folks get sucked into believing these credit repair companies will help, and that is a falsehood as well. All they want is your money, and nothing they say or do is going to change the fact that your credit rating will take a hit. But the good news is that it will come off your credit rating after seven years.
The important thing to learn from this nightmare is not to get yourself into this situation again. An overwhelming majority of folks that have experienced this problem, and are still going through it, have done so by running up their credit cards and not paying. It is not all the blame of the borrower, however. The fact is that the credit card companies charge an exorbitant interest rate that makes it extremely difficult for people to overcome, especially when they are having financial problems. If the credit card companies would cut down on their greed and lower the interest rates, more of them would get paid. But when they charge in excess of thirty percent, no wonder people are having a tough time paying!