What should you do when you find yourself in this situation? The first thing you want to do is to contact the provider of services (i.e. the hospital, doctor, lab, etc.). Explain your circumstances to them and attempt to work out a repayment plan. They communicate each day with people in your similar situation and you will find that they are typically understanding and willing to work with you. From their point of view, establishing a payment plan that fits your budget and allows them to receive their money is far better than receiving nothing in the end.
While many providers will be understanding and willing to work with you, there are those who will refuse any payment plan that does not involve 100% repayment immediately. And, if you are unable to pay, they will most likely turn you over to a collection agency.
What is a collection agency?
A collection agency is a company that arranges for payments to be made on accounts owed to a third party.
What bills can be turned over to a collection agency?
Personal, family and household bills including, but not limited to, money loaned by a third party to purchase an automobile and money owed for medical bills or charge accounts.
What should I do when I receive a letter indicating my account has been turned over to a collection agency?
Don’t panic. The goal of the collection agency is to collect the money owed to the third party, not to make your life miserable. If you were unsuccessful in establishing a repayment plan with the initial creditor, you may find the collection agency more workable. Your attitude in dealing with the collection agency will directly influence their response to you.
I have a nice attitude, but the collection agency is being mean.
Collection agencies are regulated by the Fair Debt Collection Practices Act which means they must follow certain guidelines when attempting to collect money. These guidelines are:
- The collector must send you a written notice informing you of the amount of money you owe and the name of the creditor to whom you owe the money. They must also tell you what action you can take if you feel you do not owe the money. This notification must be sent to you within five days after they have first contacted you.
- If you send the collection agency written notice that you do not owe the money, they are not allowed to contact you. You have 30 days from the time you receive their first written notice to send them this letter. They may resume collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.
- A collector may not harass you, threaten you, use obscene language, or repeatedly use the telephone to annoy you.
- A collector may not use any false or misleading statements.
- A collector cannot send you anything that looks like an official document from the court or the government.
What can you do if you feel the collection agency has violated a law?
Contact your state Attorney General's office and the Federal Trade Commission if you feel the collection agency has violated a law. Additionally, your Attorney General’s office will be able to tell you if your state has debt collection laws in addition to the federal laws.
