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Most US citizens have seen the threatening letters associated with a debt that has gone on a little too long. Through oversight, neglect or just inability to pay due to adverse financial situation, debts go past due and are assigned to a collection agency.

Lenders, credit departments in retail stores and even medical centers usually consider a debt past due if the payment is not made on or before the due date. Most often, when a debt reaches 90 days past due, it is considered worthy of sending out to another agency for more aggressive collection efforts. The originating lender or medical office or store charges off the amount and writes it off as bad debt, usually replacing the capital of the debt with funds set aside, or reserved, for bad debt losses.

The debt doesn't go away, however. It is considered an asset with some value and is sold to another party, the party that will be much more aggressive in getting the money repaid. When the debt is sold, the seller, or original lender, wants to get the most they can get out of that asset. The buyer, or the collection agency wants to get the lowest price they can get. Just like any other transaction, price determines the sale.

When a debt is sold, it will not sell at the face value of the debt. It just isn't worth face value, since it is already past due 90 days. Rather, its value will likely be around half face value. The collection agency has a better chance at collecting at least half of the total amount owed and make back what it spent on the purchase of the bad debt.

Often, the collector will pay even less than half, especially if there is evidence that an originating lender had poor credit quality guidelines. Or if the customers were in greater financial problems than originally thought this will lower the cost of the debt. If the collector gets the whole past due amount paid, they may make a huge profit. Either way, in today's market, there is a buyer for every type of past due debt and it all relates to the price the next owner of the debt is willing to pay in relation to their specific abilities in getting the customer to repay the debt.

The most successful collection agencies are the ones who show some human compassion. People who owe money usually don't feel good about being past due on their obligations. Human psychology and our own personal experience tell us that when treating others with respect and compassion, people are likely to respond favorably and do what is requested. Unfortunately, loan collectors have pressure placed upon them to use aggressive tactics, and sometimes collection becomes a war of wills with threats, increasing tempers and animosity.

Those who are the actual callers for a collection agency and call the debtors directly are often poorly paid and call people who don't want to talk to them. Stress is rampant; the workplace is often a crowded floor, called boiler rooms containing a dozen to 100 callers with only a short sound barrier between each. On each desk is a telephone headset and a computer screen. Collectors have a high burn out rate. Being a collector with a collection agency is not a fulfilling career, according to job satisfaction surveys.

The calling system used by collection agencies automatically dials numbers by the computerized system and when someone answers the phone, the call is routed to the next available collector. Such a system currently cannot make the connection seamlessly nor as immediate as if a person is doing the dialing. As a result, there often a few seconds between when one picks up the line and when an actual person is there to talk to you. While this is not always the case, one hint that a call is from a collector is when such a time lag occurs.

When speaking with a loan collector, make sure to follow-up each conversation with a letter restating whatever you agreed to do during that conversation. Because collectors have such little time between calls to log summaries of their conversations, important and significant information is sometimes lost. Anymore, time is not even allowed to provide any information that exceeds promise to pay date, amount and follow-up date.

When speaking with a debt collector, take good notes from your side of the conversation. Obtain the name of the collector, their employee number, record the time and date and especially important details of your conversation. Weigh options made during the phone conversation and do not succumb to pressure to pay more at a time than you are comfortably able to do. Collectors often are paid based upon the amount they collect, so they will pressure, force and cajole debtors to make promises that are often out of the realm of reality. Be sure to consider your situation before making a commitment, because you will be held accountable for promises to pay.

As a debtor, you have the right to speak to the collector when it is more favorable for you. As one who calls you, the caller has the advantage by being prepared and collectors want to extract payment. Take a number and name of the caller and call back at your convenience and when you are better prepared to take good notes, and make sound, advantageous negotiations.

By all means, do call back and do work out some way to make good on the debt. If you feel that a debt was incorrectly turned over to a collection agency, you do have a short time frame to provide proof to the agency that the debt is not valid. Be able to have written proof to support your assertions.

There are special circumstances where no amount of talking will appease a collector. When a consumer is right but the internal documentation of the originating debtor is in error, no amount of talking will convince a collection agency their information could be wrong. Even when written proof is presented, the debt may just be resold to the next agency in line although at a lower price.

One consumer had a payoff document from a credit card company, but it was not recorded in their internal computer records. When a copy of the document was sent to the credit card bank, it sold the 'debt' to a collection agency. Each time written proof was presented, the 'debt' was resold to another collection agency until it ended up at an attorney's office to go to court. The customer had to submit legal papers to rebut the claim with a copy of the paid debt finally to put the matter to rest.

Debt collectors have laws which control their activities. It may be in your best interest to research the do's and don't s of debt collecting in your state. Additionally, debt collection is subject to federal laws too. The Federal Trade Commission, which oversees debt collection, has a comprehensive website to help you with your rights as a debtor. Individual states have differing debt collection laws. In order to see what your state allows and what consumer protection it affords, see the Privacy Right Clearinghouse website.

Make sure you document your conversations and follow-through with your promises. If you have paid the bill, stick to your rights and provide proof to get it fully understood. Keep good records. Retain copies of letters, both to and from collectors as well as canceled checks and payment receipts. Be realistic when you negotiate and don't over promise. Never lose your temper and if the conversation becomes heated, calmly explain you are going to hang up to terminate an uncomfortable conversation. Be certain to explain the discussion is becoming unproductive and that you will call back and speak to another party in order to maintain a civil conversation. In each case, follow up each conversation with a letter to verify what was said, especially in circumstances that are out of the norm or that may become a problem in the future.

If your hospital bill has gone to collections, don't waste any more time. Call the agency and tell them you want more information on the bill and that you may be contesting the amount of the bill. The next call should be to a hospital bill auditing company.

More than 90% of all hospital bills have errors and overcharges. Pay only for the items and services you used. Visit Southwest Medical Bill Review & Recovery today.

# posted by cerio71405 @ 11:26 PM 0 comments