Last week, I was flipping through our mail when I noticed an envelope stamped with “REMITTANCE” (or REMITTAL, I don’t have the envelope anymore). Capital letters intimidate me, so I opened it right away. It turned out to be from a collections agency.
Lesson #1: Open all mail that isn’t clearly spam.
My first thought was “WHA?” because clearly we’d paid all our bills. I saw it was from Micah’s school, so I gave it to him and asked for an explanation.
Fortunately, he knew exactly what it was. This year, there’d been an issue with applying his scholarship (oh financial aid departments!) and the school had gotten it late. I then remembered the initial warning letter from the school himself which had led him to straight it out. This letter identified itself as a “friendly reminder from X collections agency.”
So the first thing he did was check the account. He logged in and saw that the scholarship had been applied on the same day the collections letter had been sent. Smart boy.
Next, he directly called the lady he’d been working with. She knew the account best and was able to confirm that everything had been processed. She explained that the collections agency must not have been informed until after the letter was sent.
To be safe he called the number listed on the letter, which was just for another department of his school (since it was a “friendly” letter, he didn’t have to work with the agency itself). He told them about the letter, his student ID#, and the story of his account. They confirmed that no further action was going to be taken by collections and that the request had been cancelled.
We kept the letter just to be safe.
We were fortunate not to actually owe them money. And fortunate in being able to work it out with the college itself. It’s surprising how many collections letters are sent out by mistake (at least, the bill hasn’t been received…or it hasn’t been received (again)…or it’s already been paid). Normally there was a bill to begin with.
Some things to do if you get contacted by a collections agency:
1. Call the company who originally issued the bill. Try to work it out with them. If possible, offer to pay the bill immediately. Or ask to get some kind of installment plan worked out. This will be the best for them, since collections will take part of the money they get.
2. Don’t ignore the letters. The debt won’t go away.
3. Read up on your rights under the rules for Fair Debt Collection. Learn how to stop them from contacting you, whether or not you owe the money (though that won’t make the debt go away). You can ask them to contact you only in writing so you won’t get harassing phone calls. That way you can work up the energy to deal with them.
4. Don’t acknowledge debt you’re not sure of. Including really old debts. “A collector may not contact you if, within 30 days after you receive the written notice, you send the collection agency a letter stating you do not owe money. However, a collector can renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.”
They have the burden of proof. If they sent you the bill and you don’t think you paid it, check rules on debt expiration…then decide what you’re going to do about it.
5. If at all possible, resolve the issue. You don’t want this looming over your head. If you have an emergency fund, this is the time to dip into it. If not, try to work something out with the original company. If that fails, talk to the collections people about working somthing out.
Don’t give them post-dated checks, however. Because while it’s illegal for them to cash those, some will do it.
6. Coming from that—only pay with money you have. As a general rule, getting a loan to pay off other debts or using post-dated checks is a dangerous and destructive practice. If you’ve got bills piling up, collections agencies hounding you, etc, you probably aren’t good for the loan either. It’ll be one more headache.