Collection Agencies

  • An original creditor is the person or company that first gave you money or credit. For example, if you get a credit card or a loan from a bank, that bank is the original creditor. You owe them the money because they gave it to you first.

    A collection agency is a different company that tries to collect the money if you don’t pay the original creditor. If you don’t make your payments for a long time, the original creditor might hire or sell the debt to a collection agency. Then the collection agency will start calling or sending letters to ask you to pay the money back.

    Collection agencies are companies hired to collect unpaid bills. They usually get a part of the money they collect. In Indiana, they must have a license. They are different from original creditor, the person or company lent you money or gave you credit.

    In short:

    ·       The original creditor is who you borrowed the money from.

    ·       The collection agency is who comes after you if you don’t pay it back.

  • You don’t have to talk to collection agencies. You may block them on your phone, email, or texts. If they bother you a lot, you should write to them, to tell them to stop contacting you. Keep a copy of the letter that you write, and when you send it by mail, pay for the post office to get a signature from someone at the collection agency which shows that they received your letter. If they keep calling to scare or annoy you, or send fake court papers, call a lawyer or your local prosecutor. The law protects you from unfair treatment.

    Even if you ask them to stop contacting you by letter, or you block them on your phone, the collection agency might still sue you. But it can help gain some time to pay or get information on bankruptcy or how to deal with a lawsuit.

  • This law only applies to collection agencies, not the original creditor. Remember, a collection agency is a licensed company that comes after you if you don’t pay the money back.

    The Fair Debt Collection Practices Act protects people who owe money. It says a collection agency must:

    • Keep your debt private.

    • Only talk to you or your lawyer.

    • Call only between 8 a.m. and 9 p.m.
      Not call you at work if your boss doesn’t allow it.

    • Not use bad words or threats.

    • Let you stop emails from them.

    • Not pretend to be someone else or use fake court papers.

    • They must also tell you how much you owe and who you owe it to. Once the collection agency tells you how much you owe and who you owe it to, you have 30 days to say you don’t owe it. If they break the rules, you might be able to sue them instead or get legal help.

Creditors Who are Not Collection Agencies

  • You can get free credit reports at www.annualcreditreport.com.

    Ask for credit reports from all three credit companies:

    • TransUnion

    • Experian

    • Equifax

    Different creditors may report to different companies, so it’s best to check all three.

    Your credit report will show:

    • How much you owe (your balance)

    • A contact or address for the creditor

    If the company listed is not the original creditor, look at the page about collection agencies to learn more.

  • Call the creditor and ask if you can make a payment plan.

    Be polite and explain your situation.

    • Tell them you’re trying to pay your bills.

    • Let them know if something hard has happened (like losing your job or getting sick).

    Take notes during the call.

    • Write down the date.

    • Write the name of the person you spoke with.

    • Write what you both agreed to.

    Be honest and realistic about how much you can pay.

    Pick a payment date you can stick to.

    Ask the creditor:

    • Where to send the payment

    • How they want you to pay (check, online, etc.)

  • Some creditors will say: “Pay us one large amount now, and we’ll cancel the rest.”

    This is called a lump sum payment.

    If you have the money saved, this can help you.

    But if you’re behind on bills, you may not have that much money all at once.

  • Ask the creditor to put the agreement in writing.

    Some creditors will do this, especially if the debt is new.

    If the debt is old, the creditor may not send it in writing.

    They may want to keep the option open to sue you later.

  • If the person on the phone won’t help you, ask to talk to their supervisor.

    A supervisor may agree to a plan when the first person does not.

  • Some companies say they will help you lower or manage your debts.

    This is called a debt relief company.

    Some people have been helped by them.

    But be careful. Not all companies are good.

    Before working with one, search for:

    • “Is [Company Name] accredited by the Better Business Bureau?”

    • “Independent reviews of [Company Name]”

    • “Complaints about [Company Name]”

    Talk to the company and ask questions.

    Make sure you trust them before giving money or signing anything.

    Warning: Even if you are working with a debt relief company, the creditor can still sue you. A payment plan does not always stop a lawsuit