How to Work with a Collection Agency

Citizens in the throes of debt consolidation and repayment are often skittish at the thought of dealing with collection agencies. After all, agencies are not known for having sympathy with indebted individuals. Moreover, the tactics that some agencies use to collect on old loans can be financially brutal and ego bruising. Instead of reacting emotionally to collection agency letters, notices, and other missives, develop a plan to reconcile debts and redress errors.

Get a debt consolidation coach to help you develop a long-term plan, so you are not constantly reacting to what your lenders and their collections departments do. Indeed, once you have a long-term repayment plan set in place, you'll likely feel significant psychological relief.

After all, one of the frustrating aspects to being in debt is not knowing how you're going to dig your way out. If you work out a solution that takes into account your earning potential, your asset building goals, and your short and medium term liabilities, you can approach collection agencies with a far more measured and articulate tone.

Try to look at your situation from the agency's point of view. If you can resolve the situation favorably for both parties, you may have some leverage to negotiate. If, on the other hand, you appear desperate, disorganized, or belligerent, you will find far less sympathy from the collection agency staff. Treat representatives like human beings, and you may find an extra kindness or bureaucratic favor thrown your way.

You can also arm yourself by reading up on how collection agencies work and what rights consumers have under the law in terms of protecting their financial interests and responding to legal threats to collect. You might even offer certain physical or liquid assets as collateral to secure your lender debts for a little longer while you get your income situation straightened out.

However, if you are between jobs or if your budget is utterly disorganized, it may behoove you to get professional help before offering any kinds of collateral or making any promises, particularly in writing, to angry lenders or their collection agents. Think -- don't react. Budget -- don't respond with outflows of cash. Listen -- agencies are often willing to negotiate.