By: Shelby Gilson
Where are YOU getting your information?
Are you googling collection agencies when you receive a notice about a past-due balance? Be careful—you might just become clickbait! In today’s digital age, perceptions of debt collection agencies are often skewed by misinformation, especially on social media. It’s easy to come across social media posts, TikTok’s, Reels, attorney firms, and so-called credit repair companies that exploit your clicks! They benefit from portraying collection agencies as ruthless scammers trying to take money you don’t owe, urging you to avoid contact with them.
So why are they doing this, you ask?
They want clicks, your personal data, and ultimately your money. Their goal is to identify potential customers, charge you to fix your credit, or consolidate your debt with a high-interest loan. They want you to follow them, spend money on credit repair, or sign up for a course on avoiding debt payments. They may also pull your credit report or sell your information to marketing companies. Some even falsely advertise a phone number as if it’s ours. (Bold, I know!!) but in the end, YOU get scammed.
Debunking Social Media Myths (This one’s for you, TikTok!)
Social media is rife with advice on every topic imaginable, and debt collection is no exception. Unfortunately, not all the information shared is accurate or helpful. Here are some common myths we want to debunk:
“Ignore Debt Collectors and They’ll Go Away”
- One of the most pervasive myths is that ignoring debt collectors will make the problem disappear. In reality, ignoring them can lead to increased interest, penalties, and potential legal action. It’s always better to communicate and try to work out a solution.
“Debt Collectors Are Just Scammers”
- While it’s true that there are scam artists out there, legitimate collection agencies are regulated and adhere to strict laws. Verifying the legitimacy of a collector and understanding your rights can help distinguish between scammers and genuine agencies.
“You don’t have a contract with the collection agency, therefore you don’t have to pay the debt”
- Of course you don’t. What consumer signs a contract directly with a collection agency? Your creditor—the company, provider, or property you owe—is using our services to help them get their bill paid. They are allowed to do that and, in some instances, are required.
“You should Pay Debt Collectors as Little as Possible because they buy the debt”
- Some social media advice suggests lowballing collectors (cough cough TikTok) with minimal payments because they buy the debt for pennies on the dollar. That is not true of KLS; we do NOT buy debt. Instead, negotiate a realistic payment plan that fits your budget, and be ready with that information when you contact a collection agency. It is a more effective strategy.
What Should You Do Instead? Don’t Be Scared to Contact the Collection Agency!
Now, let’s switch gears here and dive into the role of a collection agency and dispel some myths surrounding them.
At their core, collection agencies are businesses that specialize in recovering unpaid debts. They act as intermediaries between creditors and debtors, striving to find solutions that benefit both parties. It’s a common misconception that their sole purpose is to hound consumers until they pay up. Collection agencies offer valuable services that help individuals manage and settle their debts. They want to help, but also must meet the needs of their clients.
So, Why Do Collection Agencies Want to Help?
Successful Debt Recovery:
For collection agencies, helping those in debt is their goal. When consumers are made aware of a past-due balance that they overlooked, it is simple and easy to get it paid and corrected. It does not credit report immediately. The agency is also motivated to find manageable payment plans so the consumer can pay off their debts. Agencies are incentivized to work with debtors to find feasible solutions.
Maintaining Reputation:
In an industry often viewed negatively, collection agencies strive to maintain a positive reputation. Ethical practices and genuine assistance go a long way in building trust with both creditors and those who owe them. An agency that is known for being helpful will attract more clients and retain more business.
Legal and Regulatory Compliance:
Collection agencies operate under strict regulations designed to protect consumers. The Fair Debt Collection Practices Act (FDCPA) in the United States, for instance, sets clear guidelines on how debt collectors can communicate with debtors. These regulations ensure that agencies engage in fair and respectful practices.
A Better Approach to Dealing with Debt – Don’t Shoot the Messenger
When facing debt collection, it’s important to approach the situation with a clear head and an informed mindset. Here are some steps to consider:
Verify the Debt:
- Ensure the debt is legitimate and belongs to you. If you have questions, ask them.
Know Your Rights:
- Familiarize yourself with your rights under laws like the FDCPA. This knowledge will help you understand what collectors can and cannot do.
Communicate:
- Open a line of communication with the collection agency. Be honest about your financial situation and explore possible repayment options.
Create a Budget:
- Assess your finances and create a budget that accommodates regular payments towards your debt. This will help you manage your obligations without sacrificing essential expenses. Be reasonable about your priorities. For example, date nights can be spent at home for a couple of weeks to enable you to pay a past-due bill.
Seek Professional Help:
- If you’re overwhelmed, consider consulting a credit counselor or financial advisor. But be careful of the clickbait ads. A professional can provide guidance tailored to your specific situation. Some states have non-profit options available. Check your Better Business Bureau. A true financial advisor can help you plan beyond your current problem and help you set up a long-term plan for your future.
Collection agencies are not the villains they are often portrayed to be. Our primary goal is to recover debts in a way that is manageable for debtors and profitable for creditors. By debunking social media myths and approaching debt collection with an informed and proactive mindset, individuals can navigate their financial challenges more effectively. Remember, the key to resolving debt issues rests in communication, understanding your rights, and seeking out realistic solutions.
At KLS Financial Services, we’re not just in the business of collecting debts—we’re in the business of helping people. We’re proud to be part of a movement that’s Changing the Face of Collections as allies in your financial recovery and helping you avoid falling into clickbait traps!
