A collection agency is usually a third party company contracted to attempt to collect a debt. There are many ways to deal with these agencies depending upon what outcome a person wants. Generally one thing most agencies are allowed to do is to report a person has an account in collections, and this report unless the account is disputed or paid can remain on a credit report for up to seven years.

In the US, a collection agency must abide by specific rules governed by the Fair Debt Collection Practices Act, but unknowing consumers may be subject to breaks in these rules from time to time. In particular, an agency is not allowed to call before 8 AM or after 9 PM. They can only speak to the person who owns the debt, and they cannot leave messages about the nature of their call with anyone else. It’s also true that people are under no obligation to speak to representatives of a collection agency, and can send a cease and desist letter to the agency to prevent their calls.

Some people advise that no one ever take a call from a collection agency, but this doesn’t mean the agency can’t begin legal action against debtors to collect a debt. For small debts, this seldom occurs, though it does occur sometimes and should be considered. Those people who feel they ought to repay a debt should potentially speak to the agency, but should make sure that any repayment is with paper check so they have a receipt. They may also wish to negotiate removal of the report from a credit report prior to payment, which may be done via letter.

There are some people who cannot afford a debt and equally cannot go bankrupt, and they may have trouble with a collection agency that continues to contact them. This is why some recommend not speaking to the agency and screening their calls. Most states have rules regarding statue of limitations on how long a debt can be collected, but phone contact or being wishy-washy about paying a debt may be a way of accepting or confirming payment, and might affect statute of limitations. Note that the federal government does not have this statute and can continue to pursue collections of debts like taxes or student loans. Moreover they can more easily garnish wages or income tax returns.

If it is truly the intent of the person not to pay the debt, then they should probably not speak with the collection agency. They may also wish to pursue sending a letter of validation request to the agency, which asks the agency to validate the debt. If the agency cannot do so, the debt cannot be proved and the person can have the debt removed from credit reports.

Sometimes collection agencies will be willing to make a deal and settle the debt for less than the original amount. This may be a good option for people who truly do want to pay back money owed. These offers are usually initiated by the agency and not by the person who owes money, however, and indicating preference to make a deal may only confer willingness to pay the whole thing.

Another option for dealing with a collection agency when debts are high is to file for bankruptcy. Once this process begins, all collection agents can be referred to the lawyer who handles the filing. Agents are not allowed to contact the debtor again once they are informed that bankruptcy is in progress.