Why should I pay a debt collection agency? The #1 reason is to get them off your back. Although a cease and desist letter may end the call with one particular debt collector, collection accounts often change hands and you'd have to continually send out new cease and desist letters.
Another benefit of paying debt collectors is getting approved for credit cards and loans. Many banks won't approve your credit card or loan application as long as you have outstanding collection accounts on your credit report. Perhaps employers won't hire you for certain jobs if you have unpaid debts on your credit report.
By paying off debt, you can improve your credit score. As collections get older, they affect your credit score less. Of course, collection accounts will disappear from your credit report after seven years. As long as the accounts are still within the credit reporting time limit, a paid collection is better for your credit score than an unpaid one.
In addition to the relief of ending collector harassment, by paying you also can eliminate the risk and worry of being sued. Don't assume debt collectors won't waste their time or money suing over a small collection. As long as you have an outstanding collection, you run the risk of being sued for what you owe. A lawsuit could lead to a court judgment, a public record that will also tarnish your credit report for seven years.
Finally, paying off a debt collection means there's one less company you owe money to. You may feel like you've lost the battle if you pay a debt collection after resisting for months or years but in the long run paying off a debt collection is better for your credit and your finances.
Can I sue a debt collection agency? Yes, you can sue a debt collector who violates your rights. Examples of violations include continued calls after you've sent a cease and desist notice, the collector informs an unauthorized third-party about your collection, or a debt collector threatens to have you arrested and put in jail for a debt. The most important step of how to sue a debt collection agency, is to keep track of your conversations with debt collectors. After you talk to a collector over the phone, write down the collector's name, summarize what was said, especially any specific threats or promises made. Keep your notes for a few years even after you pay the debt just in case the collector alleges you didn't fulfill your agreement or that you never paid.
One thing debt collectors are required to do when they contact you about a debt, is to read you a mini Miranda statement. In their initial communication with you, whether that communication is made in writing or over the phone, the collector must state that they're attempting to collect a debt and any information obtained will be used for that purpose. In every other communication, they must let you know that they're a debt collector. This warning is called the mini Miranda because it's similar to the Miranda rights that law enforcement must use to warn suspects of their right to remain silent, the right to an attorney, and the right to a court-appointed attorney if the suspect can't afford one. This part of the Fair Debt Collection Practices Act is covered in Section 807 Part 11 and isn't officially called the mini Miranda.
