Our phones ring, a lot. Most of the time, people don’t answer unrecognized numbers. And for good reason: it’s either a scam or a sales pitch, right?
Debt collectors get a bad reputation for being scammers. When you do finally answer the phone or listen to that voicemail, you might worry it’s a scam, especially if you don’t remember the debt and they are asking for sensitive information.
Part of the problem is that the industry is a bit mysterious. Who is this company? How did they come by your information? What information should you expect to be asked? How is that different from all those Nigerian princes out there who want to make you rich? And what do you do if you don’t believe the debt is yours?
What is a Debt Collection Agency?
First, a debt collection agency is a legitimate business that must be licensed in each state in order to operate. Agencies are hired by other companies to track down those who didn’t pay their bills. Most of the time, people who don’t pay misplaced the bill, forgot, moved to a new home, or couldn’t pay at the time. Third-party agencies help these companies track down that lost revenue.
The more lost revenue and unpaid bills a company has, the more problems it causes down the line for everyone. Lost revenue obligates the company to raise prices for all of its consumers. A lack of revenue means they can’t invest in improvements to the services they provide, meaning they can’t operate as well as they’d like. Particularly in the case of smaller businesses, it may mean they have to close.
Plenty of people who get a call from a collection agency think it can’t be right. They always pay their bills. They don’t recognize the payment amount, date, or company. But mistakes happen. Maybe the bill never arrived or your roommate threw it away. Often we work with people who have moved a few times within a few years; a bill was sent to the wrong place and they didn’t even know about it.
Another reason people feel upset when they get a collection call is that the debt isn’t theirs. In some cases, you will get a call because you are listed as a relative or a friend of the person. Maybe that bill belongs to your ex, who is a jerk, and you’re not on speaking terms. The agency might be asking for his or her latest contact information.
In some cases, you’re certain you did pay the original bill. Maybe you shut down service as of October and they shouldn’t be billing you for November, so it’s the company’s fault for messing up.
Medical bills are the real trick; you might get separate billings from the physician, hospital, and laboratory all for one doctor’s visit. And wasn’t your insurance supposed to pay for that anyway?
What to Expect When a Collector Calls
A legitimate agency will not threaten you with jail time. The IRS will never call you. In our post about signs a debt collection is a scam, we cover many of those red flags.
Here is what a legitimate agency will ask you:
To verify the information. They should already have all the info they need, but they must confirm you’re the correct person. They may ask you to confirm details such as the last digits of your SSN, your date of birth, or address.
Once they are sure you are the correct party, they will read a statement to indicate they are a debt collector attempting to collect a debt.
How to Find Out More
If you’re not sure about something, there are a few things you can do:
- Get the caller’s contact information. If they are a legitimate company, he/she will provide it. If not, something is wrong.
- Get information about the biller. If the bill being collected is disputed or otherwise in question, the collection agency has the ability and the lawful obligation to provide validation documentation, directly from the creditor, if requested by you. This also helps if you’ve simply forgotten about a bill or didn’t know one was due.
- Check your credit report. It’s free to check once a year with each agency, meaning you can actually check three times per year if you want. Review those documents. Is the bill listed? Anything else amiss?
If you’re a company looking for ways to improve your revenue cycle, get in touch so we can help.