Consider credit counseling when your debts fall into collections

Receiving late payment notices in the mail and letters from creditors threatening legal action can be terrifying for already stressed-out consumers whose budgets are stretched thin. Accounts that are turned over to debt collections can place an additional burden on individuals and make them feel helpless to make positive changes in their finances.

However, there are several options available to consumer and the first step in knowing which avenue to turn down is to speak with lenders and a credit counselor, according to the Federal Trade Commission. Individuals who contact their lender or creditor and explain their financial predicament may learn about other repayment options or work out a deal with the lender that reduces their interest rate and allows them to make larger payments.

In addition, consumers who are weighed down by their debts and are unsure how to correct their spending may benefit from meeting with a credit counselor and exploring debt consolidation or debt management programs to simplify their payments and chip away at their balances. Each program has different rewards and benefits, so it’s important that consumers weigh them both carefully against their unique circumstances to find the option that best correlates with their debt, repayment goals and income. Credit counselors can help adults navigate the different programs, so working with a professional is advised.

Further, consumers who are receiving phone calls and letters from debt collectors have rights when it comes to how they choose to be contacted and the proper procedures that need to be followed. For example, individuals can request that debt collectors only contact them via letter or contact a third party that is representing the consumer. In addition, consumers can also request documents detailing the balance if they believe a mistake has been made. In some cases, errors or mistakes may exist, so it’s important to request these details before working with a professional.

“As debt gets older and passes from one debt buyer to another, the quality of the information deteriorates,” FTC Bureau of Consumer Protection director David Vladeck told the Washington Post.

In the meantime, individuals should continue actively participating in credit counseling services to determine the reasons behind their debt, establish a budget that helps manage their balances and avoid the behaviors that resulted in these financial problems.