If you have outstanding medical bills or don't want to pay for your storage unit anymore, your creditors might sell the bad debt to a debt purchasing company, also known as a collections agency, to get it off of their books. If you have been sent to collections, here are three things that you should do next, and how it might make a difference.

1: Verify the Charges

Does that bill seem a little higher than it is supposed to be? Instead of assuming you owe the money and forking out the dough, it is a good idea to verify the charges first. When a collection agency calls you, ask them to verify that you actually owe the balance, and to provide you with written proof.

They will contact your creditor, ask for a written explanation of the charges, and then submit the paperwork to you. Your account will be examined for accuracy, and sometimes creditor will find mistakes that you won't have to pay. For example, if you are verifying a medical bill, they might find that one of the procedures was coded and billed incorrectly, which could potentially reduce the amount that you owe. 

2: Have a Gameplan in Mind

It can be tempting to ignore those calls from collections agencies, but you have to remember that they are only calling because you failed to pay a bill. Instead of crawling under the covers and ignoring the problem, think carefully about how much you have to pay every month to cover your debt, and talk with a collector.

For example, if you know that you will make at least $1000 per month, and that you have $300 after all of your bills, offer to pay $100 a month. When you make a payment plan, make sure that they send it to you in writing so that you have time to review it before you sign it.

3: Know When Debt Expires

Most people don't realize it, but collection agencies can't call you forever about a past-due bill. Debt actually expires after a certain point, and they aren't allowed to contact you or sue you about a debt once that date has passed.

These expiration dates vary from state to state, and it is important to learn what they are where you live. For example, open ended accounts like credit cards expire in three years in a lot of states, but if you live in West Virginia, collection agencies can contact you for as long as ten years. Learn the law in your state so that you can keep track of which debts you should and shouldn't be hearing about.

Understanding how to work with debt collection companies might help you to handle issues gracefully and make things right.