Ways to Deal With a Pesky Debt Collector
The debt collector's call may often hit us with the overwhelming momentum of a free falling sack of potatoes, or at least that is how it can feel.
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That is its purpose of course, to jolt the victim into a sense of insecurity in the hope that this will make them pay up.
Bear it in mind if you ever have to deal with debt collectors, do not let them play their game. You are a person and should expect to be treated as such, establish this early on. If you don't let yourself get bullied, two thirds of the battle will have been won. The rest is mostly just a question of following some negotiation rules, which will make coping with debt collection a lot easier. |
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"Oh, in how new a light does our past life appear when re-examined in the interrogator's office: abounding in dangers, like an African Jungle. And we had considered it so simple."
A. Solzhenitsyn, The Gulag Archipelago, P117
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Understanding Your Debt and Debt Collection Rights
Be one hundred and ten percent clear about what you owe, what your options are, and what can and cannot happen to you. You have rights and debt collectors limitations, which you must use to your advantage, but the rules do vary from one US state to another. This is why being well informed is key to controlling the debt negotiating process and the end result, so be as knowledgeable about your debt as possible. A great source of reliable legal advice is your state attorney general, who can also put you in touch with the state’s consumer protection agency, two institutions that are usually very closely linked.
Here is a government list of all the State Attorney Generals, state by state. Also, here’s the directory of all the State Consumer Protection Offices, again state by state. Both these resources can be very useful when having to deal with debt collection.
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Asking For a Notice of the Debt
Dealing with debt collectors in the best possible way means that you have to get off to a good start.
You should ask the debt collector to send you a written notice of the debt within five working days of contacting you. The notice, as with all other communication they may send you, must include a warning, letting you know that any information that you provide them with may be used in the debt recovery process.
To keep a debt collector from being able to use their negotiation and coercion skills effectively, keep communication to written forms. This will also provide you with a full written record, which is essential.
If you wish to dispute the claim, make sure that you do so as early as possible. There are different limitations depending on your state, so you should check with your State Attorney General. |
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Speak With the Creditor
You have found yourself in the unpleasant situation of not being able to pay back a debt, but it may still be possible to speak to the original creditor. If you can come to an agreement with the creditor then do, as it could help you to claim that the whole thing has been a misunderstanding or even their mistake.
Under these circumstances you have a greater chance of preventing you credit rating from being affected, particularly if you can pay off the total amount. If you are unable to do this because the debt has been sold on to a debt collecting agency, or because you are not in a position to satisfy the creditor's demands, it is time to negotiate with the debt collectors. |
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Negotiating With Debt Collectors
When negotiating, it is important to be aware of what you and the debt collection agencies, can and cannot do. Debt collectors will often try to push and bend the regulations, especially if you are unable to defend your legal rights. If on the other hand you already know what is the worst thing they can do, the debt collector will not be able to peddle lies, and you will negotiate with greater ease. For this reason some people seek some form of representation at this point, although if you read up and can hold your ground, you can negotiate your own way through the process. At all times during this process, avoid lying. If it comes out later it could give the debt collector's grounds to sue you, and coping with debt collection then will be a lot harder.
To negotiate, you will have to honestly and realistically calculate how much you can repay each month. When working out the amount, remember to account for all your needs, your family's needs and all other basic expenses. Any other bills that you receive will still need to be paid for, so do not allow the debt collector to make you prioritize their debt. Remember, they want to be paid and will be prepared to negotiate the best deal they believe they can get.
The debt collection agency may well have paid a small fraction of the total amount when buying your debt. This means that they can probably make a large profit even if you don't pay them in full, so you may want to consider negotiating some sort of lump sum payment. You could get up to a fifty percent reduction if they are keen on making a quick return. There are, however, positive and negative sides to settlements, which must be considered in each particular case to decide if settling is right for you. |
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Debt Settlements
By settling, you will clear that particular debt and successfully fend off the debt collectors, but the negative effects must also be considered. Negative effects include having to pay tax on the "forgiven" part of the debt, which will be considered income by the IRS unless it is under $600, and a "settled" note showing on your credit rating which would tell any future creditors that you have failed to pay back in the past. So if you intend to use credit in the future, you must either find a different way of paying off the debt, or ask the creditor or debt collection agency to show your debt as "Paid In Full" on your credit report. These down sides make considering if a partial settlement is right for you, an essential step in the process.
If both you and your creditors agree on a partial settlement to pay off the debt, you will have to make sure that you get a written acknowledgment from your creditor. This basically involves asking them to sign a settlement proposal, in which they promise to accept the agreed settlement as payment for the FULL AMOUNT of the debt. This is very important, as it will be legal proof of your debt payment, and you will need it if they try to recover the rest of the debt at a later date. Ask for written confirmation that your account has been closed, and look at your credit report around two months later to check that it shows as "closed," "settled" or "paid as agreed". If you are negotiating the settlement yourself, you may wish to use a debt settlement agreement template, to avoid leaving loopholes. A couple of companies that offer these templates are, USLegalForms and LegalZoom. |
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Precautions
Never give a debt collector your account details to make a payment, there are simply too many anecdotes about debt collection agencies withdrawing more than what has been agreed. To avoid this possibility, you should always make payments by money order or check.
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Just a note on property. Do not sell it. Property seizure is illegal in many states, and that makes property easier to protect than cash. If you do sell, it could make things easier for the debt collection agency. Check if your property can be seized, with your State Attorney General. |
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Final Word
We can sum this article up with three basic rules:
1. Do your homework so you know exactly what your legal situation is.
2. Negotiate according to your needs and possibilities, and be as methodical as you can when dealing with your creditors.
3. Follow these guidelines and you will be able to control the situation much more effectively and to your advantage. Hopefully now you can begin fending off the debt collectors.
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Grub Street Writing and Translation: Leaving out the parts that people skip
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