Nine Things to Know
when Dealing with Debt Collectors
By: Robert Lopater, Credit Collections Expert
1. Always answer the phone - When creditors
call, they call often. And they will continue to call until
they speak with you. Save yourself the anxiety of screening
calls and speak with them. At a minimum, you save yourself
the trouble of asking yourself 'Should I answer the phone?'.
2. Always tell the truth - If you are behind
with your bills, you want your creditors to be your friend,
not your enemy. Tell them the reason(s) you are past due,
and when you will be able to make a next payment.
3. Never make a promise you cannot keep
- This goes along with keeping your creditor as your friend.
Build up credibility, and you will be taken seriously when
discussing your debt. When you promise your creditor that
you will be sending 'x' dollars on a certain date, you want
them to believe you, and in keeping your promises, your creditors
may make certain alternatives available to you.
4. Never bounce a check - This is critical.
If too many checks are returned, you will lose this convenient
method of payment, and may be forced to use a less convenient
(and more expensive) method of payment next time (for instance,
Western Union). Remember, many creditors charge a fee for
returned checks, and you will only be making your situation
worse.
5. Always ask what your options are - For
instance, credit card companies sometimes offer Match Pay
programs (where they credit your account with every payment
you make), or re-age programs where if you pay a minimum amount,
the account will be brought current. Often, automobile finance
companies may permit you to skip one monthly payment (adding
it on to the end of your lease). It does not lower your bill,
but it does buy you some time.
6. Do not lose your temper on the phone
- The person on the other end of the phone is only doing their
job, and is not personally responsible for the situation you
are in. By speaking reasonably and honestly, not only can
you build your own credibility but also you can get yourself
an ally in the company who might go to bat for you in trying
to make a favorable payment arrangement.
7. Consider all of your options - Many people
do not realize that funds can come from many sources:
• Home equity. In this case, not only will you (most
likely) pay a lower interest rate than the one being charged
by your creditors, but it may be tax deductible as well.
• Borrow against your Life Insurance
• Borrow against your 401K
• Stocks/Bonds
• Borrow from relatives.
• Borrow against the value of your paid-off automobile.
• Cash advance from a non-delinquent credit card
• Seek a loan through your bank without any collateral
(home/auto)
• Consumer Credit Counseling Services can easily be
found. They will frequently be able to negotiate a lower monthly
payment and lower interest rates on your behalf. But, they
do not always work. For instance, if you owe $10,000 on a
credit card, the creditor may find the CCCS offer too low
to accept.
8. Know your rights - The Fair Debt Collections
Practices Act and the Fair Credit Reporting Act are, for the
most part, common sense. A company cannot threaten you with
actions they do not intend to take. They cannot attempt to
contact you too early/late. They must report all information
to the credit bureaus accurately, etc. If you feel a creditor
is not following the letter of the law, do not lose your temper
and make empty threats.
9. Ask to speak with a Supervisor/Manager
- Sometimes, people with more authority can make offers which
front line collectors cannot.
Need
advice?
See one of the professionals
in our Resource Directory.
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