There’s no shame in owing someone money, but it doesn’t always feel that way when collectors bombard you with mail and phone calls. Here’s how to work with them without feeling powerless.
If your phone is ringing off the hook with calls from debt collectors, it’s not likely that you feel in control of the situation. But letting yourself feel scared or intimidated isn’t a good option, either. Go down that road and you may wind up making promises you can’t keep, or payments you can’t afford.
What if there was a way to turn the tables on debt collectors so that you are in control of the conversation, and can actually come up with a solution to put those debts behind you? You’ll find nine approaches to doing just that here.
Note, however, this is not about trying to get out of paying your debt if you can afford to do so. What we are talking about here are legitimate ways to deal with aggressive or relentless collectors who continue to pressure you to pay debts you owe but are impossible for you to pay right now. If you suspect the callers aren’t on the up and up, though, you’ll need different strategies for stopping debt collection scammers; and if you are getting calls for someone else, you’ll want to read about what to do if you are getting collection calls for the wrong person.
Don’t wait for them to call
Consider picking up the phone and calling the debt collector yourself. “People I have worked with over the years find they have a different mindset when talking with a debt collector when they have made the call themselves,” insists Michael Bovee, founder of the Consumer Recovery Network where he provides free information about how to talk with debt collectors. “You are better able to prepare for the call and are dialing with a prepared strategy and purpose. Most people feel they are more in control of the call when placing it themselves.”
Check them out
By the time a bill collector calls you, he probably knows a good deal about you. He probably has reviewed your credit reports to see what other debts you owe. He may have checked out your employment using The Work Number database. He may have even checked out your Facebook profile.
You, on the other hand, are getting a call from a company you’ve probably never heard of before. And even if you know you owe the debt, it’s reasonable for you to check out the collector. At a minimum, you want to make sure you are dealing with a legitimate company and not a debt collection scammer.
Ask for the agency’s address (you are entitled to this information) and check them out with the Better Business Bureau. Call your state’s attorney general office to find out whether collectors must be licensed in your state. If so, confirm whether they are. Most states provide an online look-up tool for checking the licensing status of a business.
What if the collector won’t tell you who is calling? If you have caller ID, type the phone number of the company that’s calling into a search engine, suggests Sukhman Dhami, founding partner of The Dhami Law Firm, adding, “You can learn a lot online.” You may find the name of the agency as well as learn about complaints from other consumers.
Dump it back in their lap
If the debt collector is trying to collect on a debt that you don’t recognize, or you think the amount is wrong, or you think it’s too old, ask them to validate the debt. You have the right to do so under the federal Fair Debt Collection Practices Act. “Asking for proof how the debt was calculated and to demonstrate it is a valid debt you owe will put you back in the driver’s seat by asking them to support their claim,” says Steve Rhode, a.k.a. “The Get Out of Debt Guy.” He provides a free sample debt validation letter on his site. At a minimum, requesting validation of a debt gives you time to research the debt to determine if it is legitimate and figure out what you can afford to pay toward it. (If a debt collector refuses to verify the debt after you’ve requested it, the company may be breaking the law.)
Stick to business
You may feel guilty or embarrassed that you couldn’t pay your bills. The collector knows that and may try to use that to his advantage. “There is a great deal of psychology used by debt collectors to create feelings of guilt and obligation on the part of debtors,” warns Atlanta bankruptcy attorney Jonathan Ginsberg. They key is to try not to get swept up in the emotions. “When the debt collector calls, people panic, and when they panic they don’t think clearly. This leads to more stress, fear, intimidation, and loss of control,” agrees Rhode.
A couple of years ago, Ginsberg interviewed Kenny Golde who was able to settle $250,000 of credit card debt for less than 50 cents on the dollar and went on to write a book about his experience. In that interview, Kenny explained that the key to his success arose from treating all interactions with debt collectors as business dealings, understanding that their focus is on collecting funds as quickly as possible, and knowing he had a certain budget he had to stick to
Show them the money
Reached an impasse? You may want to send the collector a payment, such as $100, suggests Ginsberg. “In some situations, collection agencies lose their commission if the file is referred to a lawyer so they will be less likely to turn the file over to the lawyer if they are receiving money,” he explains. Keep in mind that making a payment could extend the statute of limitations on an older debt and it doesn’t prevent a collector from suing you to collect. However, this could be one tactic to try if your other attempts to make good on a debt aren’t working.
Ask to speak to a supervisor
If a collector is trying to scare and intimidate you, write down those threats immediately and ask to talk with a supervisor. Make a note of the supervisor’s name. If you end up suing the debt collector for breaking the law in its collection efforts, “that’s how you get punitive damages,” says Florida consumer law attorney William Howard. “If it’s just Billy the crazy collector threatening you, then they’ll just fire him,” he explains. “But if you complain to their supervisor, now it’s not just their collector (that’s the problem), but their internal procedures.”
Call their bluff
If a debt collector is threatening to take legal action, don’t panic. It may not make sense for them financially to sue, or they may not have a strong case if you fight the lawsuit. They are counting on the fact that you don’t know that. “If the collection agency is based out of state they will almost certainly have to retain local counsel, so use that knowledge to your benefit and turn the tables on them,” Ginsberg suggests. “For example, you can say, ‘If you have to sue me, your company will have to hire a lawyer and you’ll lose out on your commission — why not accept my proposal of $XX.”
Tell them to take a hike
Under federal law you have the right to ask a debt collector to stop contacting you. It’s best to put this request in writing, either by mail or by fax. “They can still sue if they want,” warns Howard. “But the majority of debt collectors aren’t set up to sue, they are set up to set you up on their autodialer and keep calling.” He notes this strategy can be particularly effective with smaller debts as many debt collectors aren’t set up to sue consumers for small amounts.
Talk with an attorney
Don’t be afraid to reach out to a consumer law attorney or bankruptcy attorney for help. Many offer a free consultation. A consumer law attorney can tell you whether the collectors’ actions to collect from you are legal. And a bankruptcy attorney can explain what they can and cannot do to collect from you. Some attorneys offer both services.