How to Deal with Debt Collectors (and Keep Your Sanity)

Posted on 09. Dec, 2011 by in Wealth Essentials

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Debt collectors have a job to do and for the most part, the reward for a job well done is a commission from every dollar collected. It is in the debt collector’s best interest to leave no stone unturned when it comes to getting money paid from those that have outstanding debts. For this reason, many debt collectors can become pretty aggressive and exceptionally resourceful when it comes to pursuing you for money owed.

Because of that very resourcefulness, stricter laws have been enacted by the government to police the tactics used by debt collectors. These changes in legislation have now made it against the law to pursue debts in a threatening manner and have set a standard of guidelines meant to protect the debtor from undue harassment. However, despite the laws, some debt collection agents are persistent enough to drive one slightly insane.

Repetitive calls at home, work, and on your cell can make you not want to answer the phone. Written correspondence can become a bit terrifying especially when you don’t have the money to fend off legal actions being threatened. Overall, debt collection can wreak havoc on a person’s life thanks to the efforts of the collector and the general feeling of guilt and being overwhelmed by your withstanding debts.

Here are some tips to survive the madness and options that you have when a debt collector is on your back:

Get Educated

The best recourse when being hounded by a debt collector is to know what exactly is going on and what your rights are in the situation. All consumers have rights under what is known as the Fair Debt Collection Practices Act (FDCPA). This is the laws that protect the debtor from being treated unfairly by those collecting on a debt. The best defense against any threat or accusation is to know what is and what is not allowed by law. Read the information from the Federal Trade Commission about unfair debt practices and get wise about the ways of consumer debt.

End Avoidance

While the debt collector’s constant calls can be maddening, the only reason they continue to keep calling back is that you are not taking their calls in the first place. Sure, it can be intimidating to have a debt collector demand money you simply do not have access to, but it is time to end the charade and pick up the phone. Most debt collectors are happy that you are willing to participate in the resolution of your debts. The longer you avoid their calls, the more upset and un-agreeable they will likely be.

Ask for Proof

When debt collectors take over a debt from your original creditor, it can get quickly confusing as to who is legally allowed to take your money. For this reason, it is imperative that your first step when dealing with a debt collector is to ask them to verify the debt. This means they must be able to provide proof the debt is yours, how much the debt totals, and that they are able to legally collect on the debt. This is called ‘debt validation’ and it should be the first thing you discuss during your phone call. If the debt collector is unable to verify or provide proof, you will not legally need to pay the balance due. Also, debt collectors are required to stop contacting you until they have validated the debt.

Start Negotiating

Every debt collector will likely lead you to believe they have no power for negotiations. The reality is the debt collection agent will test the waters to see how far he can push you for money amounts. If they feel they can get the total amount due, they’ll keep pressing until you agree to pay in full. If you are generally under a financial hardship, the collector will typically be willing to work with you on a reasonable amount you can afford. While they may eventually agree to your terms, they certainly will put up a fight in the process. You need to be ready and willing to stand your ground and know exactly how much you can afford to pay out.

Get it In Writing

The only way your negotiation will be completely successful is if you get it in writing. If you agree to pay a certain amount towards the debt and the debt collector agrees to accept it as paid in full or settled for a lesser amount, you will need to secure a confirmation of these terms in writing. If you fail to get the details of negotiation agreed to formally, you may be at risk in the future for paying the remaining balance due without proof of your prior arrangement. Don’t make the full payment without a written confirmation. You can send a copy of a money order or a cashier’s check payable to the debt collection agency until you get the proof you need.

Get Money Under Control

The only way to avoid the insanity of dealing with debt collectors in the future is to refigure your finances to avoid debt cycles from happening again. You need to rework your budget so that you can eliminate the debts you have with current creditors to prevent them from being transferred to the more aggressive debt collection agents and to keep your credit history free from harmful negative information. Start living below your means or add additional income to your household to avoid getting in over your head again in the future.

Debt collectors are just doing their job and unless they are wrong about your responsibilities to a debt, you are the actual cause of the repeated contact. While many consumers struggle with debts they cannot pay due to financial hardship, the biggest lesson learned should be to move forward with better money management skills to eliminate existing debts and keep future finances on track.

This guest post was written by Eliza Collins, a seasoned personal finance writer with professional experience in the debt relief industry. Eliza writes at the blog where you can read more about hands-on debt relief strategies, debt relief services or credit repair.


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9 Responses to “How to Deal with Debt Collectors (and Keep Your Sanity)”

  1. Krantcents

    09. Dec, 2011

    Definitely get documentation of the debt. One of my friends encountered a scam about a debt. Whatever plan you agree on , stick with it.

    • Shaun @ Money Cactus

      09. Dec, 2011

      It is amazing how many scams there are in the world, you have to be so careful these days.

  2. I think sticking with the plan is the most important. If you agree to certain payment terms than you need to pay them. If not your credit is even further damaged which is not good at all.

    • Shaun

      09. Dec, 2011

      Sometimes you just have to take your medicine don’t you? The sooner it is done, the sooner you can get on with everything else.

    • Marissa

      12. Dec, 2011

      I totally agree with Miss T. i have had the unfortunate task of having to deal with a collection agency for a friend and there is only so much I could have done. The key is making payments that you promised to make, otherwise it is a pointless exercise.

  3. UltimateSmartMoney

    10. Dec, 2011

    Great advice. This is why I do not like being in debt and am trying to be debt free.

  4. YfS

    12. Dec, 2011

    Dealing with debt collectors is quite easy.. I wouldn’t advice picking up their calls. Send a letter specifying that you only want correspondence in writing. Picking up their calls opens you up to a mistake. One of the best things you can do is get a pay for delete. If you specify that you received any correspondence of the debt you eliminate your chances of getting a pay for delete. People who pick up the phone often are the ones who mess up. The other tips are very good. But, I would advise against calling a debt collector if you’re not seasoned in their tactics.

  5. One more tip, if this is an old debt, make sure they are still within the SOL enabling them to collect on the debt.