How to Handle Debt Collection

Debt collectors calling your phone practically 24/7 and sending threatening letters can frazzle anyone’s nerves. But you have different forms of protection and many techniques available to deal with them.

The Fair Debt Collection Practices Act lays out guidelines for what debt collectors may or may not legally do when trying to collect a debt. They can’t, for instance, call before 8 a.m. or after 9 p.m., nor make threats to garnish wages in states in which it’s illegal, or harass you with frequent phone calls if you tell them to stop. [For the full text, see: http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm#801]

With this law, you have several options. One can simply refuse to take the call. Most answering machines have the functionality to screen call before picking up and if you have caller ID/call blocking you may be able to filter the call out completely. If you choose to answer the call, you can insist not be contacted any more, and the agency is legally compelled to stop calling - if you’ve sent a ‘cease and desist’ letter. But legal action of that kind may be costly, so you may want to opt for other techniques first.

First, try to pay the debt, if you can and if you actually owe it. It is your responsibility and the creditor is entitled to be paid. But, if you’re badly short of funds, you can couple this with negotiating for a reduced rate. If you follow up on the obligation, the phone calls will stop. Bill collectors, in spite of their sometimes unpleasant attitude, are just simply doing their job. They will move on to others once an agreement is finalized.

Be sure you keep a record of any calls made or accepted, and note any terms agreed to. Make a note if you’ve insisted they stop calling you, especially if you’ve been called at work. You can record the call if that’s legal in your state. (Sometimes it involves advising the other party that you are doing so.)

A small number of debt collectors will make any statement that’s out of line if they know they’re being taped. That recording or note can be especially important if you have talked terms regarding debt reduction.

Nearly all debt collectors have the authority to accept considerably less than they’re asking for. Of course, since they get paid a percentage of what they collect, they’re going to keep the amount as close to the original as possible. But they will accept less if you push. They know that 50% of $500 is more acceptable than %100 of nothing.

Part of the arrangement should involve a commitment on the debt collector not to put any black marks (beyond what may already be there) onto your credit report. You should take that one step further and insist they update quickly any payments you made and to adjust any amount owed.

Get it in writing before you send anything more than a token good faith payment. It’s reasonable to send some money to demonstrate the genuineness of your commitment to the agreement. Send too much and they have little motivation to make the effort to fulfill with the terms binding them.

Patience, realism and maintaining your calm during negotiations will go a long way toward making an inherently horrible situation less traumatic.