Dealing With Debt Collectors

Whereas most debtors have no experience of debt collection and have next to no knowledge of the law, the majority of debt collectors have both experience and training, which means that it's normally easy for them to trick and to intimidate the debtor.

So if you're afraid to answer your phone because you're worried that the call will be from a collection agency, then it's vitally important that you know what to say to them, and what not to say to them, and more importantly that you know what you can sign, and what you definitely mustn't sign.

Understand and fully internalize, that debt collectors are only contacting you for one reason,

They Want Your Money!

Most debt collectors get paid on a commission basis, and a large number of them will lie to you, and try to bully and con you into paying them.

So Be Prepared

If you don't have your credit report then you must get one, because without it you won't know the details of your various debts, whereas the debt collector will know, and that is something that would put you at an immediate disadvantage when you answer the phone.

I'd suggest getting a triple report from one of the three major credit bureaus (Equifax, Experian, or Trans Union) because they're far easier to read than trying to cross-check three different reports.

At the time of writing they cost $39.95 and if you don't have that kind of money then you can search around for a free report, although most of the advertised ones don't end up being free.

Once you have the report in front of you, make a list of all the unpaid debts and their balances, and make sure you list who the money is owed to, and keep your list next to your phone

A Debt Collector Phones You

1. When somebody calls you about a debt, always start with the premise that the person doesn't have the legal right to collect the debt.

2. It's the caller's job to prove that he has the right, and not vice versa.

3. Under no circumstances, admit that you owe the money!

4. Tell the caller to mail you details of the debt, and ask him to include the amount of the debt, and the name of the original creditor, and if he doesn't know your address then he's not legit, which means that you can safely hang up the phone.

5. a) If he knows your address and all the relevant details, then ask for the collection agency's address and tell him that you will write and request a debt validation letter.

b) According to law (Fair Debt Collection Practices Act is Section 809 Validation of Debts), you need to write to a collection agency within 5 days of first being contacted by them, and you must request the amount of the debt as well as the name of the original creditor.

c) The return letter that you receive from the collection agency should state that if you fail to dispute the debt within 30 days of receipt of their letter that the debt will be considered valid.

d) If you write a return letter disputing the debt, then the collection agency must mail you a verification of the debt, or a previous judgment from a civil court case.

e) If you dispute the debt the collection agency must halt all collection attempts for either 30 days, or until they provide you with the requested information.

6. If the debt is 2-3 years overdue then I wouldn't offer them any more than 20% of the original debt, because it's unlikely that they paid more than a few cents on the dollar for it.

7. Don't offer more than you can pay, and don't make any promises you can't keep.

8. If possible, use a lump sum to pay the debt, and get a letter from them in advance stating that,

a) The payment 100% satisfies your obligation to this debt, and is considered 'paid in full'.

b) That the debt will not be transferred or sold to another collection agency.

c) They will not attempt to collect on the remainder of the debt at some future date.

The above information will hopefully have given you a clearer understanding of your rights, and will enable you to better deal with the next debt collector that calls. If however you haven't yet got debt collectors calling you, then please seriously consider contacting a credit counseling agency, and investigate both debt settlement and debt consolidation, and the sooner you do it the better.

And keep your head up high, because things haven't been this bad since the Great Depression (the 1930s), and being in debt right now, is sadly becoming par for the course.