If you’re dealing with collectors, you’re likely under a lot of stress. You’re constantly pressured to pay an insurmountable mountain of debt and reminders come in daily phone calls and letters. If only you could get these collectors off your back and get some breathing room.
Good news: you can.
I want to encourage you to make a plan to pay what you owe, but also hear this loud and clear: having old debt does not make you a bad person or a failure. The collections agencies want you to feel that way so that you make emotional decisions to pay them, even if you truly can’t afford it.
Don’t give in to the manipulation and the fear. It’s time to face this head-on so that the debt can be part of your past and you can move forward with your life.
Here are four tips for dealing with debt collectors so that you can deal with it and move on.
- Know Your Rights
The Fair Debt Collection Practices Act (FDCPA) helps protect consumers from unfair collection practices and abusive tactics. However, this doesn’t mean collection agencies always abide by the law! They know that most people aren’t familiar with the laws and that they’re under a lot of stress. The unfortunate thing is that harassing tactics tend to work, so if it helps them get money, the collectors will continue to use them.
BUT, you can do something about this. Let them know that you know your rights. If you tell them they cannot call you at work, for instance, then they are legally obligated to STOP calling you at work. They are also not allowed to call you on any number before 8:00 am and after 9:00 pm.
They cannot pretend to be an attorney or government agent; they must be transparent about the fact that they’re a debt collector.
They cannot use profane language, they can’t threaten you with physical harm, and they can’t claim you’ll be arrested (you won’t be) for not paying them.
I know this all sounds crazy, but money can make people say crazy things! (Or maybe it doesn’t sound crazy because you’ve been on the receiving end of some of these tactics!)
They might be able to garnish wages, but ONLY if they sue you and the court allows wage garnishment. So if you receive threats of having your wages garnished, know that there’s a process they have to follow and they cannot simply decide one day to access your bank account.
When you receive a call, letter, or voicemail, think of the agency as a yippy little dog on a leash. They’re tied down by rules and can’t force you to give them money simply because they demand it.
- Beat Them at Their Own Game
Knowing your rights will help you set boundaries. Next, it’s time to beat them at their own game.
Talk to the agent calling you. You may want to write a script of what you plan to say and practice it to build your confidence before you talk to them.
Let them know that you want to pay your debt, but that you have to keep the lights on and keep everyone fed FIRST. Tell them that YOU will be calling THEM once per week at 9:00 am every Wednesday to provide a quick status update.
At this status update, inform them of how much money you will be able to send. This should not be dictated by the payment amount they claim you owe. Be sincere and honest without going into detail about your life. Simply tell them that a check for x amount is on its way (only if this is true). And send it certified mail.
It’s very possible that after a few weeks, the annoying calls will stop. Communicate with them on YOUR terms, and you will gain control.
- Know What You Can Afford to Pay
How much can you afford to pay? It might not be the full payment amount. But in order to know, you need to write out a budget. Take care of YOUR basic needs first: food, utilities, rent, and transportation (in that order).
After that, pay what you can. If you can make all the minimum payments on debts, that’s great. If you can work the debt snowball and make extra payments following the Seven Baby Steps, even better.
If you find there simply isn’t enough money to cover your basic needs AND make minimum debt payments, then I want you to make a Pro Rata Payment Plan.
First look at the total amount of income left over after you fund your (very basic) living expenses. Say it’s $500, and you have $1000 in minimum payments to make.
What you’re going to do is pay a proportional percentage of the debt. Here’s how to calculate: If the largest minimum payment is $200, that’s 20% of the $1000 in minimum payments. Calculate 20% of $500 ($500 x .2 = $100).
That debt will receive $100. Do the same for the remaining payments. This will give you some breathing room while you find ways to increase your income and get the debt paid off.
- Never Give them the Upper Hand
While you’re working this plan, it’s essential to document everything: when you called, to whom you spoke, the bullet points of the conversation, any mail you send or receive, every message from the agency, ALL of it. Keep a simple log in order of date and highlight payments that you send.
I know it’s a pain, but it’s a lot better than spending time being stressed out without taking the necessary steps to resolve it. That way, if you’re accused of not sending a payment, or if you discover FDCPA violations, everything is documented.
Also, remain calm under all circumstances. You may have to get assertive, but arm yourself with a plan and a script, or at least a bullet point list of your talking points.
If you tell the collector your plan and they come back at you with a “that’s not good enough” response, calmly inform them they can take what you can pay or they can get nothing, and that you’ll call again next week. End of discussion.
The thing is, they’ll be so stunned to talk to someone who is calm, assertive, and has a plan, that they’ll probably shut up.
You don’t need to yell, and you don’t need to cower. But you MUST follow through on your word.
In your documentation, write down what you say you’re going to do and put your action steps on a calendar so that you remember to do them.
Finally, never give access to your bank account and don’t be intimidated into giving collectors any of your personal information. Instead, mail a check (along with any letter you send) the old-fashioned way, and send it via certified mail so that you KNOW they got it.
Dealing with collectors is frustrating and stressful. It can feel like a predicament you’ll never get through, but you can as long as you’re willing to face the problem head-on and work to get out of debt. Know your rights, communicate regularly, calculate how much you can afford to pay, and carefully document everything. It’s time to face the collectors with confidence and a plan.