How to Deal with Debt Collectors

Most of you probably don’t know this…but once upon a lifetime ago, I briefly had a stint as a debt collector or “collection agent”. I worked this job for less than a year, before being driven to quit because of my lack of performance. Yes. I wasn’t bringing in enough money, so they were taking away my accounts until I had to start from scratch on a team that was full of people like me who were terrible at the job. I wasn’t bad at my job because I was lazy or stupid. I was bad at this job because I had a heart. I had compassion for the people I was calling. My “debtors”. Granted, some people are always trying to cheat the system but the vast majority of folks I spoke to were just like you. They were your friends, your neighbors, your parents. I spoke to people from all walks of life. I had accounts that belonged to wealthy women hiding credit cards from their husbands, I had accounts that belonged to single moms just trying to get their heads above water.

The last straw came when my bosses pulled my accounts that already had made payment arrangements with me, and turned them over to more aggressive collectors who would harass and attempt to squeeze more money out of people who had already made satisfactory arrangements with me. I packed my desk, scribbled a note for my boss, and walked out in the middle of my shift. Something I have NEVER done before, nor will do again, but I knew that what they were doing was wrong.

Now, years later, I want to share information that may help those of you dealing with debt or bill collectors. There are a few things you need to know first. I am no longer a licensed debt collector. Some of the laws and regulations may have changed in the last few years. This is not legal advice. I cannot be held responsible for any ramifications or consequences, this is just suggestions based on what I know. Nothing here is illegal, nor would I ever recommend trying to scam any agency. The following tips will help you figure out how to deal with debt collectors.

10 things debt collectors don’t want you to know:

1. Debt collectors are often paid on commission

You might have expected this, and while I’m not sure about every single debt collector, the vast majority are paid on commission. That means, the more they get out of you, the more they get in their OWN paycheck. And since they are not working in a customer service position, they don’t have to be nice to you. Watch out for the dishonest ones. Some will do everything they can within the law (and some even outside the law) to get as much money from you as they possibly can.

2. Whenever possible, make payment arrangements the last day of the month or during tax time

Because they are paid commission as I mentioned in the previous item, the best time to work with a debt collector is the last day of the month (or as close to the last business day as possible). If you’re lucky, the collector has met or is close to making his quota for the month. This means, they will be salivating over the chance to get you to pay something. Anything. Sometimes collectors will send out letters near tax time offering to cut you a deal in exchange for paying your debt with your tax return. Which brings me to my next point…

3. Sometimes you can pay less.

Sometimes less is more. If the bill is very old (think at least 1-2 years or more) its probably been sold down a chain of collection agencies for pennies on the dollar. At this point, they know you’re not willing or able to pay (it won’t stop them from trying of course) so you MAY be able to reach a settlement. This is satisfying the debt for less than the full amount owed in exchange for removing the negative mark on your credit. That being said, they will often list the debt as “settled in full” which is not as good as “paid in full”, but if it takes a significant chunk of debt off your plate, it might be worth the imperfection on your credit in the long run. Still, it’s worth checking into.

4. Know your rights

When working out how to deal with debt collectors, you must know that there are things debt collectors can and cannot do. A real debt collector (as opposed to folks that pose as debt collectors to run scams on innocent people) cannot leave personal information on your voicemail. They cannot harass you. They cannot give personal information to your relatives or neighbors. They CAN leave messages with others, but only can say they are calling about a “business matter”. They cannot call you dozens of times a day, or before 8am or after 9pm local time. If you feel you are being threatened, harassed, or in any way having your rights violated, immediately record as much information as you can, and file a complaint with the FTC (Federal Trade Commission). The Fair Debt Collection Practices Act (FDCPA) is there to protect you, the consumer from unlawful collection activity. If you are dealing with a debt in collections, it is a good idea to read up on the FDCPA and know your rights before any issue presents itself.

5. Stay calm

While it is possible that you may be sued or garnished, its unlikely (depending on the size and type of debt). Sometimes collectors throw these threats around whether they intend to or not, but either way, it is important to remain calm. Screaming, yelling or hanging up on the collector is only going to make things worse. Calmly discuss your options, and if things escalate, inform the collector that you are ending the call. You can ask to speak to a supervisor, but they can often be worse to deal with. If you panic, or get upset, scared or angry, you might wind up making decisions you may later regret. Keep a clear head.

6. Get EVERYTHING in writing

They will fight you tooth and nail on this. They want your payment and they want it now. You need to take a second and protect yourself. What if you pay them, and an unscrupulous collection agency claims they never got your payment? Insist on everything in writing, including notation that once the debt is satisfied, they will remove the negative mark from your credit. Do not send cash under any circumstances. Send funds only by check or credit card, that way, payment can be revoked if there’s any funny business.

7. There’s a statute of limitations

The length of time varies by state, but if a debt has been around long enough, eventually it disappears from your credit report. Now, I am by no means encouraging you to ignore your debts, the damage to your credit could be anywhere from 7-10 years, but if you are truly destitute and cannot pay for whatever reason, it may eventually go away. However, there is a caveat to this: often times if the debt is sold to another collection agency before the time limit expires, it can be given a new account number with the new agency and may reset the clock on the statute of limitations. It’s risky, but if you truly have no other way, you might get lucky.

8. Debt collectors MUST be licensed in your state

There’s a licensing process for all debt collectors and this information is on file with the state. If you are contacted by an agency and you are worried that they may be scam artists, you can check with your state to see if they are licensed. If they are licensed, and they are in violation of any laws, you must report them right away. If they violate the law, not only can you sue, but consumers have frequently been awarded punitive damages from collection agencies acting against the law.

9. You can make them stop calling

Laws may vary by state, but generally you can give a verbal cease and desist order (aka: telling them to stop calling you) in certain situations. You may verbally cease a debt collector from calling your cell phone, your work phone, or any friend or relatives phone. All you have to do is TELL them. You have to specify that the number they are calling is a cell phone, or work phone and that they do NOT have your permission to call that number. You CANNOT verbally cease them from calling your landline home phone, but you can do so in writing. If you cease them from calling your home phone, one of two things will usually happen: either they will sell the debt to the next collection agency (thereby restarting the whole process) or they may pursue legal recourse it is possible in your situation. I don’t recommend ceasing all calls, but it’s an option.

10. Disputes

If you have a dispute with the debt, you must act quickly. The collection agency is required by law to send you a letter letting you know you have 30 days to “verify the validity of the debt”. Usually you get this letter at the last minute, some people don’t even read it. To be honest your best bet for disputing is either through the original creditor (wherever the debt originated….for example, rather than dealing with the debt collector, you would deal with the credit card company directly. This is difficult to do once the debt is in collections, but its possible) or with the credit bureau.

Most important of all, is to remember that you are not alone. Millions of people have debt that is with collection agencies. You may get endless phone calls, you may be severely depressed or scared. YOU ARE NOT ALONE. These things can happen to anyone. It does not make you a bad person. Everyone has their mistakes. Your best bet is to face the problem head on. Do whatever you can to clear up the debt and restore your credit. It takes time, and it is a lot of work, but there is always a light at the end of the tunnel of debt.

One more thing to keep in mind: often debt collectors have debts in collections too! Yup. Many of my colleagues (including myself) had debt on file with collection agencies before, during, and after working as debt collectors. Though it may not seem like it at times, they are people too.

Figuring out how to deal with debt collectors can be scary, and it breaks my heart to hear stories of people taking their lives over the stress from debt and financial troubles.

If you or a loved one is having suicidal thoughts or is deeply depressed over your debt, PLEASE seek help right away. Figuring out how to deal with debt collectors is NOT worth taking your own life. There is no problem that does not have a solution. Your life is worth far more than your credit score.  You are NOT alone and you are not a LOAN.

Need help? Call the National Suicide Prevention Hotline 1-800-273-8255

Do you have any other tips for how to deal with debt collectors?