How to Deal with Debt Collectors
If you have found yourself to be deep into debt, with little chance of meeting the monthly repayments, then it is likely that you have already experienced the debt collectors whose job it is to collect on the debt.
You may find that you have phone call after phone call. If this is the
case you have to option to tell them that they have to, by law, stop
calling you. For this to happen you may need a legal letter to 'cease
and desist', and this will cost you more money. But sometimes the
threat of the letter may be enough to quell their calls for a while.
Sample Cease and Desist Letters are available1:
You should also know that is it illegal to call you before 8 am and after 9 pm. In many states, they are not legally able to garnish your wages. To find out your full legal rights in this matter, you should go to the relevant website for your state.
In the short term, you can consider not taking their call. If you need time to think and make up a budget of debt repayments then this is a good option. Answering machines mean that you can screen calls, and caller ID will help with this as well.
Of course, this is only a short term measure. Better by far, is to come to some arrangement of paying off the debt, or at least resuming a monthly repayment plan. If you had difficult making the payments before, do not agree to make the same payments as it is likely that you will default again.
Try and negotiate reduced payments. Better still, try and negotiate that all interest on the loan stops, or that you pay a reduced amount. All debt collectors are authorized to negotiate the debt repayment. They are usually paid on the amount of the debt that they are able to recover. But all debt collectors know that 70% of a smaller amount is better than 100% of no amount. If your debit includes late fees, over-limit fees and interest. These can often be waved by the collector, if that strongly implies that the principle portion of the debit will be repaid.
Quite often your debit will be sold to a collection agency for a small value on the dollar such as 5 cents on the dollar, so if the collection agency can collect more than 5% of your debit, they have made a profit.
Once you negotiate a new rate of payment, send them a small good faith payment, and ask for the new rate to be put in writing. Also ask the any payments are recorded quickly so as not to harm your credit score too much.
Collection agencies rarely sue, unless the debit is substantial and there is an indication that you have substantial assets that can be seized, such as a home with equity, bank accounts with substantial balances or other assets that have a positive resale value and can be found and readily acquired by a third party.