Surviving Debt Collection Calls

By Kevin M

The economy and the job market are finally showing signs of life. Unfortunately, debt problems are cumulative in nature and often take years to work out. In the process, many are dealing with an unwelcome semi-professional: the debt collector.

Now, when you’ve been through tough times you’re already off balance. The loss of a job or a home is enough to take a big chunk out of anyone’s confidence. But a call—or more likely a series of them—from one or more debt collectors can finish off what’s left of anyone’s self-esteem.

If you’re facing debt collectors right now, rest assured that you aren’t powerless!

I know a thing or two about the collection process from my time in the mortgage business, but for this post I decided to enlist the support of David Kelly, professional speaker, contributing writer here at, and one of my very best friends. In addition to these attributes however, Dave was also in the debt collection business a few years back, and has useful advice from the inside.

If debt collectors are hounding you, here’s some of that advice that might help you.

Know your rights. Familiarize yourself with the Fair Debt Collections Practices Act (FDCPA) published by the Fair Trade Commission. It provides specifics on what a creditor can and can’t do—legally—in an attempt to collect on a debt. Knowledge is power—know the law better than the debt collector! Most will assume you don’t; surprise them!

Don’t be intimidated. They can’t put you in jail for not paying your debts. For one thing, there is no debtor’s prison, and for another, the collector is prohibited by law from threatening you. But that doesn’t mean they won’t try! Also remember that the collector isn’t your boss, a court judge or a police officer—he’s a person attempting to collect a debt and little more. Most likely, he’s working on some sort of commission arrangement which explains his passion more than anything else.

Make the debt collector respect you. When you owe a debt that you can’t pay, it’s natural to feel as though you’re dealing from a position of weakness. Debt collectors know that too, and many will take full advantage. Even though they may not directly threaten you, they may do it more subtlety by talking down to you, or using other demeaning tactics. Knowing the law will help immeasurably but you can also take the upper hand by speaking in a strong voice, directly to the collector as though you’re negotiating a business deal. If necessary, insist that he address you as “Mr.”, “Mrs.”, or what ever salutation you prefer. And remember that your inability to pay a debt, while unfortunate, is NOT a crime.

Don’t answer your phone. Dave says collection calls are why God gave us voice mail. Seriously though, if you can’t pay a debt and a collector has your phone number, he will probably badger you constantly for payment. If you don’t have the money to pay, there’s no point even speaking with him, and the best way to avoid it is by not picking up the phone. Don’t bother changing your number, they have ways of getting the new one. One more thing…if you let his calls go to voice mail, don’t waste your time listening to them—that’s what the delete button is for. You don’t need the stress he’s serving up.

NEVER commit to a deadline or dollar figure. Please re-read that heading—it’s critically important. Collectors will try to get you to do exactly that, and for good reason. They will often tape their conversations with you, which you should assume to be the case even if they don’t tell you. One of the collector’s legitimate weapons is using your unfulfilled promises as evidence that you aren’t “acting in good faith”—that’s something he can bring before a judge. Never promise to send money by a certain date in an attempt to make him go away. Yes, he will stop bothering you, but only until the deadline passes and then he’ll be back on your case even if you do send money—he’ll be looking for more and the cycle starts all over.

Avoid sending partial payments. The collector won’t get out of your life until you pay the debt completely. Partial payments will never satisfy him, and are best avoided. And for reasons known only to debt collectors, sometimes partial payments are sent in, but the debt balance doesn’t drop. Wait until you have the money to pay the debt completely, that way you can take out the entire obligation at once.

Everything is negotiable. And that includes the debts the collector is trying to make you pay! When you are in a position to pay the debt, offer less, even much less. You may be able to settle your debt for pennies on the dollar! Here’s why: the collector doesn’t get paid until you send money. He’s got bills to pay too, and may even have a collector or two on his butt; for that reason most of the time they’ll accept a settlement in lieu of full payment.

NEVER send money without first getting a written agreement. This is important any time you send money to a collector but it’s absolutely critical if you offer less than the listed balance as full settlement! If the debt is $5000, but the collector agrees to accept $3000, don’t send any money until you a) have the money to pay the agreed upon amount (absolutely NO partial payments at this point), and b) the collector has sent you a written confirmation agreeing to accept the reduced amount as FULL payment of the debt. The confirmation should include ALL of the following:

  1. It must be on the letterhead of his firm
  2. It must include the account number the collection agency has assigned to the debt (make sure it matches the number showing on your credit report)
  3. It must list the original creditor, and the account number they assigned to the loan (again, make sure it matches the number showing on your credit report)
  4. It must specifically agree to accepting the reduced amount as FULL payment
  5. It must include a “pay by” or “good until” date that gives you reasonable time to send payment
  6. It must agree to report the debt as paid on your credit report
  7. And finally, it should include an original signature and title by an officer of his firm

Important: Once you have the letter and it’s satisfactory, you must make payment by the agreed upon date and for the full amount agreed upon. A late payment or partial payment will be accepted, but if the collector wants to get ugly, he can claim that the agreement was not complied with and is therefore invalid. Send payment by overnight courier or by wire if possible, that way there’s no possibility of missing the due date.

You will need this letter to send to the credit repositories; lenders are required to do this, but they don’t always. Keep the letter in a safe place for a long time—it’s your best protection against “misunderstandings”, especially the ones that end up in court.

It’s in your best interest to be proactive about paying past due debts, but you don’t need to be bullied in the process. If you have doubts, or you’re dealing with a collector who’s especially aggressive, consult with an attorney to discuss your options. You always have them.

Have you ever had the displeasure of dealing with debt collectors? How did you handle it? What advice would you give to someone who’s dealing with one now?

( Photo by rocketace )

8 Responses to Surviving Debt Collection Calls

  1. LOL, I had to “chuckle” when I read the title of your blog. To be honest, I no longer try to work things out with my debt collectors. Reason – my credit is so messed up, I no longer care. Up until 2008 before I got laid off, YES, I worked very hard to keep my credit great. Maybe one day I will go back to that way of life! Great topic…

    My Blog: A Story of Hope!

  2. Angela – I can fully appreciate why you don’t try to work things out with them. If you don’t have the resources, you simply can’t. But you’re situation isn’t uncommon–a lot of people do this especially since it’s so much harder to file for bankruptcy today.

    This is also another good reason collectors are willing to settle for less on many debts–with so many unable to pay anything, they have to negotiate with those who can pay at least something.

    Thanks for weighing in Angela!

  3. Thanks for the helpful advice from you and David! I have dealt with bill collectors in a dispute with AT&T. They changed the agreement on me unilaterally, and tried to make me pay for a whole month of service when I canceled mid-month. This was after the contract expired. When I got the collection letters, I wrote why I didn’t owe anything and they would go away. However, the debt is periodically resold to some other shady firm who tries again. I haven’t heard anything in a while but I still keep my documentation.

    AT&T is still mad about it, and wanted to charge me an $800 deposit on an iPhone in 2008. I have a pre-paid T-Mobile phone instead.

  4. It seems like a lot of companies are inventing charges and hitting us with them. That seems to be some new sort of business survival strategy. In a lot of cases we can go down the road and deal with one of their competitors, but in some industries–phones being one–the competition is thinning out and options are becoming few and far between. That leaves us open for collectors! (Must be a booming business!)

    This is off the subject, but we’ve been with Verizon for years and they’ve been terrific. Service is superb, and monetary disputes have gone in our favor on most occasions and with little effort. They may not be the cheapest provider, but in my opinion they’re the best and that’s worth paying a little extra for.

  5. First, I wouldn’t touch AT&T with a 30 foot barge pole. Same thing with institutional banks, Comcast, or any of the “too big to fails”. All those organizations have in my personal opinion lived way past their usefulness & have questionable reasons to exist at all.

    Second, if you’re really sinking financially as so many Americans are, & you’re forced to choose between food on the table & paying a debt collector, take the food every time. Even if your situation is a few degrees removed from that, I’d still take the former as a strategy. It’s easy for your mind to go spinning off into many different directions with fear, but after you’ve cooled off ( & before paying anyone I might add…), know *exactly* what you’re up against.

    Forewarned is forearmed.

    The FDCPA is a good place to start, however things vary widely from state to state.

    Know how much debt you’ve accumulated, & whether it is secured or un-secured debt. Home loans, auto loans (god forbid), student loans, are all secured debt, meaning the repo man can be hiding in the bushes at 3 am ready to pounce on you & there is no statute of limitations. If on the other hand it’s unsecured debt, such as credit card debt, know the statute of limitations for your state.

    Incidentally it should be obvious by now why the interest rates on secured debt is always lower than what you’d find on credit cards, etc.

    After so many years *you know them nothing* & it becomes time-barred debt which is noncollectable, aka “zombie debt”. They can’t dock your pay, raid your bank account, steal your kids, land a SWAT team on your roof, etc. unless you’ve been served a summons to appear in court & successfully sued (which won’t happen after the SOL pops). Yes, they can still try to sue in such instances, but they’ll lose, wasting everyone’s time.

    If at anytime while the SOL is in effect, even if you pay them $1 dollar, you instantly re-set the SOL, restarting the clock for your state. Also, during that time, if you verbally or in writing promise to send them something when you can, that will also re-set the clock on the SOL. In other words, know what your objective is, & be *very* careful what you say to them in the heat of the moment. My advice is don’t say *anything* to them, & don’t answer your phone. period.

    They don’t want you to know any of this & prey on your ignorance. This is how they pick the low hanging fruit.

    Get copies of all your credit reports early on, there are reputed to be some sneaky bastards in the collection business that attempt to re-age collection accounts on folks credit reports, also known as falsifying documents, which needless to say is completely illegal. If you can prove someone did that, you might be in for some cash. Also, see if you can legally in your state record telephone conversations w/out consent, if you can do this & they get ridiculous or abusive, you can get some cash from them. Who doesn’t like free money?

    Last, don’t let anyone give you a “morality” lesson regardless of which strategy you ultimately decide on, such as defaulting, etc. They’re most likely not being particularly helpful. Be cool, be rational. Look after your own skin.

  6. Jeremy – I think you outdid the original post! Very good points though, and I can’t disagree with any of them. It sounds like you’ve been through this. I mostly agree with your point that collectors try to exploit your ignorance, and that’s why learning the game is so crucial.

  7. Nice tips on dealing with debt collectors. I don’t think people realize they have so much control when a collection agency gets involved. It’s their job to intimidate you, but it’s in every one’s best interest to get it resolved. They want to find a debt settlement just as bad as you 😉

  8. Jeremy – So true. People think that debt collectors are all over them in an attempt to punish them for not paying their debt. Nothing could be farther from the truth! They’re all over them because they’re on some sort of commission arrangement, and they want to get paid! They get nothing if you pay nothing.

    Realizing that is liberating. It lets you know that you have at least some control over the situation, ie, the collector has to work with you on some level if he or she wants to get paid.

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