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5 secrets for dealing with a debt collector

Paying a debt collector

If you feel a little spike of adrenaline whenever the phone rings, you’ve probably been called by a debt collector. I know what it’s like — that accelerated heart rate, the sweaty palms, the sense of dread.

What should you do? Scream? Hang up? Is there a better way to handle the call?

Actually, there is.

Debt collectors are responsible for more complaints than any other industry. Most collectors follow the rules but many don’t. They demand more money, threaten you, contact your neighbors, your job and call you outside the permitted hours.

Americans carry an estimated $3.2 trillion in consumer debt. According to statistics published by the Census Bureau, that works out to over $10,200 in debt for every man, woman and child that lives here in the United States.

But you don’t need to suffer a panic attack when a debt collector calls. Take these steps to handle your debt and stay calm:

Acknowledge the call

Don’t ignore a collector. Understand that the debt collector is working for a living and isn’t your enemy. Gather all the information about this particular debt, collection agency name, collector’s name, ID number if any, and the amount they claim is owed, and write it down. Include the date and time of the call. At this point, if you were caught off guard, ask if you can call them back at a more convenient time, when you’ve had a chance to collect your thoughts.

You know how much you owe — or don’t owe. If it has been too long between payments and you really would prefer to settle the debt but don’t have the funds, say so. Focus on what you can do. If it is not your debt, request that proof of the debt be sent to you.

Tell them if you can pay and how much. Decide what timeline is acceptable to you. Determine if you are able to offer a lump sum cash settlement. Write it all down. Then call the agency back.

Note: If you are working with an attorney on a bankruptcy, say so immediately and provide your attorney’s name and phone number. Answer legitimate questions about the bankruptcy. This will stop all calls to you immediately.

Using this phrase right away will foster a casual conversation between you and the collector.

My intention is to take care of this when I am able to do so.

Continue your conversation with: “I want to take care of this, but at this time I have no way of making payment arrangements. Please touch base in a few months.”

Again, get their info: name, contact company, ID number, time and date.

To stop repeat calls, tell the collector this:

At this time, I am not accepting communication by phone; therefore, this is a verbal cease and desist. You can only contact me by mail,” and then provide your current address. You may be asked to provide your request in writing.

If you don’t mind them calling you, specify a phone number and time of acceptable hours to call. It can be at your convenience.

If you have informed the collector not to call at any time, or if the call comes at an inconvenient moment; or before or after the legal allowed time, you have the right to complain. You may demand to speak to a supervisor, or in many states you may record the call for later proof if there is a violation of the Fair Debt Collection Practices Act. Remember, knowledge is power.

No one has the right to abuse you or to be abused by you, which can happen during a collection call. Your lender is seeking payments. To them, it is a business transaction without emotion involved. Many collectors are in a position to negotiate, and as the old saying goes, you catch more flies with honey than with vinegar.

By using these proven strategies, understanding federal law, your consumer rights and remaining calm, you won’t have to feel like you are being hunted to the ends of the earth by a debt collector. And you’ll sleep better at night.

Elise Negrin is an active volunteer and an avian specialist. She lives in South Florida with two parrots and one cat.

I did credit collections for almost 10 years and would say the most important thing is:

DO: Explain what you can honestly pay and follow though. It’s better to be honest than to make a promise you can’t keep. “I understand I owe $689.00, and I can pay you $20.00 every two weeks and I get paid on the 1st and the 15th, so I will commit to having you $20,00 by the 3rd and the 18th of each month.”

Honesty and integrity will keep collectors from calling.

DON’T: Lie or try to explain why you’re behind. They don’t care. Really, they don’t. Your late, you’re in collections and they why doesn’t matter. Just make a plan to get it cleared up.

I am debt free, but have a common surname and have been harassed by debt collection calls numerous times over the years. I don’t know what the ratio between legit calls and mistaken ID calls is, but my experience trying to get debt collectors to stop calling has been very unpleasant, and I wonder how many others are similarly harassed for others’ debts. Typically the caller doesn’t believe that I’m not the person they are seeking, and they demand all sorts of personal information they have no right to possess. They also typically refuse to identify themselves or to provide contact info, which I believe is a violation of the FDCPA. Since I live in a single party state, I make a practice of recording these calls, including my polite refusal to divulge my SSN, DOB, etc., and my request that the caller cease and desist. I also let them know that my number is on the DNC list and that I will file complaints under both DNC and FDCPA laws, using the recording, if they continue to call me. (Just telling the caller that they are being recorded tends to make them hang up, fortunately.)

I am extremely grateful that my personal circumstances have never caused me to go into debt, and that my law school background means I know my rights, because my impression of the entire debt collection industry is that it only employs people who can’t get a job anywhere else and who are happy to violate any and all laws in hopes that one call out of 100 will yield partial payment. I assume these employees get a bounty. Perhaps they would be less motivated to ignore stae and federal privacy and debt collection laws if they were paid hourly instead?

– Never. Ever. Give your checking account information over the phone to a bill collector. Too many times “mistakes” have led to the collector withdrawing whatever they want instead of the agreed-upon amount.

– In your first conversation, do not even acknowledge the debt exists. Simply ask for a statement of the amount they believe you owe to be sent to you in the mail. Do this even if you know of the debt and you plan to pay. A scammer is not likely to do this, and a legit agency is required to.

– If you come to a settlement to pay less than the amount owed, get that in writing, again, before paying one thin dime. If you pay your “settlement” without getting it in writing, there’s a fairly high chance you’ll still be hounded for the rest, and there will conveniently be “no record” of your payment agreement.

– Use a money order, cashier’s check, or credit card (NOT debit card), to pay any amounts. You do not want the agency to ever have access to your checking account, or know it’s account number.

– If the caller threatens to have you arrested, hang up; they are scammers. If the caller threatens to file a lawsuit, they are probably lying. Most legit collectors will simply file one without bothering to threaten you first.

– Debts that exceed the statute of limitations for your state without you paying, acknowledging the debt, or the creditor filing suit, are not collectible if you don’t feel like paying. Simply tell the collector (in writing) to stop contacting you entirely about the debt. That doesn’t mean they can’t sell it and have somebody else bother you about it.

At my old work phone number, I got debt collection calls for the previous owner of the number for the entire 15 years I used that number. I had no CallerID info and no real way to track them down.

Honesty and integrity will keep honest collectors from calling. Alas, the industry is also a Wretched Hive of Scum and Villainy, and there are far too many bad apples where any consumer, even if they legitimately owe a debt, has to go on the defensive in any interaction with a collector, as there’s no way to tell up-front which sort of collector they are dealing with.

Before agreeing to a settlement, you should be aware that you will receive a 1099C for the amount being forgiven, which the IRS considers taxable income. For example, if you owe a hospital $10,000, and they agree to settle the debt for $8,000, you will receive a 1099C for $2,000. You must include this on your federal return as taxable income. This is also furnished to the IRS, so if you fail to report it, not only will the IRS adjust your taxes, but they will penalize you as well.

All GREAT tips, especially the one about never giving them anything that allows them to access your account.

Also, if you get a collection notice in the mail, do not forget to send a letter back disputing the charges and asking for verification of the debt. They will be required to provide you with proof of the debt. Do not ask for this over the phone as you will likely never get anything in the mail, or you will be told that x company claims it is a valid debt so we need to collect. -I actually had AT&T tell me that a debt was valid because AT&T is a trusted company.

Unless you get an agreeable amount in writing up front, do not make any amount of payment. For example, if they claim you owe them $500 but you think you owe them $400, do not make a payment for $100. They will just continue to claim you owe them $400.

When the collectors came at me from Time Warner Cable, (less than three weeks after I cancelled my service) I explained that I did not owe the amount they claimed. They asked how much I thought I owed, to which I told them. They then wanted me to make a payment in that amount with no guarantee that they still would not hassle me for the rest of the amount they claimed I owed. Instead, I insisted that I get a correct bill based on my service dates and only then will I pay. The lady then really pushed me for a partial payment to which I responded that I would need a correct bill first, then I hung up.

I was called a few times by a collection agent for a debt I

did not have, the last call I invited the low life agent to come here and collect in person. that put an end to the calls. I think it was a scam.

Debt forgiveness is not taxable if you are insolvent. (Your debts exceed your net worth.) If the hospital chooses to grant you a discount (vs. writing off the debt), it is not a taxable event.

Unless you are living a very very simple life it is almost impossible to live debt free. I know of no one who can afford to pay cash for a house, and very few who can buy a car. Paying cash for everything is not wise because you have no recourse. Paying by credit card has many advantages.

Very good advice. Thank you for sharing.

Mark, you now know two people who are totally debt-free. I may be a liberal when it comes to politics, but I’m ultra-conservative on my finances.

So what? Nice statement, but how does it have anything to do with the subject at hand?

Time to abolish the 16th amendment.

Mark – There are more than you know living debt free. Having decided to do so, we’ll be debt-free this year other than our mortgage, which with the cash we’ll have freed up from debt service will take us less than five years to pay off (granted, I live in a fantastic area to own a home where prices are reasonable). Paying with cash has advantages you don’t get with credit cards – negotiation – nobody walks away from cash on the table. As for recourse? That’s where the BBB, local courts and simply having a good relationship with the people you purchase things from come in.

And pay for government services how?

Ditto re my politics v. personal money management. That’s way calls from debt collectors are never for me. I paid off my last mortgage 15 years ago and pay cash for a modest car every 11 years, whether I need a new one or not. I do use a credit card for many purchases but pay it off every month, taking advantage of the grace period float and other rewards while avoiding any interest or other fees.

Well, Duh. Let’s see, how could that be done? By taxing commerce? Wow, what a concept! Gee, how was it done before they had an income tax?

Hey, let’s have an income tax so that the RICH people will pay taxes. Regular guys will NEVER pay income tax! Taxes will be paid at the end of the year in one sum, and, of course, tax rates will be uniform across the United States, so everyone will pay the same exact rate. Income tax will never be used as a tool to intimidate or oppress the citizenry, because the government is always going to tell the truth and be good.

Naturally, most of the stuff the Feral Gubmint is involved in is not its core mission. That mission includes defense, diplomacy, postal services, stuff like that. It does NOT include the police power, education, welfare payments, morality regulation, and other such fields into which it has crept steadily over the years. Time to choke the monster before it’s too late to kill it.

Well…. not really… at least not entirely. For every file, the collector MUST set a call back reminder. If there is a payment plan in place, you can sort of do a two month check up, but you can’t just let the file hang out there because you’ll lose track of it otherwise. When collectors log in to the computer, their “call back” reminders pop up. You can even set a time of day to call back. So when someone would tell me they can’t pay “right now” I’d have to set a two week to six week reminder and call them back. There were people I had to call monthly (monthly is the general rule) and they’d never pay…. but I had to call them. Even if they were nice and honest, I had to call them.

A national sales tax would be a regressive tax. You’re for regressive taxation?

I make car payments monthly into a mutual fund or CD, whatever is best at the time. That way I earn interest rather than pay it, and once I am ready for the new car, I have the cash ready to go and then some. If money is tight one month, I don’t always have to pay into the new car fund. So no penalty for missing a payment. Sure beats a loan. I can also use it for emergencies since I tend to keep cars 10-15 years.

I do use a credit card too for protection, points, and float, but I don’t charge what I can’t pay off that month. The mortgage is the only area where I have debt, well, I did have student loans, but I paid them off.

Where did you get that idea?

I’ll tell ya what: I am opposed to the idea of PROGRESSIVE taxation. It’s thievery of the highest order.

No debt here. Paid off the house a couple of years ago after paying extra on it for years. Buying a house isn’t a debt, it is an investment. Debt with credit cards is completely preventable. If you can’t afford it, don’t buy it.

Don’t get your hopes up TOO high, Mike… about being debt free, that is. A few years ago, I finally got my house, cars and ex-wife paid off. Thought I was in tall cotton. Not! There’s still the house insurance, car insurance, medical insurance, electric bill, gas bill, water bill, sewer bill, trash bill, green waste bill, recycling bill, dental bill, and probably half a dozen other bills I’ve forgotten. Ahhh! 🙂

I didn’t know that, Em. Thanks.

A good thing to remember when dealing with debt collectors is, even if you’ve declared bankruptcy… if you pay so much as a nickel on a debt, it’s reactivated, and you’re back on the hook for the entire thing. 😮

i’ve been harassed, i mean really harassed – almost daily, by a debt collection agency (not the original creditor), and over 10 years after the supposed debt was incurred! one of the callers even told me that no matter what i said, they were going to continue to keep calling me, just because they wanted to!

i finally got them to send me their “supposed bill”, and it turned out that it was totally bogus. yes, i’d once had that credit card, but i had not been living at that address when they claimed i had made the charges. totally bogus. just because i’d had a card when i lived at abc adddress, don’t show me a bill after i’d cancelled the card after i’d moved to xyz address.

i also get phone calls for someone who apparently had my phone number 10 years ago, threatening all kinds of law suits if i don’t contact them immediately to pay “my” debt. but i’m not “sally smith”! the only way i can stop those is to call them back and tell them that they’re calling the wrong number. pita, but at least it stops them from continuing to call me.

Grant, there’s a big difference between debt and bills. Insurance for example is not debt unless one neglects to pay it immediately or finances the purchase. Even if a bill recurs, such as a sewer bill, such future obligations are not debt until past the due date and not paid or financed.

We are also 100% debt free and even credit cards are paid in full each month so they are not debt but rather a convenient payment method (and earn really useful frequent flyer miles, Chris!).

As soon as you used “Feral Gubmint” your entire argument lost all semblance of credibility.


Paying the Original Creditor After Contact by a Debt Collector

Paying a debt collector

So the question is; did they actually sell the debt. You need to find that out and deal with the debt accordingly and pay the entity that is actually owed money.

Paying a debt collector


How do I Pay Off a Debt In Collections?

by Lisa Sefcik paralegal

Know how to bargain when talking to creditors and collections agencies.

Filtering through collection notices and fielding phone calls made from toll-free numbers probably isn't your ideal of newly wedded bliss. Once a debt goes to collections, persistent creditors seem to be everywhere but at your front door. Generally speaking, if you don't pay a debt, it's charged off by the original lender after six months for accounting purposes and either dispatched to the lender's collections department or sold to a third-party collection agency. Paying off a debt in collections gets creditors off your back and makes a more peaceful home.

Prioritize your spending. Before you and your spouse agree to pay off a debt in collections, you should both be sure that you can comfortably afford it without making major sacrifices. The most pressing expenses come first -- paying your rent or mortgage, utility bills, car loan and income taxes get first priority. Don't press yourself or your spouse to pay off an old debt if this means you won't be able to make ends meet.

Have cash on hand. The ability to make a single lump-sum payment is your best bartering tool, as collection agencies want to get you off their books as soon as possible. Additionally, your creditors may be willing to settle for far less than what you owe if you agree to pay a specified amount, rather than if you suggest making small monthly payments.

Negotiate with the collection agency, but keep in mind that there can be consequences to tossing out a low-ball figure. If your creditor agrees to forgive a part of your debt that's $600 or more, you must claim the amount of the forgiven debt as income when you file your taxes at the end of the year. If you can't afford to make a respectable offer, it may be best to hold off on paying the debt until you can.

Get it in writing. Once you and the creditor have concurred on a lump-sum payment, ask the creditor to send you a written agreement before you even think about writing a check. Drive a hard bargain: Ask the creditor or collections agency to report the debt as "paid in full" to the three credit bureaus, rather than an account that's "settled.9quot; This may or may not help your credit score -- but it won't hurt it.

Keep an eye on your credit reports. When it comes to paying off debts that have gone to collections, financial experts agree that it's difficult to know how it will affect your credit scores, as much depends on the age of the old debt and the credit bureau's scoring methods. However, if you and the creditor or collection agency have reached an agreement, and you've made good on your end of the bargain, you'll want to make sure this is reflected in your all your records. By law, you can request a copy of your credit reports from all three major credit bureaus – Experian, TransUnion and Equifax – once a year.


Can you make partial payments to a debt collector and stop a lawsuit?

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Paying a debt collector

Can a collector who bought your account from the creditor be awarded a lawsuit judgment if the debt was included in your bankruptcy?

Can a 400 bill that is unpaid affect your credit report even if you make payment arrangements with the debt collector?

Paying a debt collector

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How to Find Out if a Debt Collector is Licensed to Collect Your Debt

Is that debt collector who has been calling you even allowed to collect a debt?

When you are contacted by a debt collector, one of the first things you need to do is verify that their claim is legitimate and if it is, confirm that the debt collector is actually licensed to collect on that debt in your state.

You must remember that debt collectors are trained to persuade and encourage consumers to pay a certain amount of debt listed on their account, and will do everything legally possible to get you to pay as quickly as possible.

In some cases, collectors go too far and use abusive practices to force you to pay. When this happens, they are violating Federal law and you do have the right to pursue legal action. You can read about your rights under the Fair Debt Collection Practices Act here.

If the debt collector has provided you with proof of your debt and you have a reason to believe that you do owe this debt, you must make sure that the collector is licensed. Use these steps to verify their licensing information:

  • Confirm whether licensing is required in your state. Many states do require that a debt collector is licensed before they can collect any type of debt in your state, but some do not. States that do not require licensing include California, Georgia, Iowa, Kansas, Kentucky, Montana, Oklahoma, Pennsylvania and South Carolina.

If the collector is not licensed in the State you reside in and they are trying to collect on a debt, send them a Debt Validation letter and there’s a good chance they will simply stop contacting you.

If you find out that the collector is unlicensed, you have the right to file a complaint with your State’s Attorney General Office. Just search online for “office of the attorney general” + “your state” to contact the office online.

  • Determine whether they are registered with your state’s Division of Corporations.

This organization maintains a registry of licensed agents on its website.

This will take you to the corporate information of different debt collection companies that are licensed to operate in your state, so you will need ot verify your collector’s address with those listed here.

  • Visit the Better Business Bureau website.

    Find out if the debt collection agency or collector has a profile on the Better Business Bureau.

    Visit http://www.bbb.org/us/Find-Business-Reviews / and track down the collector by name or address.

    Check to see if they are a “BBB Accredited Business”, and if any complaints have been filed under their profile.

  • Determining whether a debt collector is licensed to collect on your debt is essential when you are preparing to respond to letters or phone calls and want to verify whether a debt you once owed, or still owe, is ready to be paid.

    Use the resources above to verify licensing information, then take the necessary steps to communicate with the debt collector and reach an agreement.