How To Effectively Deal With Debt Collectors

How To Effectively Deal With Debt Collectors

How To Effectively Deal With Debt Collectors

“Tis against some mens principle to pay interest, and seems against others interest to pay the principle.”
-Benjamin Franklin

Read Time: 3 Mins

If you are like most Americans you likely have some sort of debt. You may even be behind on payments and be getting calls from debt collector agencies.

Not going to lie, when you get your first call from a debt collector, it can be a little intimidating. You’re probably asking yourself “how do I deal with debt collectors?”

That’s a good question and today’s post we are going to talk about the steps you can take to be more informed on this process.

First, if you get a call from a debt collector, you should verify whether or not the debt belongs to you.

But, before we discuss how you can verify the debt and deal with debt collectors, it’s better to clarify who is a debt collector and why are they calling you?

Read more: How We Paid off $50,000 of Debt in 11 Months

What is a debt collector?

If you’re not making regular payments on your debt, the creditor can and often will send the account to a third party debt collection agency to collect the unpaid expense on their behalf. Your creditor can also sell the debt to a third party debt collection agency.

At that point, the debt collection agency will be the one who calls you to collect the unpaid debt.

So, what do you do when you get that first call from a debt collector?

First of all, know that you’re not alone and you can take steps to take care of it.

According to a 2014 report by the Urban Institute, about 35% people (about 77 million people) in our nation have at least one record of a debt collector account on their credit report. 

Like I mentioned earlier before you pay anything to the debt collector the first step is to verify that the debt is actually yours.

How can you do that? Simply ask to validate the debt with the collector.

After receiving the call, send a letter to the collection agency asking to validate the debt – give a proof that the debt is yours.

Under the FDCPA (Fair Debt Collection Practices Act) a collection agency is supposed to send you a letter verifying the debt amount and its validity.

So, step one, verify your debt with a valid letter from the debt agency.

You will have 30 days to dispute it if the debt isn’t yours. If you don’t do that, the debt collector will assume it to be a valid debt.

You can also ask for the name and address of the original creditor within 30 days of receiving the first collection letter.

You can also pull credit reports to check your record.

Request a credit report from Credit Karma. Credi Karma is 100% free and one of the best free tools to get your credit report and manage your score.

Check whether or not the debt is listed on your report by mistake or if it’s valid.

If it is invalid, then dispute it with the credit bureaus and notify the collection agency by sending a certified mail within 30 days of receiving the notice.

Do not negotiate or make any payment before you’re satisfied that the debt belongs to you.

If the debt does belong to you, here are four steps to deal with a debt collector successfully.

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1. Check out the SOL period

Check out the SOL (Statute of Limitations) period on the debt. Never make a payment, even $5 or $10, before you’re sure that the SOL is not over yet.

If you make any payment, the SOL period will start all over again, which may lead to a lawsuit and wage garnishment.

2. Don’t succumb to the scare tactics your debt collector

A debt collector may try different tactics, like telling you your credit will be tarnished forever in order to collect the debt from you.

Under FDCPA, they can’t do certain things; so, know your rights to fight back.
Let them know what they can’t do. They can’t:

  • Claim to be an attorney or a credit bureau representative
  • Harass you with repetitive calls
  • Call you after 9 pm or before 8 am
  • Talk to a third party about your debt
  • Call you at work if you’ve asked them not to do that
  • Threaten to sue you or seize property, unless they intend to do that

3. Negotiate with your debt collector

A debt collector will force you to pay the entire amount. However, if you can’t pay the entire outstanding balance, you have a right to negotiate a reduced payoff amount.

In order to do this, try offering to pay half of the original debt balance at first.

They will likely negotiate with you and try to get you to pay 75% of the debt. Work your way to a figure that you feel comfortable with and don’t be afraid to hang up the phone and try again in a week or two. Sometimes time can be your best-negotiating tactic.

Once you agree on a settled amount, get confirmation in writing. This will help you avoid any miscommunication in the future in case they try not to hold up their end of the deal.

4. Keep all records from your debt collectors

While dealing with debt collectors, make sure you keep a record of every phone call, message, and letters they send you.

Keep a note of phone conversations or with the collector’s permission, record the calls.

Note down the date and the time of the calls along with the name of the collection agency, the person you talked to and the summary of the conversation.

Maintain a record of all the written communication so that you can produce it in the future if required.

In the end, the best way to avoid having to talk to debt collectors is to not take on any more debt. If you have debt, make your payments on time.

Most importantly, if you have debt collectors calling you, ask yourself some questions before paying off your debt. Try to negotiate the terms. It will give you a clear picture and help you make a proper plan; and in turn, it will keep you on the right track when it comes to dealing with debt collectors effectively.

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P.S. If you want more inspiration to negotiate your medical bills take a look at this video below.

Author Bio: Phil Bradford has immense knowledge on how to tackle personal finance issues. He is a regular contributor to and an active participator to the forum. He loves to help people solve their financial issues. Besides analyzing and writing personal finance articles, he loves to cook and travel to places.

About the Author Zack

Hi, I'm Zack. I write for FreeUp. I enjoy writing about investing, personal development, and general life hacks to improve your life. When I'm not working on the blog or running my own business, i'm probably reading something on global affairs, riding my motorcycle or struggling through a trail run in the mountains somewhere.

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  • Thanks for sharing! Luckily I’ve never had to deal with a debt collector. And hopefully never will. It’s just one of those things for me personally. Just very debt averse. Other than the typical leverage one takes advantage of, with his/her mortgage; that’s about it for us. Money’s a horrible master!

    • Zack says:

      Yes so true! We are the same way. We hate debt. I’ve negotiated some debts in the past with some of these strategies though and they work! Thanks for stopping by!

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