The only thing that feels worse than being deep in debt is getting calls from debt collectors. Whether it is past due loan payments, mounting credit card debt or unpaid medical bills, consumers behind on payments will eventually find themselves on the receiving end of a call from a collector.
When you’re in debt and getting these sometimes daily calls from collection agencies, what’s the best way to handle it? Here are ten tips for managing debt problems the right way.
1. Face the problem. You may have ignored the bills, thinking you were helpless to do anything. In the end, that never works. Accept the fact that you’re behind on bills and you’ll have taken the first step toward fixing things.
2. Know what you owe. Find those bills you’ve been ignoring and read them. Understand the balances, fees and penalties. There is no reason at all for the debt collector to know more than you do.
3. Understand your rights. The Fair Credit Collection Practices Act governs, among other things, the methods and techniques debt collectors are and are not allowed to employ. You need to be able to recognize when collector is overstepping their bounds.
4. Contact the FTC and state’s attorney general. This is the continuation of number three. If a debt collector crosses the line with harassing calls, threats and abusive or insulting language, you need to report this abusive behavior right away to the proper authorities.
5. Keep records. Write down times, dates and content of all debt calls. Unless you’re in a state that forbids it by law, record the conversations as well. This will be helpful if you need to take legal recourse against the collector.
6. Don’t engage. Get it in writing. By law, debt collectors must supply written notice of the amount you owe, to whom and the actions you can take to resolve the issue. Cut the debt collector off right away, ask them to send this information and tell them you will not speak with them until you have received it.
7. If you’re being sued, get a lawyer. Some debt collectors choose to file suit. If this happens, find a consumer lawyer right away. A lawyer will know all the ins and outs of fighting collectors and can keep your wages from being garnished or your bank accounts from being raided. Debt collectors fear lawyers and will be more apt to back off.
8. If you don’t believe you owe, dispute it in writing. Send certified mail to the debt collection agency and the creditor disputing the claim. From there, you can cut out the collector entirely and work with the creditor.
9. If you do owe, negotiate. Debt collection agencies understand it’s a tough fight and they will take what they can get. Start with a very low percentage of what you owe and understand that most debt collectors will settle for around half the full amount, resulting in a substantial savings for you.
10. Get it all in writing. If you negotiate a settlement with the debt collector, get the details of the settlement in writing before you pay them anything.