Monday, June 20, 2011, AM | 1 Comment
What do you do when the collection agency, frequently termed as debt collector, contacts you? Mind you, the contact is definitely not of a social nature. You borrowed, more appropriately rented, money. You did not pay it back and now you are hounded by the collector. To tell you the truth I don’t blame the debt collector. The lender has hired the agency to collect its money from you.
I keep saying this: “It’s the lender’s money, not yours. You rented it, you used it, and now you must pay it back. It’s as simple as that.”
The biggest mistake the consumers make is just totally ignore the debt collector. That is a no-no. You don’t want to avoid them. I know its not a social call but you definitely don’t want to hang up on them.
Here are 9 Tips how to handle debt collectors when they contact you:
You see advertisement, receive email or phone call from a debt-settlement firm. Because you are desperate, you immediately reply positively. You follow its instruction to stop making minimum payments and to let the firm’s representatives handle everything.
Do research on that firm. Talk to people, your friends, family, colleagues. Don’t be ashamed to talk about it. See if the company is legitimate and genuine. Deal with them only when you are sure of their “well-meaning” contact with you.
Instead of dealing with your creditors directly – or through a nonprofit credit counseling service – you would pay your precious money to a settlement firm that gave you bad advice and managed to get you into more hot water.
You would be surprised to know this kind of experience is more the rule than the exception. Consumers commonly make costly mistakes when dealing with debt collectors.
Confront the debt collector head-on
You wish the debt collector would just disappear. Don’t avoid creditor calls when you don’t have enough money to pay. That would be a big mistake on your part. Confront them head-on. When you ignore the calls, the situation gets worse.
Just be honest. A little honesty goes a long way and significantly enhances the chance of a good outcome. Tell them why you cannot pay the rented money back. Tell U-Haul why you cannot return their truck. Honesty is the best policy.
Old debt that you forgot
There is a good chance you borrowed money but then you forgot all about it. Now it may be because you never borrowed it or the statute of limitations has expired on that. How? Beats me. Every state has different statute of limitations. Check with your state.
If the statute of limitations has expired on your loan, you need not pay it back. I don’t understand how that can happen. Why didn’t the lender or the collection agency never bothered to contact you unless the lender no longer exists.
However, if the lender and the debt collector are still in business, one or both can sue you for their rented money. Don’t let the collector intimidate you into making a payment on a debt that is past its expiration date – that can make things worse.
If you agree to make a token payment just to get the collector off your back, that action can extend the statute of limitations, giving them more time to collect from you. Better yet, talk to your lawyer.
The lender was kind enough to bestow upon you late fees and interest charges. Appeal to their kindness. Talk to them if they can forgive that extra money. When you borrowed the money, if you remember you agreed to abide by their conditions. That extra money is a part of those terms and conditions that you had signed on.
If the extra amount has exceeded certain limit imposed by states on the lender, then you are not liable to pay the exceeded money. But be warned that it is the extra money beyond the state limit and not within the state limit.
If the debt seems inflated, you have the right to dispute the amount, which gives you more time to investigate whether you owe as much as the collector says you do. Check with your state attorney general’s office to find out what charges are allowed.
You probably don’t understand the magic of interest, read about the financial fundamentals to understand what part interest can play in your life. Your whole life and your family life is affected by interest. Do read about it. It will do you good in future.
Stop the abusive calls by debt collector
There is no need for abusive calls made to you by the debt collectors. Federal law prohibits debt collectors from calling repeatedly “with the intent to annoy, harass or intimidate” you. Also, the law strictly prohibits that you be called by the debt collector at your place of work.
If the collector is impolite or overly demanding, ask to talk to a supervisor or hang up, pure or simple.
Don’t let them sue you
Suing for any reason is a big hassle. When they call you, don’t hang up on them unless they are abusive in their behavior.
If they sue you and you lose in court, the judge may allow the collector to take a piece of every paycheck – and may hold you accountable for court fees, significantly increasing the amount you owe.
If you keep cooperating and communicating with them, your case might not end up in court. That saves everybody time and money.
Record your conversations with the debt collector
Use anything, a notebook, your Windows notepad. Write down everything with dates and times. Keep a log summarizing the phone calls you have with collectors. This would help you in case you are sued.
Talk to the lender
Talk to them. See if they can forgive the late fees and some interest charges. Most lenders will try to keep you out of bankruptcy courts. The lenders don’t like that. How else can they money if you defaulted and went bankrupt?
Never ever pay off debt with home equity or retirement account
Debt collectors will urge you to sell assets to repay debts. That’s fine if it’s something you don’t need – like a spare tire. The creditors don’t have rights to certain assets, even in bankruptcy.Your 401(k) and IRA accounts are almost always protected from creditors, as is some home equity as well as some equity in the car that gets you to and from work. Besides, no court will ever deny you the basics of life to repay your debt.