When you’re having financial problems, one of the most dreadful and embarrassing realities is when debt collectors begin calling. The late payment reminders and final notices can come from anywhere – bills, credit cards, medical debt, student loans, car payments… anywhere you owe money.
While they are annoying, debt collectors are just trying to do their jobs and not make your life more difficult (although it may feel that way). However, some of the tactics debt collectors use are aggressive and intimidating. They usually call at the worst times, catching you off guard.
Instead of panicking and screening all your phone calls, learn how to protect your money, your rights, your personal information, and your sanity as soon as you find yourself in a financial mess. If not, you could make mistakes allowing debt collectors to get the better of you.
1. Hang Up the Phone
If a debt collector calls and you are not prepared to talk to them or are too busy, tell them you are busy. If they do not let you off the phone, hang up.
When you aren’t prepared to deal with debt collectors, you endanger your finances. Keeping your future safe matters significantly more than being polite. Trust me, they are persistent people and will call again or send you something in the mail.
2. Say as Little as Possible
Before you say one word to the person on the other end of the phone, pause and take a deep breath. Ask the debt collectors to tell you about the debt and then ask for a validation letter. You should receive it within five days of the phone call.
Never give out any information they can use against you, never acknowledge the debt, and do not make any quick promises to pay. Even if you pay just a little bit, that gives debt collectors the advantage, which can create more problems.
This isn’t something that has to be figured out this very second. You can take your time, gather information, and seek advice from a financial advisor or attorney if needed.
3. Know Where Your Finances Stand
Before you can address how you will handle this debt, you need to know your overall financial situation. Figure out how much money you make, how much your monthly bills are, the balance owing and interest rates on your debts, and how much you can pay toward your debts.
Debt collectors will often be satisfied with some type of monthly payment, but you won’t be able to arrange them if you don’t know what you can afford. Setting up a payment plan that you can’t follow will only result in further debt.
4. Make Sure It’s Not a Scam
Debt collection scams are everywhere. They’ll call, text, and email you—anything to get your money.
If a debt collector contacts you, always be cautious regarding your finances and personal information. The first thing you need to do is ensure it’s legitimate. Some of these scams look real and have enough of your personal information to convince you even further. You really need to be diligent!
Do you actually owe this debt, or is it made up? Is the debt collector sharing their mailing address and phone number with you? Are they pressuring or threatening to have you arrested?
And if they are asking you to send them money electronically or gift cards as payment, it’s a scam!
5. Get the Debt Details
While it is possible that you’re getting collection calls for a legitimate unknown debt, chances are you knew this debt existed. Unfortunately, it didn’t just go away; but that means you should have records.
Don’t assume that the information the debt collector is giving you is correct, especially regarding how much you owe. Go through your paperwork and bank statements, and collect as much information as you can on your debt.
If debt collectors have different amounts than you, contact your credit bureau to report inaccuracies. Errors on your credit report are possible, too, but they can be fixed.
6. Check the Statute of Limitations
Different states have different laws regarding the time limit for collecting debts. The statute of limitations is typically 3-6 years but can be as long as 15 years. If enough time has passed, you don’t have to pay the debt anymore.
7. Understand Your Rights
Before talking to a collection agent, know your rights as a consumer – you have a lot! These include the right to dispute the debt, how the collectors communicate with you, and even the right to get them to cease communication altogether.
You also have a right not to be harassed, threatened, or abused over the phone. If you receive calls that could be considered threatening, harassing, or abusive, report them to the United States Consumer Financial Protection Bureau (CFPB). Debt collectors have rules to follow, which are clearly explained to consumers in the Fair Debt Collection Practices.
8. Ask For Everything In Writing
I get anxious talking on the phone with people I like—I certainly don’t want to talk to a debt collector! Thankfully, you don’t have to. You can request only to be contacted in writing. This gives you time to read everything carefully to make sure you understand it.
You also have time to prepare your response this way and aren’t pressured into making any big decisions or commitments.
9. Use Certified Mail
When dealing with collection agencies, only use certified mail with a return receipt. This way, you will have proof that they received the correspondence and a date stamp, which can be vital information.
Letters get lost in the mail, and it would be a shame if yours did, especially when dealing with something as serious as debt collection.
You can also use certified mail to send cease-and-desist letters if the calls become too bothersome. Debt collectors will also use certified mail to contact you if they are beginning court proceedings.
10. Be Secretive
Scammers can easily pose as debt collectors, especially over the phone. Never give debt collectors your personal information, including your Social Security or bank account numbers. If you need to share those numbers, only do so after the debt collector has sent you something in writing and you’ve verified that this a valid debt that they can collect on.
You should also never give out any information about where you work, how much you make, and other bills you might have. Debt collectors not only want to collect money, but they also want to collect information that will make it easier for them to get money through lawsuits.
For that same reason, do not make any payments with a personal check to protect your bank account numbers. Instead, use money orders or certified checks from a different bank. Doing so makes it more difficult for debt collectors to figure out where you bank.
11. Record Conversations
If you are worried about harassment or threats from debt collectors, record all your phone conversations with them—but only if it’s legal. Some states have outlawed recording phone conversations, so be sure you have a right to do it.
Or, you could just tell the debt collector you are recording them. They won’t know if you really are or if you are bluffing. Doing so can keep debt collectors from being abusive over the phone.
12. Keep Detailed Records
Debt collection is a legal process. Having detailed records of the collection process can protect you.
While you are on the phone with the debt collector, write down the time and date of the call. If you can get the caller’s name and the creditor, record that, too. You should also note what the conversation was about and what the agreed next steps will be.
Make sure to keep copies of everything you send to your debt collector, just in case there are any questions or discrepancies in the future.
13. Talk to a Professional
Debts and the laws surrounding them are not the simplest things to understand. Getting some professional advice from a financial advisor or a legal expert can help you understand your obligations, your rights, and your options regarding the debt in question.
14. Negotiate
Once you have determined that yes, you do have this debt to pay back, don’t just accept what the collector suggests. Instead, negotiate a repayment plan that works for you. Debt collectors will accommodate reasonable requests, as it’s better to reach an agreement than not get paid at all or have to go to court.
15. Apply for a Consolidation Loan
Look into a debt consolidation loan where you can consolidate several payments into one affordable payment. These loans often have low-interest rates, which can help you pay off your debts quicker and prevent debt collectors from calling.
You must meet certain standards to qualify, such as having good credit. Therefore, you should apply as soon as trouble begins before your credit report starts to nosedive.
16. Dispute Your Debt
Yes, you can dispute a debt if it’s not yours, incorrect, or past the statute of limitations. A challenge to the debt within the first 30 days after the initial phone call will temporarily stop collectors from calling. They can only resume contact after investigating and verifying your debt in writing.
However, the debt collector can still call you if you do not challenge the debt within that window.
17. Protect Your Money
After some time, debt collectors can move to legal action. Once they file suits with courts, you could have your bank accounts frozen or have payments automatically deducted from your accounts.
Some people will take their money out of their bank accounts as soon as debt collectors begin to call. If you don’t have money in your accounts, there isn’t anything that debt collectors can take. However, if you have direct deposit, consider canceling that and finding an alternative for cashing your paychecks. Look into having separate bank accounts to hold your exempt income, like Social Security or disability payments, securely.
If you have filed for bankruptcy, let debt collectors know they will not be able to access your money.
18. Consider Your Credit Score
You won’t go to prison for having unpaid debt, but you could have difficulty buying a new car or getting credit to buy a home.
The magic number for credit reporting is seven years. But, if you have an unpaid tax lien, it could remain on your credit report indefinitely. If you file for bankruptcy, that financial event can stay on your credit report for up to 10 years, depending on your state.
Coming to an agreement and paying off the debt will help your credit score over time.
19. Stay Vigilant
Even after the debt is resolved, you need to stay on top of your financial situation. Doing so can prevent future issues from arising, such as facing collections again or having this debt resurface when it shouldn’t still be lingering.
20. Do Nothing (Carefully)
If you don’t mind getting calls, you can simply wait until the debt drops off. As mentioned, there are statutes of limitations on debt collection, so creditors and debt collectors will stop calling after a while. It can take several years for this to happen, though.
However, if the debt is excessive or you have put up collateral, you will likely have to make some payments or eventually face court action. So, if you decide to go this route, make sure you understand the potential consequences. They could be quite serious.
Get Rid of Debt Collectors for Good with These Simple Steps
Dealing with debt collectors can be stressful. Before speaking with them, verify that the debt is legitimate and understand your rights. Doing so will help you confidently work towards resolving the debt with as little stress as possible.
Don’t let debt collectors intimidate you. Arm yourself with knowledge and take control of the situation and your financial future.
Are You in a Financial Mess?
If you think you are the only one struggling financially, you are wrong. Millions of people struggle with their finances every day. Yes, it’s stressful and makes you anxious all the time, but you have to take control of it because no one will do it for you. Here are some tips and tricks that can help you get out of your financial mess.
Expert Tips to Get Out Of Debt
Dealing with debt can feel like a hopeless situation. You try your best to make payments, but interest charges eat up all your progress. The next month, you’re back to square one.
Does this sound familiar? Don’t worry: You don’t have to be stuck with debt forever. We consulted several experts and obtained their best tips for getting out of debt. Here’s what they had to say.
Amanda Kay, the founder of My Life, I Guess, provides valuable career advice and support for anyone striving to make a living and, more importantly, make a life. Whether it's navigating job searches, learning new skills, overcoming unemployment, or dealing with debt, My Life, I Guess has been a go-to resource for career guidance and financial stability since 2013. Amanda's expertise and relatable approach have been featured in trusted publications such as MSN, Credit.com, Yahoo! Finance, the Ladders and Fairygodboss.