How to deal with debt collectors in 5 steps

Here is an actionable plan on dealing with debt collectors without panicking

debt collector

How to deal with debt collectors in 5 steps. Source: pexels.com

If you have past-due debts, you may be legally contacted by a representative of a collection agency or an independent debt collector. Most people get scared or annoyed by the often-aggressive methods used to recover the amount they owe.

Moreover, they often don’t know their customer rights and may be easily misled by unfair collection practices. It’s especially true for vulnerable citizens (low income households, unemployed, ill, socially marginalised, etc.) who get victimised by debt collectors most often.

1. Decide if you want to personally talk to them, or redirect them to your lawyer (if you have one). You also have a right to address the collector in a written form and ask to conduct all the communication this way. If you interact with a collection agent by phone, record your conversations. In case of illegal collection tactics applied, you’ll be able to prove that before governmental agencies. In many cases, debt collectors approach the debtor’s family members, employers, colleagues and friends. You can request the agency stop contacting you if the debt is not yours.

2. If you are affected by any illegal collection practices, you can lodge a complaint with your state attorney general and the FTC in the US. In other countries, there are different agencies responsible for fair debt collection policies. If you’re not sure whom to address in such cases, seek legal advice. Many American citizens can also file lawsuits to collect up to $1,000 from debt collectors that cross the line under the federal Fair Debt Collection Practices Act. If you are threatened by violence and abuse, you may contact local police.

3. If you wish the collection agency to stop calling you, calmly negotiate a debt repayment plan. To begin with, you should come up with one which is not that easy. Consider all your income sources and liabilities. Think about the items you can sell or rent, additional ways to earn money, possible cuts on your daily expenses, etc. Consider the term you need to repay the amount owed. If you can’t figure out all those aspects yourself, you’d better seek financial advice. Some services of this kind are available for free.

4. Address the collectors with the plan you have drafted. Describe your financial difficulties and the reasons you are not currently able to repay your delinquent debts. You may need to support some of your statements with solid proof (documents, certificates, etc). Outline what you intend to do to recover the borrowed funds. Propose a workable payment schedule.

5. If you cannot pay the debt in full, try to find out a collection agency’s “bottom line” amount. In many cases, offering to pay back an amount equal to 60% to 70% of the balance owed may be reasonable. Settling a debt in this negotiable manner can help avoid legal action by a debt collector.

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