Never call a debt collector and arrange to pay them over the phone. To better ingrain this into your head please refer to the visual representation below.
Here is what I did wrong:
I gathered all of my debt collection letters and started calling collection agencies. This was a big mistake. Tip: If possible contact the original creditor. For example, if you have a debt from a Capital One credit card, but are getting letters from a 3rd party collection agency, attempt to contact Capital One first. Negotiating with original creditors is the way to go –in this article I will show you how to negotiate to get charge offs completely removed from your credit report
It is my experience that while many times it may appear as though a debt was sold to a collection agency, the original creditor still owns the account and are simply using the 3rd party collection agency to collect the debt. Therefore you can still cut the 3rd party agency out and contact the original creditor directly. Keep in mind: a debt has only been sold to a collection agency if the debt has a ‘Collection’ status on your credit report.
Always communicate with creditors via certified mail. This means that the creditor is required to sign for the letter before the post office will give it to them. The post office will also send you verification once it is signed for. I recommend paying the extra couple of bucks to get a copy of the signature once they have received it in case you ever have to go to court (many times creditors will claim they never received your letter). You can do this completely online. Download one of my example dispute / negotiation letters, edit it to fit your needs and go to the USPS website and upload the file.
A few things will happen if you contact a debt collector over the phone (particularly a 3rd party collection agency).
- You will be welcomed by the rudest people on the planet. If you do have to speak to one of them, try to remember that most phone debt collectors are under 25 and make $7 an hour –they don’t care about your problems. Some collection agencies hire employees as young as 16 years old.
- Collectors will say almost anything to get you to pay over the phone. Also, when you deal over the phone and they lie, you have very few legal protections. I will speak in another post about The Fair Debt Collection Practices Act and my bad experience attempting to get any protections under this.
- Resist! They will push hard for you to pay right there. They will ask for your bank account information so they can setup automatic deductions. In my case, they threatened a lawsuit if I didn’t pay them right away.
Remember that most of the tactics executed over the phone by collectors are done to scare the shit out of you. Keep in mind that collectors will say such things as, “Do you know what you have done? Do you know what is going to happen to you? Do you even realize how much trouble you are in?” In another words, they will make it sounds as though paying off the debt is the most important thing in your life, and while it may seem as though it is, never fall for this –it’s not the most important thing in your life.
I fell for this. I setup for automatic payments to be deducted from my bank account. I cannot tell you how many problems this caused me. Never give out your bank account information
Take home points:
- Never make a deal over the phone. Request for everything in writing.
- Always communicate with creditors via Certified Mail.
- As difficult as it may be, never buy into their scare tactics.
- Never give out your bank account information.
{ 6 comments… read them below or add one }
I found your blog today through a search. I am going through a credit card collection now. I charged a balance of $5k a couple of months ago and now I’m out of work (along with other financial obstacles). The collection agency for the credit card called today. She asked what my intentions were with the balance. I asked for her last name and she would not give it. Then she became real rude with me and said the account will be charged off. I became real defensive with her but thanks to your information, i will now request they send everything in writing. Luckily I have not made any deals over the phone so I have the leverage, my money. Thank you.
Not that I’m totally impressed, but this is a lot more than I expected when I stumpled upon a link on SU telling that the info here is quite decent. Thanks.
hello,
I have a couple item on my credit report that are scheduled to be removed in the next month. I was told that if you haven’t made contact with the creditor or disputed anything it will be removed. Is that true or what do I need to do?
Hi Ryan,
I settled in 2006 with some creditors and just this year I received two bills from Capital One saying that I owe them money. I checked my credit report and the two accounts were charged off. I settled with Cap One by phone and autorized the settlement payments. I do not have settlement letters but I do have copies of the of the bank transactions and of the e-checks.
What can I do since this transaction occured in 2006 and the CC company never reported the settlement and wants money again?
I am in the process of finalizing settlements on 13 accounts with 6 banks. While not using the phone to do this, in my case doing it by registered mail, as much sense as that makes, would have been a full-time job, taken twice as long, and cost a lot more.
In most cases, by the time I got to the right escalation person, they were actually friendly and helpful. One even told me her husband was going through the same thing, the way she described it, I did not doubt this.
All in all, my average is about 53%. There has been no trouble with wire transfers, and all are following through with letters indicating completion of the settlement.
Since I found this blog through a search on Cap One: they are the holdout, and as I am reading nearly everywhere, they are without a doubt absolutely the most difficult to work with.
Just wondering can you get the state to remove tax leins after you have paid them off.
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