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10 Ways To Get the Upper Hand When Dealing With A Debt Collector (Part 1)

If you’re like most people, being on the opposite end of a collection call can be quite a defeating interaction. Collectors generally seem unforgiving and absolutely unwilling to hold a civil conversation. This all makes it very difficult to make any progress (let alone get the upper hand) during one of these calls. Nonetheless, it’s been my experience that when you equip yourself with the correct tools, controlling the outcome of a collection call can be very easy.

1. Collectors are trained to toy with your emotions for a very specific reason.

Do you ever wonder why collectors act so merciless about your situation and further, why they seem to go out of their way to embarrass and degrade you? The answer is simple, yet often overlooked. Collectors are specifically trained that the fastest way to get a person to pay is to exhibit behavior of such disgust and ruthlessness that the person simply says, “I cannot deal with this human anymore, I will pay them just to go away!”. If you keep this mind, these tactics will become transparent and ineffective.

2. Asking to speak to a manager will get you nowhere.

It’s important to realize that a “manager” at a collection agency (at least the ones that they’ll ever let you speak you), are not really there to make sure their collectors are treating customers fairly. Rather, the managers are there to make sure the collectors are getting you to pay –because, of course, that’s how they get paid. If anything, the manager will treat you even worse. Also, why do you think they are manager? Likely, they are running the show because they are very good at getting you to pay and as we have already discussed, this usually means behaving very erratic. Don’t waste your time with a manager.

3. Never make a deal without getting it in writing.

If you have been a longtime reader of this blog, you have heard this a million times. Yet, when the time comes, still some people tend to get flustered and agree to a payment plan over the phone. What do you think happens when you do this? Most of the time they will clean out your bank account and you will find there is nothing you can do because they will simply say, “Well, you owed the money”. You can’t sue them because you have no proof. Again, any agreements should be made in writing before you give a collector access to your bank account.

4. Debt collectors are more willing to negotiate on older debts

The next time a collector contacts you regarding a 10 year old debt, don’t be afraid to offer them a settlement of pennies on the dollar. Many collection agencies purchase old debts from various companies after the company has written off the debt. Therefore, even if the settlement amount may seem small, keep in mind that as long as the collection agency makes a return on their investment, they will be happy.

5. Collectors do not care about your situation

It’s difficult to make smart money decisions when you are emotionally tied to the situation. Collectors know this when they call you a “deadbeat”. You must detach your emotions from the situation and consider it in the same way collectors do: this is just a business transaction.

Come back soon for Part 2 of this series!

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Posted in Negotiating with Creditors | 3 Comments »

Collector’s That Will Not Remove Late Payments

Reader’s Question

Dear Ryan,
I have a department store credit card I use occasionally. I had signed up for electronic statements which I was receiving with no issues for over a year. In April, I started getting phone calls with no messages for several days – always on my home phone while I was a work. By chance, I did a reverse phone lookup and found out it was Kohl’s collections. I called Kohl’s and found out I was near 90 days past due on a $19.23 balance that was due in February. I had not received ANY communications from Kohl’s for over 3 months.

The last statement was the month prior to this missed statement which was paid in full. They agreed to remove the late fees and finance charges and I paid the balance in full immediately. They also said this wouldn’t show up on my credit report. Well, it’s showing as a 30 days late payment. I called Kohl’s several times, and they say they have reviewed my account and will not re-age it to fix the problem. What else can I do? I’ve had PERFECT credit for 30+ years!!! I’m certainly never receiving electronic statements ever again! Help!

My Response

Hi [name removed],
Unfortunately you have learned the hard way that collectors are filthy liars and should never be trusted. Also, because you do not have this agreement in writing, there is little you can do. You could keep bugging the hell out of them (that is, call them everyday) and you might get them to budge.

Personally, however, I would not bother with this. In the long run, this is a small mistake and will only negatively affect your credit for a couple of years. I understand that it’s annoying to have this little ding on your 30+ years of perfect credit, but unless you’re in the market to purchase a home, I would brush it off and, rather, declare it as a lesson learned –the lesson being: always get agreements between you and collectors in writing before sending them any money.

Hope this helps,
Ryan

Take Home Point

I wrote an article awhile back entitled, “3 Ways to Get a Late Payment Removed From Your Credit Report“. In this article, I stated that a hiccup (i.e., a single late payment on an account with otherwise clean history), will sometimes be simply forgiven if you ask them. However, when you are dealing with a collector, you must keep in mind that any verbal agreements mean nothing because collectors are liars. If you are attempting to negotiate a late payment, make sure that any agreements are issued in writing before you pay them. Many times they will send you a letter stating the agreement and you’ll be golden.

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Posted in Negotiating with Creditors | 1 Comment »

Hospital Bill Payment Plan Sold To Debt Collector

Reader’s Question

Dear Ryan,

I went to the hospital several years, and left with a a large bill that I was unable to pay in full. I set up a payment plan with the hospital to pay the account over time. I’ve paid the agreed $25 payment ever month since that time.

I recently received a letter from a collection agency stating that my payment of $25 was due. I contacted the agency and they told me my bill was sold to the hospital over a year ago. This was the first letter I received, and I have made payment through the hospital’s online bill pay the entire time. I have never missed a payment since setting up the payment plan.

What I don’t understand is how the hospital can sell my bill without my knowledge when I did not break our payment agreement? Also, how is the hospital still able to take payments if they no longer own the bill?

I have no idea how to proceed in this matter. I’m a student and need good credit to get loans for graduate school. Any advice you can give me about how to proceed would be greatly appreciate.

Thanks,
[name removed]

Response

Dear [name removed] -
When you made the arrangements with the hospital did you receive the agreement in writing? If so, you need to contact the hospital’s billing department ASAP and tell them that you have an arrangement to pay $25 per month towards this bill. If you don’t have anything in writing, I’m afraid there is very little you can do except for paying this bill as quickly as possible. Offer to pay the collection agency IN FULL if they state in writing that it will not be put on your credit report. If it’s already on your credit report, offer to pay in full if they remove it. Nonetheless, I would attempt by any means possible to deal directly with the hospital and not the collection agency –as collection agencies are scum.

Best,
Ryan

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Posted in Reader Questions | 2 Comments »

Ripped Off By Debt Collector On A Charge Off

Reader’s Question

Hi Ryan,
I wish I would have found your blog sooner. Last summer I made an arrangement with a debt collector over the phone. This arrangement was for a XXXX-XXXXX account that was in charge off status for the past year or so. The debt collector said that if I paid $867, the account status would be changed on my credit report from ‘charge off’ to ‘paid in full’. Instead after I paid him, my credit report was updated to ‘paid charge off, $1400 written off’. My credit score only went up 4 points. I think you could understand how horrible this felt because I thought I was doing the right thing and I got screwed. My question is, now that I read some of your blog, is there anything I can do?
Thanks,
[name removed]

Response

[name removed],
Unfortunately this happens a lot and there is very little you can do. The problem is that the deal was made over the phone -you can’t prove the scumbag collector made that offer. Trying to communicate with the collection agency now will be useless because they have already been paid. In this case, you can try to dispute the record with the credit reporting agencies and see what comes from it -you never know. Read my post regarding disputing an entry on your credit report. Nonetheless, I recommend that you ‘write it off’ as well and begin rebuilding your credit. Start out by getting a credit card. Check out my recommendations.
Best of luck,
Ryan

Posted in Reader Questions | 3 Comments »

My Third Mistake: I Dealt With Creditors Over The Phone

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:

1. Never make a deal over the phone. Request for everything in writing.
2. Always communicate with creditors via Certified Mail.
3. As difficult as it may be, never buy into their scare tactics.
4. Never give out your bank account information.

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Posted in Mistakes | 4 Comments »