Thursday, October 1st, 2009
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!
(1 votes, average: 5.00 out of 5)
Posted in Negotiating with Creditors | 3 Comments »
Tuesday, May 19th, 2009
Reader’s Question
Ryan,
I have 120 days past due with my GEMB/LOWES Card so they sold it to another lender who I am paying through a debt counseling co. GEMB/LOWES is reporting my PAY STATUS as 120 days past due although I have not missed a payment with the lender who bought my debt. Can I get this statement removed to read PAID AS AGREED?
Thanks!
[name removed]
My Response
Dear [name removed],
It sounds like you’re using a debt settlement company to pay off your debts. The problem with debt settlement companies is while they will settle your debts (eventually), your credit gets destroyed in the process.
The way it usually works is that you basically setup a savings account with the debt settlement company and pay them an amount you can afford on a monthly basis. Once you have enough money in that savings account to settle debt, they will attempt to negotiate with the collector on your behalf for settlement. The problem is that the debt settlement company requires that you stop paying the debt to the creditor while you are paying them. This is what destroys your credit. I’m afraid that unless you take matters into your own hands and stop paying this company, your credit will only continue to get worse. Trust me, [name removed], you can do this on your own if you follow the steps outlined in my blog.
Best,
Ryan
Take Home Point
Many people arrange for their debts to be handled by a debt settlement company falsely thinking that all of their credit problems are going to be fixed overnight and all they have to do is give the debt settlement company a small percentage of the amount successfully settled. The fact of the matter is that going this route is not easy –in fact, its painful because when you stop paying your debts directly to the creditors, the late payment entries pile up. Remember, the business model of debt settlement works by telling their customers to stop paying their debts and start saving money in a savings account with them. While this is good if you absolutely cannot afford your debt payments (the debt settlement companies will adjust your savings amount according to your affordability), they will not pay ANYTHING to the creditors until they think they can settle the debt.
(2 votes, average: 5.00 out of 5)
Posted in Debt Settlement Companies | 4 Comments »
Wednesday, January 28th, 2009
Reader’s Question
Hi Ryan,
I just got married last month and we still living at my mom’s. We tried to buy a house but my wife’s credit is so screwed that the interest rates were astronomical. We’ve been looking for a good credit repair company but all seem to be rip-offs or have poor results. The reason I write you is to see if you know the people at [website removed]. Sounds good to me but before expending that kind of money I’d like to have some more info, referrals.. something If they keep up their promises it might be a good deal.
Thank you for you input.
Response
Hi [name removed] -
Thanks for contacting me. I do not recommend anyone use debt settlement companies or so-called, “credit repair” companies. I will tell you right now: most of them will rip you off and you will end up in a bigger mess than before. The thing to remember is that these companies do not possess the ability to magically “fix” your credit. That is, everything that they can do, you can do just as easy –for free! I recommend that you fix your credit report on your own by tackling one thing at a time. It takes time, but I assure you that using one of these rip-off companies will not speed up the process. Use the internet and my blog as a resource to further your credit knowledge and I am certain you can do this on your own. You won’t regret it. Also, start by reading the “My Mistakes” series on my blog –that is a good place to start.
Best,
Ryan
(1 votes, average: 5.00 out of 5)
Posted in Reader Questions | 7 Comments »
Sunday, November 23rd, 2008
Reader’s Question
Do you have any advice on debt settlement companies? I am involved with one now and I am not sure I made the right decision.
Thanks
Response
Hi there -
I personally do not like debt settlement companies and wouldn’t advise anyone to use one. The true benefit from getting out of debt is the joy and pride that is gained from knowing you did it yourself –not to mention a sincere and recognized change in your future behavior. That is, once you have gone through the hell that is required to get out of debt, you will never want to do it again. Besides, more than likely you will end up paying much more using a debt settlement company.
Best,
Ryan
Posted in Reader Questions | 1 Comment »
