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How To Deal with Debt Collectors When You Can’t Pay

If you are like most people, you have dealt with or are currently dealing with debt collectors. I’ve been preaching about the dangers of debt collectors for years and get countless emails from readers who end up in trouble by answering the phone when a debt collector calls. So, how should you deal with debt collectors? Here are some specific things you should keep in mind if you end up on the phone with a debt collector.

How To Deal With Debt Collectors In 5 Steps

Remember, debt collectors, care about one thing – getting you to pay them so they can earn a commission check. Nonetheless, it’s been my experience that when you equip yourself with the correct tools, dealing with debt collectors can be very easy. Here are 5 ways to deal with debt collectors, even when you can’t pay:

Tell Them You Know Your Rights Under Federal Law

Regardless of what a debt collector might tell you, you have a lot of rights when it comes to how debt can be collected. In fact, merely mentioning that you understand your rights will, many times, stop debt collectors in their tracks. Your rights come from the Fair Debt Collection Practices Act (FDCPA). This act lays out the rules debt collectors must follow when they attempt to collect a debt from you. Unfortunately, because so many people are unaware of their rights, collectors many times ignore these rules. They certainly won’t inform you of your rights.

Therefore, you’re in a good position when you tell the debt collector you are aware of The FDCPA and that any violation will be documented and forwarded to the Federal Trade Commission (FTC) as well as the Consumer Financial Protection Bureau (CFPB) and your State Attorney General’s office.

If this sounds overwhelming, you can reach out to a credit expert.
The team at is very professional and they do this all the time.
It costs some money but is less expensive than you might think
considering you are getting your own professional to fight on your behalf.

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Don’t Allow Them To Provoke You

Debt collectors often don’t need to resort to tactics that break the law. They play with your emotions, tapping into your existing fears and stigmas about debt collection. Agents can simply imply threats, and that’s often enough to prompt payment, such as threatening to call your employer and set up wage garnishment arrangements. But, under federal law, a legitimate debt collector must first successfully sue you in civil court to be able to garnish your wages. This is why it’s so important to know your rights.

Most commonly, a debt collector will try to make you feel guilty, implying you’re stealing or not doing your part as a responsible citizen by not being able to pay your medical bills or credit card debt. Don’t fall for this nonsense. It’s all an act.

When this doesn’t work, an agent may switch strategies and try to make you so angry you’d rather just pay up than continue dealing with the agency. So, just stay calm and cool. You can be professional even if the agent on the phone seems to be running a scam.

Knowing how to spot a scam debt collector can help keep you safe. The FTC covers this on their website.

Some of the warning signs include:

  • They want you to repay a debt you don’t recognize
  • They refuse to give you their mailing address or phone number
  • They try to scare you into paying by threatening to report you to law enforcement or have you arrested


Request Debt Validation

There are several things you should be looking at before agreeing to make any payment. Regardless of whether you receive a debt collection notice via a letter or a phone call, you need to make sure the debt and its full amount are accurate. So before you do anything else, send the collector a debt validation letter.

This letter is allowed by the Fair Debt Collection Practices Act. In the letter you request the collector prove you owe the money. You have to send the letter within 30 days of your first contact with the collector. If the creditor can’t prove you owe the money by providing accurate information, including account numbers, you have a strong case for getting it off your credit report and your credit score could improve significantly. Not everything that you see on your credit report is guaranteed to be correct. In fact, a 2013 FTC Study found that “Five Percent of Consumers Had Errors on Their Credit Reports That Could Result in Less Favorable Terms for Loans”, so making sure that your debt is validated is a good step to take.

Another thing to look for: outlandish late fees or additional interest added to the original debt amount from the original lender or credit card issuer. Remember that in most cases you can negotiate to significantly reduce, or even eliminate these fees.

Try 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 debt settlement of pennies on the dollar. For example, if you owe $1000, try offering a $250 payment to settle. 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. This normally requires a lump sum but an agency may agree to a payment plan.

If the debt is still on your report, you should ask the creditor to remove the negative item from your credit report in exchange for your payment.

All Agreements Should Be Made In Writing

Debt collectors are notorious for making false promises, reneging on agreements, and even clearing out people’s bank accounts which can ruin your personal finances. All of these things can happen when you make verbal-only agreements with debt collectors over the phone. Protect yourself by never making agreements with debt collectors over the phone. Simply tell them to send you everything in writing or via email and then hang up. Unless you have agreements in writing you can’t prove you ever had an agreement, to begin with.

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3 Things You Should NEVER Say To A Debt Collector

In your process of dealing with debt collectors, it’s also very important to keep a note of what you should not share with them. Here are 3 things you should never reveal to a debt collector:

1. Never Give Them Your Personal Information

A call from a debt collection agency will include a series of questions.

The agent will ask for personal information to confirm your identity and your ownership of the debt.

You don’t have to answer these questions. Instead, ask the agent to communicate with you only in writing.

Here are a few more personal things you shouldn’t provide to debt collectors:

  • Additional Phone Numbers (other than what they already have)
  • Email Addresses
  • Mailing Address (unless you intend on coming to a payment agreement)
  • Employer or Past Employers
  • Family Information (ex. spouse’s employer or phone number)
  • Bank Account Information
  • Credit Card Number
  • Social Security Number

2. Never Admit That The Debt Is Yours

Even if the debt is yours, don’t admit that to the debt collector.

There is no reason to do this, and it could get you in trouble later on if you try to dispute the debt on your credit report as inaccurate.

Many times old debts have fraudulent interest charges that you aren’t obliged to pay, but debt collectors will attempt to collect anyway.

Again, it’s best to tell the collection agent to send you the information in writing and then hang up. You have the right to do this, and we’ll talk about that in a minute.

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3. Never Provide Bank Account Information

A debt collector will try to convince you to make a payment, even a small payment, while you’re on the phone. The agent will need your bank account or credit card number to make the transaction. It might seem like a quick and easy way to end the conversation and get off the phone. But this can cause a few big problems:

  • You Lose Leverage: Your payment is your leverage for dealing with debt collectors later. So don’t make a payment prematurely and give away your best bargaining chip. Save it for later when you can get something in return such as asking the creditor to remove negative items from your credit report in exchange for a payment.
  • You Share Account Details: The agent may say he or she will not store your bank account or credit card number. But you have no way of knowing whether this is true. Debt collectors have also charged more than you agreed to pay.
  • You Reset the Statute of Limitations: By making a payment you reset the statute of limitations on the debt. This gives the creditor more time to sue you for losses later.

If you want to pay off the debt or enter a payment plan, that’s OK, especially if payment is part of your broader debt management plan. But get an agreement in writing first.

What Debt Collectors can’t do

We’ve covered some of the tactics that debt collectors might use to pressure you in to paying debt. It’s important to know how to handle these pressure tactics but it’s also important to understand that a lot of these are actually prohibited under the FDCPA. You can feel secure about pushing back because as the FTC states:

  • “Debt collectors may contact you only between 8 a.m. and 9 p.m.”
  • “Debt collectors may not contact you at work if they know your employer disapproves.”
  • “Debt collectors may not harass, oppress, or abuse you.”
  • “Debt collectors may not lie when collecting debts, such as falsely implying that you have committed a crime.”
  • “Debt collectors must identify themselves to you on the phone.”
  • “Debt collectors must stop contacting you if you ask them to do so in writing.”

Knowing this might provide some peace of mind while navigating such an unpleasant and stressful situation. The Fair Debt Collection Practices Act can protect you, so it pays to know your rights. It’s thanks to pieces of legislation such as the FDCPA that abusive debt collection agencies such as The Regional Adjustment Bureau have had to face the legal consequences of their federal law violations.

When Dealing with Debt Collectors, Your Basic Needs Come First

As a general rule, you should never pay a debt collector if it puts your ability to pay for necessities in jeopardy. Always make sure your rent/mortgage, groceries, utilities, and other necessities are paid before you pay off an old debt.

It’s simply not as important, regardless of what a debt collector might have you believe.


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