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Debt Collection Tactics

Debt collection tactics can confuse and frighten a debtor. You need to develop some effective tactics as well.

The Role of the Debt Collector

Debt collection agencies have very different goals, dependent upon whether they have been assigned your debt or whether they have purchased your debt. If a creditor has assigned the debt to a collector, it means the collector is working for a percentage of whatever he collects from you. If the collector has purchased your debt, however, it means that the creditor has already written off your bad debt, and the collector has purchased it for pennies on the dollar. Whatever he can get over the purchase is profit for him.

What Collectors May and May Not Do

Debt collectors may do the following:

1. call you at work or home
2. send you letters
3. ask you direct questions about your ability to pay and a timeline for that payment
4. tell you that legal action will be taken (only if they intend to do so)
5. tell you that your credit will be ruined if you fail to pay up

Debt collectors may NOT do the following:

1. threaten or demean you by negative name-calling
2. use foul language of any kind
3. threaten to sue if they do not intend to
4. call you at work if your verbally request that they not do so
5. call you at home if you request in writing that they not do so
6. discuss your debt with anyone but you

What You Can Do

You have the right to determine how collectors contact you. If you tell a collector not to call you at work, he/she may not do so. If you send a registered letter telling a collector not to call you at home, he/she may not do so. (Be certain the letter is sent “registered” with “return receipt requested” and keep a copy.) The best advice is not to talk with the collector by telephone but to record any conversation if you do.

You have the right to request debt validation. This means that the collector must send to you copies of the original debt, including the original credit agreement you signed, the agreement between the original creditor and him, and a breakdown of all interest and fees being added to the original debt. Check this validation material very carefully. If it looks as if the collector has purchased the debt, you are in a great position to negotiate. If the original agreement between you and the creditor does not state that you agree to pay that creditor and/or its assigns, you really do not owe the collector anything, because he is not a legal creditor on this debt. If the collector has purchased the debt, remember he has done so for pennies on the dollar, and you will be able to negotiate a much lower settlement. You may get out of the debt for as little as 25% of the original amount. And never indicate to a collector that you can pay by using a tax refund or borrowing from a relative, etc. The collector must believe that you are really in dire straits, or his motivation to negotiate is not as strong.

If the collector agrees on a lower negotiated settlement, remember it must be in writing. Tell the collector that not one penny will be paid without a signed agreement between the two of you.

A Word About Your Credit Rating

Once your debt has been turned over to a collector, either by assignment or sale, your credit rating has already been affected. Paying off 100% of the debt will not change your score in any way. The damage has been done, so your best bet is to get out of the debt for as little as possible.