The phone rings. Your body freezes with dread. You know this phone number as one of your many debt collectors. Do you answer it? Ignore it? Put your phone on silent? Debt collection can be an intimidating process. Your phone rings all hours of the day, and you start to become stressed out from the constant badgering. Here are some tips on what you should do when that phone starts ringing.
1. Don’t Ignore It
While this can seem like the best option at the time, all you’re doing is delaying the inevitable. Your debts don’t simply disappear when you ignore them, and in fact, can incur late fees and other extra dollar amounts when not addressed.
Ignoring those phone calls is probably the best way to slide further into debt. Not to mention, they can negatively impact your credit score, which you need to finance pretty much anything. Letting this slip is not a good idea if you’re trying to manage debt successfully.
Answer the phone when the debt collectors call. Write down any pertinent information to the debt; how much you owe, when you need to pay it, and where the debt comes from (if you’re being called by collections on behalf of someone else).
You’ll find that debt collectors aren’t the vicious sharks they’re made out to be. They’re simply attempting to collect money that you owe and should pay as soon as possible to avoid negative credit marks and keep yourself above water.
2. Try To Negotiate A Smaller Payment
Often creditors are more willing to work with you than you may think. A total loss is never preferable for them, and even sending you to collections or small claims court isn’t a guarantee that they’ll receive any of the money you owe.
You can attempt to negotiate a smaller payment with your debtor. They may accept your negotiation, thus making your debt easier to pay off. They’ll also leave you alone after a settlement is reached, provided you make the newly negotiated payments on time.
3. Be Courteous
We understand that being delinquent on a debt, and having someone constantly calling you to collect on it can be frustrating. And while it’s alright to be frustrated, it’s never okay to take this frustration out on the caller.
The person on the other end of the line likely has no idea what your relationship is with the debtor, and is simply doing their job by calling you and letting you know the details of your debt. The old saying “don’t shoot the messenger” applies here.
Keeping your cool not only helps you seem more professional, but it can also make negotiations go much smoother. Think of how hard it is to work things out with someone who’s incredibly angry. You’re unlikely to get much done that way.
If you truly want to get out of debt, your first roadblock is the debtors calling during the day. Successfully navigating these debts can boost your confidence and put you on the right track to financial freedom.
4. Don’t Make Any Payments Until You Know The Debt Is Valid
This may seem strange at first, after all, if the collector is calling you, they must have the correct information, right? That’s not always the case, unfortunately. There are mistakes made in the financial world every day, and the debt may not even belong to you.
It’s always a good idea to validate any debt before you begin to make payments on it. Do some research. Find the date the debt was owed, when it was sent to collections (if at all), who it was from and for what, and the exact amount that’s owed.
Also, be sure that the debtor is calling for the right person. You can give them things like your current address, phone number, and name, but never share any personal financial information like your bank account number.
Validating your debt will ensure you don’t accidentally pay for someone else’s mistake or fall victim to predatory collections or scams.
5. Make A Plan
So you’ve kept your cool, successfully navigated the phone call, validated the debt, and negotiated a dollar amount. Now, you need to make a plan to pay back your debt in full and on time.
This may involve tweaking your monthly budget to meet the new demands of your payment plans. You may have to sacrifice certain luxuries for a period of time while you pay back the debt, or pick up extra hours at work to cover the cost.
This can seem daunting at first, but you’ll find that once you’ve paid off your debt, the sense of freedom and fulfillment you have from not owing anyone money will be well worth the sacrifice.
Create a plan for what you can pay and when. Try to pay more than minimum payments and make sure that you’re saving enough each month to put towards the debt. Sooner or later, you’ll be done paying on it and ready to move on with your financial future.
6. Get An Attorney
If you’re having trouble navigating the phone calls or negotiating a settlement, or if your debtor is being unusually aggressive, you may need to hire an attorney to handle negotiations for you. Debtors are not allowed to use aggressive or harassing language, but that doesn’t necessarily mean that they won’t.
Hiring an attorney is a great way to negotiate a smaller amount as well. As we mentioned, most debtors will prefer a smaller amount to a total loss. If you’re having trouble navigating your debts, try hiring a debt attorney.
7. Watch For Red Flags
The Federal Trade Commission has guidelines on how debts are to be collected and how the debtor should go about collecting these debts. They are very specific and stringent in their guidelines, and any debtor that violates these standards should be held accountable.
Some things to watch out for are unusual payment methods requested (such as Paypal or other wire transfer service), they won’t give you details about the debt, or they demand payment in full in an unreasonably short amount of time.
You can visit the Federal Trade Commission’s website for the full guidelines and what to look for when talking with a debt collector.