Handling Calls From Collectors

True story, happened this week.

A woman applies for a home loan to buy a house. Her credit isn’t perfect, which is all right. Collections that add up to less than $2,000 can be ignored by the mortgage lender. Medical collections can be ignored. If the credit score and income qualifies, all is well.

The loan officer calls the woman back to discuss her loan application. “Hello, Mrs. (Name)?”

“Hello, hello, hello?” the woman replies, then she launches into the most foul language imaginable and hangs up. Apparently, she assumed the nice loan officer was one of her collectors calling for money.

Guess who’s not getting a Letter of Approval for a Home loan?

Even if you aren’t applying for a mortgage and you are correct in assuming the caller is a collector, you must never, ever use rude or foul language. Doing so only shoots yourself in the pocketbook.

How to Handle Collector Calls If You Don’t Owe Money

If the collector is wrong or if the account is past the Statute of Limitations for collecting money in your state, then say this:

“I am going to record this phone call. I want it on record that the reason I don’t owe money on this account is because…” Explain your reason and end the conversation by saying, “Please correct the account with the credit bureaus to show this is paid-as-agreed. I will be sending a letter to the bureaus as well.”

If you need to look up the Statute of Limitations for your state, see here.

How to Handle Collector Calls If You DO Owe Money

“Thank you for calling me to discuss this account.” (That will put them off guard! No one ever thanks them.) “My credit is important to me, but I don’t have funds to pay the entire balance. Since your company purchased the debt for pennies on the dollar, let’s discuss a settlement arrangement that would work.”

Be prepared to tell them how much you can pay.
Do NOT tell them what your income is!
Do NOT tell them where you work — or even say you are employed!
Do NOT tell them where you bank!
Do NOT agree to automatic payments or auto-debit!

If they ask any of those questions, reply with, “I am not divulging that information. Let’s discuss the settlement.”

You must never give them information they could use to garnish your wages, recalculate how much they think you should be able to afford, or get their long fingers into your bank account!!!

Keep the conversation professional. Record it if possible. Get your settlement agreed upon, and then get it in writing.

You must get your settlement agreement in writing. You cannot trust a verbal agreement.

Don’t Tell Them to Cease and Desist Contacting You

If you truly owe money, don’t tell them to stop contacting you. Why? Because if you cut off all communication, their next move might be to file lawsuit.

Better to work out an agreement than to get slapped with a lawsuit!

What If You Can’t Pay?

If you can’t afford to pay even $5 per month, then tell them why. “I’m sorry, but at this time, I am unemployed and have no money to live on. I am literally going to the food bank to feed my family. As soon as I am back to work, I will set up a pay plan.”

Always be professional and polite. Maintain your personal dignity. Be smart. Swearing and foul language only reflects poorly on yourself and sets you up for the collector to take negative action against you.

9 thoughts on “Handling Calls From Collectors

  1. Hi Carolyn. I have a question. My husband and I both are retired and both 66 years old. We are interested in purchasing a home. We don’t have money for a down payment and was told by a loan officer that we make too much money for down payment assistance. Our credit is fair. Do you have any suggestions?

    Sent from my iPhone

    >

    • I assume your loan officer would have told you if you could get a USDA zero down loan or a zero down Veterans Loan. So then you will need to save money for a down payment. 3% of the purchase price for a conventional loan, and 3.5% for an FHA loan. I know it takes some time and sacrifice to save for a down payment; but if you can do so, then the reward of homeownership is worth it.

  2. I agree mostly with ALL of your suggestions, except for the ADMISSION of owing the debt…

    The Collector is also recording the call…

    After admitting owing the money, the Collector now has the ammunition to win in court and you may have unintentionally relieved them of their duty to prove their entitlement to collect…

  3. I tried to reply at your website, but it kept kicking me off and asking me to sign in…

    =============

    I agree with almost everything that you have suggested with the exception of…

    The suggestions to admit to owing the debt puts the consumer in a very bad position…

    The Collector will be recording the call also and when the Consumer has admitted to owing the debt that is all the ammunition that the collector needs in order to go to court and win… The Collector no longer has to prove anything because the Consumer has admitted to owing the debt…

    On Thu, Dec 10, 2020, 2:49 PM Ask Carolyn Warren wrote:

    > askcarolynwarren posted: ” True story, happened this week. A woman applies > for a home loan to buy a house. Her credit isn’t perfect, which is all > right. Collections that add up to less than $2,000 can be ignored by the > mortgage lender. Medical collections can be ignored. If the” >

  4. Hi Carolyn.

    My question is “why aren’t people disputing these debts, even if valid, right off the report since the collection agency isn’t the data furnisher?

    They also list amounts that they didn’t pay so not only do we not owe the false furnisher, but we don’t owe them said amount.

    Any response would be welcome and thanks again.

    Tony

    On Thu, Dec 10, 2020 at 1:48 PM Ask Carolyn Warren wrote:

    > askcarolynwarren posted: ” True story, happened this week. A woman applies > for a home loan to buy a house. Her credit isn’t perfect, which is all > right. Collections that add up to less than $2,000 can be ignored by the > mortgage lender. Medical collections can be ignored. If the” >

    • Thank you for your insights, Tony. I heard from another credit repair specialist as well, so I will be writing another blog post to amend this advice. To answer your question, though, my thoughts were that even if the account is removed from a credit report, the creditor still holds the debt and can still call and ask for money. If it’s past the SOL for collecting, then don’t pay. But if the collector is an attorney or has one on staff and the amount owed is large, a lawsuit could be looming if an agreement isn’t worked out. Either way, screaming at the caller does no one any favors. If you have further comment, I welcome what you have to say; and thanks again for commenting.

  5. Hello…
    Is it really wise for the Consumer to admit owing the in light if the Collection Company also recording the call…
    After admitting to owing the. Any reason why one can’t pay is irrelevant…The Collector can sue and the Consumer will have zero defense after admissions have been made…

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