If you have an account past due more than six months and it has gone into collections, or if the account was charged-off after six months of non-payment and then sold to an attorney or other company, this is an important message for you.
If you receive a phone call regarding payment, do not execute a knee-jerk, emotional reaction by yelling, crying, swearing, or hanging up.
Likewise, do not ignore the call — even if you don’t have funds to pay.
Even worse, don’t send that letter circulating and offered for download on the Internet that demands that the collector cease and desist all contact. That is a huge mistake, and I cannot believe people are putting it out there as a free letter to print and use! Why?
If you send a cease and desist notice, the collector cannot contact you to discuss payment options; therefore, their only recourse is to SUE YOU IN A COURT OF LAW!
The cease and desist letter royally sets you up for a lawsuit.
Instead, be smart and be professional. Handle the collector call in one of these two ways:
- Explain in two sentences (no long stories) that you cannot pay at this time (if that is true), and ask them to contact you next month by mail only.
By allowing them to communicate by mail, you keep a line of communication open other than going to court. And, because you have explained that you have no money to pay, they understand that suing you will not produce payment. Be prepared to show a bank statement to prove what you are saying is true; especially if it is a large sum of money. You don’t want to risk being disbelieved and sued. However, cut off the name, address, and identifying information of the bank and redact the account number, leaving only your name and balance information.
2. The second option is to negotiate a settlement. It is the rare collector who will not agree to a lower amount so they can get something rather than nothing. Negotiating is both an art and a science. It is nothing to be feared. It is two adults discussing and coming to a business agreement. Keep your tone and language professional, and in so doing, you will be respected.
As part of your negotiation, you want them to agree to remove the negative account from your credit profile when they receive payment. Instructions on how to do this are in Chapters 15 and 16 here. Also in those chapters are actual scripts I used in the past to negotiate settlements for my clients.
It is extremely important that you keep your employment and bank PRIVATE. Never agree to automatic deduction. Never tell them where you work. Maintain control of your privacy as a safeguard against having your account garnished. You don’t need them getting their long, greedy fingers into your grocery or rent money!
If you have no funds to pay and request future communication by mail, do respond to the letters by providing an update on your financial status and ability to pay. The purpose of doing this is to keep yourself out of a lawsuit.
Finally, don’t get personally angry at the man or woman placing the call. They are just doing their job, which is to collect money on a past-due account.
When you purchased the goods or services, I am sure you intended to pay for what you purchased. But then, something went awry that prevented you from being able to keep your contract. Explain that, agree on a settlement, and everyone will be happy to get the account closed and done with.
4 thoughts on “How to Handle Collector Calls”
Hi. I deleted the email that you sent with the doc for the letters. How can I receive the email again.
Sent from my iPhone
Ebony, I have emailed them to you again.
Hi.. once a settlement amount is agreed upon .. what percentage of the forgiven amount is taxed and how do you get them to reduced owed total down to before accrued interest was added to the total ? Example.. actual owed at last payment..$15000.. now is $18000 plus.. due to interest..
Debra, thank you for your questions.
In general, not counting exceptions, cancelled debt that is over $600 may be taxed. The creditor is required to file a 1099-C form with the IRS. There is a line for it on the tax forms. However, there are some exceptions. You can read more about that here: https://www.cnbc.com/select/how-to-prepare-for-taxes-on-forgiven-debts/
Because what you owe is significant, I recommend speaking with a professional. These professionals, founders of successful credit repair companies, will give you a free consultation. Google search for contact info and websites.
Scott Schaaf, SW Group Credit Repair
Erik Kaplan, THD Credit Solutions
For DIY negotiating, it is explained in Chapter 15 of Repair Your Credit Like the Pros. Although, I negotiated settlements for my mortgage clients in the past, none of them owed more than $9,000, that I recall. With large amounts of debt, you are more susceptible to being sued, so if it were me, I would speak with a couple professionals.
I wish you all the best!