Debt Collection Combat Tactics
When times turn tough consumers fall behind on their bills and payments. Creditors start panicking and get very aggressive in attempting to collect. Consumers feel the weight and pressure to pay but find themselves in a position where they must choose who does and does not get paid and in what order. The phone keeps ringing and the mail keeps coming. Eventually lawsuits are filed and process servers show up at your home or work. Maybe you find yourself with your wages or bank account garnished and not enough net income to survive. What should you do? Where do you turn? What are the rules as relates to debt collection? Who do you pay and not pay to protect your credit and in what order? These are questions that very few know the answers to and only find out when it's tool late.
Lets start with the first principle of personal finance. Your credit is your lifeline and your cash is oxygen. You need oxygen to breath and live and you need the lifeline to maneuver and fill gaps. If you learn how before the proverbial shoe drops you can maintain both long enough to find new sources of income or cut expenses enough to level the playing field.
Rule #1: Revolving credit plays the most critical role in determining your credit score. Your credit score determines if you can borrow, how much and under what terms. Protect your revolving credit by making the minimum payment on all credit cards no matter what. Remember you can make the payment on time and take the money right back out if needed every month if you must but make the payment.
Rule #2: Cash is king even especially at home. Don't part with cash to pay third party debt collectors in an effort to get them off your back and leave yourself vulnerable to not paying essentials like your rent or mortgage. Learn how not to be pushed into making this mistake by simply not taking the call when you see it on the CID. Get the companies information including address and fax and send them a letter both ways stating you wish not to be contacted by phone at home or work for any reason. All future communication is to be done via U.S. mail only. Send by fax and certified mail. The calls should stop. If not send a 2nd letter stating that you have forwarded the first to the FTC's division of credit practices and filed a formal complaint. Most collectors add fees to the debt that are not allowed by law or by the original contract. Dispute the debt in the same letter and request proof of it in terms of signed application, invoices, payments, receipts and dunning notices.
Rule #3: Get Lean and Mean with your income and expenses. Cut out anything and everything non-essential. Downgrade service levels with cable, DIRECTV, Phone etc.. to the basic service level. Shop for food with the thought in mind that you need to eat not gorge. No eating out, movies, long drives, toys for adults or kids except for birthday's and holidays. Keep it to a minimum on every level. This will give you piece of mind that you can live your life and not have the electric shut off.
Rule 4: Communicate with creditors on your terms but keep the line of communication open every week no matter what. Get the name of a customer service supervisor who you seem to connect with. Don't tell them too much about your life but do tell them that you need to work through it without hurting your credit. If you know their time tables and widows for payments you can work to get them paid but scatter the collective across the month instead of trying to pay all on the 1st. (Example would be cc#1 due on the 1st but not reported late till the 30th, cc#2 due on the 15th but not reported late until the 14th of the next month. You always have a window of 30 days to pay any loan or credit card payment as long as the payment is within the 30 day window of the due date your credit will never be hurt. You will be told that on day 15 it is "late" and a fee assessed. The fee is applicable but "late" is not the same as 31 days past due / in arrears.
Rule #5: Communicate with aggressive creditors and collectors only by mail. Never take a phone call during dinner time or when you are with the kids. Never promise any payment you aren't sure you can make as it creates stress two fold. Never send a post dated check to anyone for any reason. Never let a collector get away with portraying themselves as a law firm if they are not in fact lawyers.
Remember Collection Agents make their money by collecting the money from you and getting their percentage of it once collected. They collect money and get paid. They are rarely aware of the law they must operate under and unless you stand your ground will pull it out from under you. Best of luck.
References:
1) FTC Division Of Credit Practices
2) PrivacyRights.org
3) MyHomeLink.com
Lets start with the first principle of personal finance. Your credit is your lifeline and your cash is oxygen. You need oxygen to breath and live and you need the lifeline to maneuver and fill gaps. If you learn how before the proverbial shoe drops you can maintain both long enough to find new sources of income or cut expenses enough to level the playing field.
Rule #1: Revolving credit plays the most critical role in determining your credit score. Your credit score determines if you can borrow, how much and under what terms. Protect your revolving credit by making the minimum payment on all credit cards no matter what. Remember you can make the payment on time and take the money right back out if needed every month if you must but make the payment.
Rule #2: Cash is king even especially at home. Don't part with cash to pay third party debt collectors in an effort to get them off your back and leave yourself vulnerable to not paying essentials like your rent or mortgage. Learn how not to be pushed into making this mistake by simply not taking the call when you see it on the CID. Get the companies information including address and fax and send them a letter both ways stating you wish not to be contacted by phone at home or work for any reason. All future communication is to be done via U.S. mail only. Send by fax and certified mail. The calls should stop. If not send a 2nd letter stating that you have forwarded the first to the FTC's division of credit practices and filed a formal complaint. Most collectors add fees to the debt that are not allowed by law or by the original contract. Dispute the debt in the same letter and request proof of it in terms of signed application, invoices, payments, receipts and dunning notices.
Rule #3: Get Lean and Mean with your income and expenses. Cut out anything and everything non-essential. Downgrade service levels with cable, DIRECTV, Phone etc.. to the basic service level. Shop for food with the thought in mind that you need to eat not gorge. No eating out, movies, long drives, toys for adults or kids except for birthday's and holidays. Keep it to a minimum on every level. This will give you piece of mind that you can live your life and not have the electric shut off.
Rule 4: Communicate with creditors on your terms but keep the line of communication open every week no matter what. Get the name of a customer service supervisor who you seem to connect with. Don't tell them too much about your life but do tell them that you need to work through it without hurting your credit. If you know their time tables and widows for payments you can work to get them paid but scatter the collective across the month instead of trying to pay all on the 1st. (Example would be cc#1 due on the 1st but not reported late till the 30th, cc#2 due on the 15th but not reported late until the 14th of the next month. You always have a window of 30 days to pay any loan or credit card payment as long as the payment is within the 30 day window of the due date your credit will never be hurt. You will be told that on day 15 it is "late" and a fee assessed. The fee is applicable but "late" is not the same as 31 days past due / in arrears.
Rule #5: Communicate with aggressive creditors and collectors only by mail. Never take a phone call during dinner time or when you are with the kids. Never promise any payment you aren't sure you can make as it creates stress two fold. Never send a post dated check to anyone for any reason. Never let a collector get away with portraying themselves as a law firm if they are not in fact lawyers.
Remember Collection Agents make their money by collecting the money from you and getting their percentage of it once collected. They collect money and get paid. They are rarely aware of the law they must operate under and unless you stand your ground will pull it out from under you. Best of luck.
References:
1) FTC Division Of Credit Practices
2) PrivacyRights.org
3) MyHomeLink.com