Dealing With Debt Collectors Can Be Frustrating!

If you have ever had to deal with a deal collector, you know how frustrating and stressful it can be!

  • First you get the letters from the debt collector.
  • Then, you get the phone calls.
  • From then, you get a combination of angry and sometimes threatening letters and calls!
  • If you chose to ignore all of this, you may get a knock on your door and be served a summons!

Yes, very stressful and frustrating.

But, here are some tips to make this process somewhat bearable:

You must understand the basics of the DEBT COLLECTION PROCESS:

Let's say you have several (unsecured for the sake of this blog) accounts including:

  • Credit Cards
  • Store Cards
  • Medical Bills
  • Private Student Loan
  • Personal Bank Loan

Not that unusual for the average person to have $7,000 - $15,000 of unsecured debt these days.  As long as you are making at least the minimum payments, everyone (your creditors) are happy.

But, miss a payment or two and the DEBT COLLECTION PROCESS starts.

Once your account gets a couple of months behind, it will most likely be transferred to  the "collection or recovery" department within the company.  They send letters and start making calls.

By-the-way...here's a link to show you how to stop collection calls from DEBT COLLECTORS.

But, as annoying as the calls are, as long as the account is with the the original creditor (not transferred to a debt collector), they have the legal right to call you.  Now, once that account is transferred, sold, written off, etc. and lands with a Debt Collector, you can request/demand that they stop calling.

STOP Collection Calls Free Sample Letter

If your account is still with the original creditor, you may be able to get a settlement (reduction in the total you owe), but most likely they are going to offer you some sort of HARDSHIP PROGRAM...but, BE CAREFUL!

In most "hardship programs", the original creditor offers to let you lower your monthly payment for 6 months or so and then "reconsider".  While this may cut your overall payments, inevitably, you will have to go back to making the larger payments.

So now you are late on your payments, the calls and letters are still coming, but there's not a lot you can do about it due to your financial circumstances.  What happens to your debt now?

In most cases, the creditor will hire a Debt Collection Company to try and get as much money from you as possible.

Dealing with debt collectors can be very intimidating for the average person.  They call several times a day and leave messages (for anyone and everyone to hear) that says that you need to return their call right away.

So, you call them back, and here is where it gets frustrating.  Debt collectors are trained to do one thing...GET AS MUCH MONEY OUT OF YOU IN THE SHORTEST PERIOD OF TIME they can!

You try and explain your situation, thinking that the debt collector will actually "care".  While it is true that not all debt collectors are bad people, it has been my experience over the last decade of dealing with them for my clients that the average debt collector has just gotten (for lack of a better word) "calloused".

You owe their client (the creditor) money...their job is to get it....period.

The debt collector will tell you that you must pay this much in this period of time and there is nothing else available.  But, that is usually not true.  In most cases, some sort of settlement can be negotiated.

The problem with trying to negotiate on your own for your own debts, is that you are (obviously) emotionally involved, stressed out, frustrated and scarred of what the debt collector can and cannot do to you!

If you are going to try and negotiate and/or work out agreements with debt collectors, I strongly advise you to learn about what your rights are as a consumer in dealing with them.

The Federal Trade Commission has some very good information on their sight that you should investigate. 

                    Go to: Consumer Information about Debt Collection.

The more prepared you are, the better your chances are that you can negotiate a good settlement or repayment plan.

If you are unsuccessful in coming to a mutually agreeable settlement, the debt collector may take the final drastic step and file a complaint against you.

They will hire an attorney who is licensed in your state to file a claim in your county's courthouse.  Next, you will be served a summons.  A lot of people try to avoid accepting the summons, but eventually you will be served.

unfortunately, a lot of people who are served a summons choose to ignore the summons.

                   BAD MISTAKE!  Please, DO NOT IGNORE A SUMMONS

                    Check out a recent blog on this that will be very helpful.

The goal of the claim and summons is to either:

  • Scare you into sending them money
  • Being awarded a "default judgment" so they can pursue wage garnishment.

But, the are EXCEPTIONS!  Basically, only W-2 wages can be garnished and each state has it's own variation of how much, etc.

The basic guideline for garnishment is 25% of your net take-home pay!  Wow!  Suppose you are bringing home a modest $2500 per month.  At 25%, that's $625 they can get and there's little to nothing you can do about it.  That is why you can't ignore a summons.!

Debt collection in Texas is a little different in that there is no wage garnishment for residents of Texas! However, your bank account could be garnished or better, levied in Texas, so be careful.

Their are more protections and/or exemptions that would prevent a debt collector form being awarded a wage or even a bank garnishment.  Again, if you are going to try and go it alone with debt collectors, you have to know what type of income is and is not available for garnishment!

I live in Oregon, and debt collection in Oregon can be very, very stressful and frustrating!  It seems that the smaller debt collection companies are tougher to work with than the larger ones.  Some debt collections companies are actually attorneys who only deal with debt colletion.  However, they can and will work out settlements, depending on your various circumstances.

Finally, if you decide to DIY and deal with the debt collectors on your own...good luck!

worry rocking chair

It is a frustrating and stressful situation to be in.

  • Know your rights
  • Know the debt collectors rights
  • Know the process

FREE EBook Debt Settlement  Basics

 


Photo credit: www.flickr.com/photos/kitby/4883787012/

 

 

 

 

 

 

 

 

 

Tags: settlements, wage garnishment, debt collection in oregon, hardship plans, debt collector, credit cards, debt collection in texas