Do you cringe every time the phone rings, fearing it’s another debt collector? Many people find themselves in this situation at some point in their lives for one reason or another.
Some people have excessive medical bills that are difficult to keep up with; others have high student loans, but are underemployed or unemployed after college; and some people spent more than they can afford to repay with credit cards.
Whatever the cause of your debt, debt collectors can really add to the stress of the situation.
Here are some strategies for dealing with bill collectors while you take steps to get your financial life back in order, and none of the strategies suggest hiding! Avoiding the phone and pretending the problem doesn’t exist is not going to make it go away — so be proactive in correcting the situation before it gets worse.
Work with lenders first
If at all possible, stay in contact with the lenders and original creditors and work out payment arrangements and modifications to your account terms. This should prevent the debt from being sold to a third-party bill collector who will generally use more aggressive means to collect the money you owe (within certain limits).
When you work out a payment arrangement or any modification, make sure you get the information in writing so they cannot turn around and say you failed to keep your end of the bargain.
Confirm any and all debts
When you receive debt collection calls or letters, make sure the debts and accounts they’re talking about are in fact yours. There have been many cases where consumer debts were resurrected. If you are being asked to make payments on a debt that doesn’t belong to you, there may be an issue with identity theft or a credit report error that needs to be addressed.
Don’t ignore this situation — make written requests to a debt collector within 30 days of being contacted and ask them to verify that the debt belongs to you. If they can’t verify it, they need to remove the negative notation from your credit report and stop contacting you to recover the money.
Carefully choose payment options
As you work out payment agreements with your creditors, you might want to avoid setting up electronic withdrawals or automatic payments from your bank accounts at this stage.
You might also consider making a payment with a money order instead of a check, so that the debt collector does not have access to your bank and routing number. Debt collectors can freeze your bank accounts as one of their methods for recovering a debt you owe if a court orders it, so don’t make it overly easy for them.