So your financial situation is getting worse and one of your debts has gone to collections. While you shouldn’t panic, there are plenty of things you can do at this point to make your financial life a lot worse.
Here are seven things you should avoid at all costs.
Ignore the initial letter.
When your debt is first given or sold to a third-party debt collector they must send you a letter to “verify the debt.” This gives you thirty days to inform them in writing as to whether or not you agree you owe the debt. This is called a “cease communication” letter, and is one of your rights under the Fair Debt Collection Practices Act.
Usually you do, and usually disputing the debt doesn’t really get you anywhere. But the letter offers all the information you need to stop the collectors from calling at all. Stop where you are, go to your computer, and type up a letter informing the agency you only wish to receive communication by mail, and that they should not contact you at home or at work. This will prevent the calls from coming.
Hang up on the collection agent a zillion times.
Maybe you forgot the 30 day notice. Now the calls are coming. Don’t hang up on the collector a bunch of times, don’t cuss them out, don’t pretend to be someone else. You can verbally request that they cease communications. Many agencies will, because they don’t want to run afoul of the Attorney General.
But don’t fail to send one in writing at your earliest opportunity.
Collection agents have a frustrating job. Make it more frustrating for them and they tend to get vindictive. That is, if you make them angry enough, if they can refer you for a lawsuit, they will. While your wages can’t be garnished in Pennsylvania there are still a host of other unpleasant consequences for getting sued. Try not to risk it when it’s not even necessary to do so.
Fail to understand what they can and can’t do.
Any time a collection agent falsely represents what he or she can or cannot do, they offer you new legal avenues to pursue. You can’t take advantage of them if you don’t know them, however.
The Pennsylvania Post-Gazette once ran a nice breakdown. It’s clear and easy to understand. Take a moment to review it.
If you hear a collection agent doing anything on that list, make a note, jot it down, and inform your attorneys. By the way, if you have debts starting to go to collection agencies, it may already be time to go to an attorney. Your credit is already plummeting and it’s one of the surest signs that you’re financially overextended beyond all reason.
Create payment arrangements you can’t truly meet.
Most people who run into debt problems are good people who truly want to meet their obligations. It’s no surprise many people try to work with the collection agents when they call, creating payment arrangements so they can put the debt to rest. Unfortunately, most people struggle to meet these arrangements.
If you’ve had a nice windfall and you can truly take care of the debt, maybe you do it. Maybe you don’t, because if you’re drowning in other debts you don’t want to make it look like you’ve given this creditor preferential treatment just because they are hyper-aggressive. But creating a payment arrangement and then failing to meet it tends to make these guys more rabid than ever. You’re better off using your money to pay for your basic needs.
Set up an ACH agreement or allow an automatic credit card charge of any kind.
On the same note, you do not want to give collectors your personal financial information. Most are scrupulous. Some are not. If you don’t want to wake up one morning to find the collection agency wrote themselves a blank check to reach into your account and take out the entire amount of the debt then make sure you keep ACH information out of their hands. Authorize a one-time credit card charge, send in a paper check, or don’t play ball at all.
Sure, you could try to get that money back, but you’re fighting an uphill battle at that point. And when that happens, you’ll also be short on money you might have really needed for other things.
Discuss income or assets.
You don’t want to give any collection agency any ammunition to use against you in a court case later, whether it’s a lawsuit or a bankruptcy case they’re disputing. You do not ever have to talk about your job, your car, your house, your boat, child support payments or anything else with a collection agent.
Just politely tell them not to contact you instead.
Put up with them until you just can’t take anymore.
Many of our clients put up with collection calls far longer than they have to. The stress and strain can make it hard for them to work, deal with their families, or live a full, healthy life. But once the calls start coming it may be time to think seriously about filing for bankruptcy. The problem isn’t going to go away, your credit is going to keep getting worse, and chances are you’re going to fall further behind without skilled help.