Debt collections and the debt collector seem like things we should avoid at all cost, but that’s not true. Sometimes going into collections and being in collections is the smartest thing you can do.

If your choice is between spending all your money and living paycheck to paycheck or preserving some of your money and paying what you can afford, then paying what you can really afford is the smarter way to go.

When your credit card account is in collections it means that you are behind on your bill and have failed to make promised payments. We are rained to think that collections is bad and should be avoided at all costs, but why?

Creditors and collectors don’t care if you put yourself in a disadvantaged position in your life. All they want is one thing, your next payment. But holding onto your money may be the best move for you and your family in troubled times.

Let’s look at a typical situation and why going into debt collections would be a smart thing to do.

Jayne and Jon have had a reduction in income but the bills keep coming. They’ve used the credit cards a bit more than they should have for food and gas but they promised themselves that things were getting better, they aren’t. This month there are just more demands for payments than money available to pay. Jayne and Jon have some cash in savings they could dip in to pay the minimums.

If their situation was unique, then maybe tapping the savings account for a one time infusion of cash might be a smart thing to do. But with no immediate solution to their reduction in income, sucking money out of savings just makes the savings lower and does not solve the problem. Soon there will be no money left in savings and the situation will not have changed. The only thing achieved is that the debt collector got a few more payments out of you and now you are flat broke.

Being behind on credit card bills will land you in collections and will hurt your credit report and lower your credit score but it won’t get you evicted or your car repossessed. And when you go into collections, what happens:

The Normal 6 Month Collection Cycle
- Polite Late Notices
- More Demanding Late Notices
- Friendly Collections Calls
- Threat of Negative Marks on Your Credit
- Less Friendly Collection Calls
- Threat of Being Sued
- Maybe Being Sued
- More Aggressive Collection Calls
- Your Account is Sold to Another Creditor
- Cycle Begins Again

The reality is that collections is most effective when you are running in fear from the collector. But it just does not have to be like that.

Rather than give over your emotional power to the debt collector, use the following approach.

1. Don’t Avoid the Collector - Always be gracious and friendly. There is no need to react to the emotional tricks and pressures they will apply to you. Welcome the call, make a friend and be polite. Ask the debt collector how their day is going and wish them well. Avoiding the collection calls only drives the collector to try to find you by calling family or neighbors. Don’t let that happen.
2. Be Completely Honest About Your Situation - If you can’t afford to make a payment on your credit card bill this month, don’t. If you promise to make a payment and then fail to meet that promise the debt collector will use that against you. It is much better to stand your ground and deliver what you can honestly be able to rather than make a promise you can’t keep.
3. Be Mentally Prepared - As long as you are mentally prepared for the worst, you don’t have to be afraid of it. The worst that can happen when your account is seriously past due is that it will be reported to the credit bureaus, will appear on your credit report, you may incur a fee or penalty and your interest rate will be raised. Much, much latter in the collection process you may be asked to appear in court and explain your situation.

As long as you are aware of these basic facts the debt collector can’t emotionally manipulate into doing something that isn’t smart for you to do. The dumbest move would be for you to keep sending payments you can’t really afford just to protect your credit report or credit score. You can’t feed your family your credit report.

Food, shelter, clothing and transportation to work should always come before making a payment on an unsecured debt like a credit card.

Get Out of Debt Squirrel Says: Don’t be a chump, learn when to not pay your bills.

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Here is a Quick Online Debt Collection Guide

Most people make a big mess out of dealing with the debt collector and don’t know what their fair debt collection rights are. Dealing with a debt collector isn’t so much about learning how to beat the debt collector as it is just understanding what the debt collector can and can’t do.

Remember, debt collectors have received credit card debt collection training and are professionals and unless you are a repeat debtor, you’re a rank amateur at this game.

The best way to deal with debt collections is to be cool, organized and cordial. There is no reason to lose your temper or raise you voice to the debt collector. If the debt collector is doing abusive stuff like using abusive language or engaging in debt collection on a bankrupt account, then you can pull out the big guns.

And don’t be afraid to ask to speak to a supervisor if you feel you are being treated poorly. It is just one of the duties of debt collection manager. Just remember that great advice though, be nice, be cool and be cordial.

Let the debt collector know what you can and can’t promise. And NEVER make a payment promise that you can’t keep. It is much better to over-deliver than over-promise.

But you still need to know your rights. “Most people are not aware of their rights. And unfortunately debt collectors take advantage of that fact,” says Joe Ridout of Consumer Action.

Here’s some expert advice on how to fight back against unethical collectors. The Fair Debt Collection Practices Act requires that debt collectors treat you fairly. This doesn’t mean you won’t have to pay your legitimate debt. But here are some basic rights:

A debt collector cannot call you before 8 a.m. or after 9 p.m., unless you agree.

Collectors can’t legally claim federal benefits, such as Social Security or your retirement accounts, like your IRA or 401(k).

Once you’re contacted by phone, you have the right to get a notice that outlines your debt, whom you owe money to, and what action to take if you don’t owe the money. Keep in mind that a debt collector can collect a debt owed by an ex-spouse. If the debt was incurred while you married, you may be liable for the debt after a divorce even if the divorce papers state your spouse is responsible for paying off the debt.

If you’ve been contacted by a debt collector, but you don’t think you owe a debt, you must write a return letter stating that the debt is not yours within 30 days. Once a collector receives your letter, they should send you proof of the debt, such as a copy of the bill. Don’t be coerced into paying a debt you don’t owe. If you do pay just to get rid of the debt collectors, it’s an admission of guilt, and it will have a negative impact on your credit score.

If you still feel like you aren’t getting anywhere, consider enrolling in a debt management plan to get the debt collector off your back while you figure out how to best deal with the situation. Who knows, maybe your find a debt consolidation loan to save you or have to resort to going to the court house to file bankruptcy.