Should I Even Call the Collector Since I’m Out of Work Because of Covid?


Dear Steve,

Hey, so I’ve been reading some posts about this topic but need some clarification and a clear answer to my current situation.

So I had been charged off by Citibank a number of years ago and dealt with the debt collector on smaller monthly payments. Doing this I actually managed to cut a nice chunk into what I owe.

Enter Covid, at some point the payment plan with the debt collector ended, and in a “let sleeping dogs lie” strategy, I decided to avoid calling so long as they weren’t calling me.

At some point that was going to end, and today it did when I got a notice from a new collector saying they now have the debt and got 30 days to either pay it all (which I obviously can’t) or to work out a plan with them.

What’s my best course of action at the moment? I’m not currently working and only collecting unemployment and being in the service industry, no one is hiring with this dark Covid winter ahead. Not paying this loan allowed me to keep paying other student loans that aren’t in default. Paying them might make it extremely hard to avoid being charged off with those as well.

My thinking right now is just calling them and seeing if they might accept an extremely low payment per month. I guess that seems like an obvious potential solution, but I wanted to run it by someone out there who might know better.

Also, a bonus question. I mentioned that by having this loan in the hands of debt collectors, I was actually able to pay a chunk of them off since there was no longer any interest. My fear with my other loans is being charged off to debt collectors, but could that actually be a better long term option if there would be no interest. My fear is if there is ever total private and federal loan forgiveness (I realize its doubtful) from the government, that loans in default might not be eligible.

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Dear Joseph,

It looks like you have two different types of loans. The first is consumer debts and then you might also have some student loan debts.

But you have a bigger issue, unemployment.

It appears your reality at the moment is you are not working and have limited income. We just have to deal with that reality.

That means that making a token payment is not going to stop anything. Facing the inability to pay you have three logical options:

  1. Avoid the collector and let your account slowly move through the collection queue to buy you time.
  2. File bankruptcy at some point to eliminate your unsecured consumer debt in full in about 90 days. Debt collection calls stop.
  3. Contact the collector, attempt to negotiate some payment that you can both agree on and have a friendly and sunny disposition with the collector.

The poor job situation is a reality for many right now. Making promises to the collectors that they either won’t accept or you can’t meet is not going to help anyone.

With a limited income, you need to first make sure your basic needs are met. Shelter, food, utilities, etc.

You might feel compelled to prioritize your financial outflow by emotion but I need for you to organize it by need.

If you are going to be stuck in an employment winter, for now, one approach might be to do nothing, make no payments you can’t afford, and clean it all up with a consumer bankruptcy when you land a new job.

If you decide on an overall plan and not sucked into reacting to this and that, it will be less stressful.

If you can post an update in the comments about what kind of student loans you might have, I can give you some advice on those as well.


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Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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