How to Best Deal With a Debt Collector or Debt Collection Agency – What Everyone Needs to Know

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Hi, this is Steve Rhode, your Get Out of Debt Guy from GetOutofDebt.org. Today I wanted to share some life-altering low-stress advice on how to best deal with debt collectors.

I think what I’m going to share will surprise you and be a big help if you or someone you know is getting calls from a debt collection agency.

When it comes to debt collectors, not everything you believe is true. So let’s put all the assumptions aside for this podcast.

By the time you finish listening, you learn new tools and techniques to:

  • better deal with debt collection agencies;
  • engage with debt collectors in a constructive and lower-stress way;
  • and understand how to set yourself up for success with a debt collector.

Getting a phone call from a debt collector is scary and stressful for most people. So we desperately try to avoid the call. That is a normal knee-jerk reaction.

A collection call can trigger many emotions, from fear and shame to anger and hostility.

It is understandable, but none of those emotions are helpful for either you or the debt collector.

But I’m here today to share with you some secrets and tips I learned when I had to deal with debt collectors in my life. These are secrets that I’ve been sharing since 1994, and they are time-tested and proven to work.

I’m also going to ask my debt coach friend Damon Day to join us to share real-life lessons he’s learned from dealing with debt collectors daily on behalf of his clients needing debt help.

Let’s take a giant step back and look at some realities you may not consider when facing financial stress and panic.

If a debt collector is contacting you, it is for one of three reasons.

First, the call might be regarding a current financial obligation you are behind on for one reason or another. Hey, life happens. The fact something happened in your life does not make you a failure. Not at all. I’m going to give your the tools to deal with that scenario.

Second, A debt collector might be trying to get in touch with you over an old or purchased debt. Sometimes these are called Zombie Debts because they keep coming back to life.

Third, the debt collector call might be a mistake. But, hey, it happens sometimes.

I’ve received my share of collection calls in my life where the collection agency was looking for someone who had my phone number before me. I once even had a debt collector aggressively pushing me to pay an old bridge toll from a fuzzy picture of a car. But, once I kindly made him realize I didn’t even live in the US at that time, his tune changed, and he became cordial and helped to resolve the issue.

And let’s not forget that the collector call might be from a scammer, not a legitimate debt collector. Those types of calls are in a league of their own. The most common examples of those calls are when someone claims you had an old payday loan or owe the IRS. They are nearly all scam calls. Just hang up.

While it is human nature to immediately respond emotionally to the call, the better action plan is to gather facts and give the best responses, not spew venom or unnecessary information.

Debt collectors are people working for a paycheck. They don’t take it personally that you owe a debt to someone else. They are just doing a job—some do it better than others.

I’ve learned from my decades of helping people with debt that people on all sides of this situation are often unhappy. The consumer hates getting the call, and the collector hates being yelled at and called names.

I once went to visit a national debt collection center for a large credit card company. I walked through the facility and watched the collectors have calls dumped on them by a computer automatically dialing consumers and pushing the call to the next available debt collector.

The collectors were judged by the number of promises to pay they could get out of customers. They were also evaluated on how long they were on phone calls. If they took too long, that was a negative mark.

At the end of my visit to the collection center, I couldn’t help but feel many of the collectors did not enjoy their job all that much.

I had stopped to quickly ask questions to some debt collectors when my guides were distracted. Some whispered it felt like a factory assembly line. The computer-connected calls just kept coming.

The tour was insightful on many levels. I’m so glad I had the chance to do it.

The collection center was in a nondescript business park. There was no signage to tell people what was happening inside.

A guard stood at the front door. So when I entered the facility, I assumed the guard was there to keep the public out.

But as the day ended and I walked out these same doors, I could not help but feel the guard might be there to keep the collectors in.

When dealing with my financial problems in the early 1990s, I felt the entire range of emotions you might be feeling right now.

But, at that time, I was an uneducated consumer without much experience dealing with debt collection calls. I didn’t know anything about getting out of debt. I was a real estate developer and not a consumer debt expert.

I was in your same fearful, angry, anxious shoes. If you have a debt collector calling you now, I truly know how you feel as you listen to this.

After a short time, I realized as long as I felt angry, afraid, and ashamed that, those emotions I felt were ruining my day and nobody else. Likewise, my inability to sleep or my lack of appetite wasn’t hurting anyone else. Just me.

My self-talk of being a failure as a husband and father because of financial situations beyond my control was a reality I was creating in my own head. But that didn’t make it a true statement.

So I turned the situation around. Instead of avoiding the debt collectors and being tense and hostile, I made it a point to be kind and friendly.

Sounds kind of crazy, right?

That little perspective shift changed the entire situation and improved my daily life a little each day I struggled.

Instead of being afraid when a collector would call, I made them my friend by being kind, cordial, and strategically honest. Meaning I did not give more information than was necessary.

By making the debt collectors my friends, I had some great conversations, traded some fantastic recipes, and learned a lot of good tips.

By approaching the calls with kindness, I turned the stressful situation into something more tolerable. I can’t say it eliminated 100 percent of the unhealthy emotions, but it eliminated 90 percent of my stress and anxiety.

I began to not dread many of the collection calls from then on.

You see, I started asking questions once we had created a cordial environment to have a conversation.

I was so embarrassed and ashamed about my financial situation I didn’t have hardly anyone I felt comfortable talking to about it. But the debt collectors knew I was in debt and having trouble paying.

Some of the calls went from the debt collector giving me a demand to pay to me saying there was no way I could promise to make a payment, and I asked the collector what they would do in my shoes.

The answers surprised me. Most were reasonable, and some were ridiculous.

Into the silly bucket, I dumped the suggestions of selling my blood or having a yard sale. That might help the payment they wanted on that call this week, but it would never resolve my situation.

I learned most debt collectors are good decent people and that not every profession is filled with top folks. Of course, a small minority of debt collectors were jerks, but I learned how to deal with them from the collectors I had made my friend.

Once the friendly collectors and I could talk more openly, I learned some were also struggling financially.

Other collectors told me I should file bankruptcy as soon as possible. When I said I didn’t want to do that because I was worried about what the creditors would think about me, I was told, “Steve, you’re just a number on a screen. Nobody is judging you here.”

A lightbulb went off for me then.

The only person judging me about my financial troubles was me. My stress, fear, and anger over my situation were all being generated by me, and why was I doing this to myself?

Years later, I concluded that debt issues are just simple math problems wrapped in emotion. The math took an hour to figure out. The feelings took years to get through.

One of the landmines I learned to avoid from a friendly collector served me well.

Jim said, “Steve, the worst thing you can do is try to get me off the phone by making a promise to pay that you won’t be able to make.”

I said, “So what should I do since you are looking for a payment?”

He said, “Tell me you can’t afford to pay now. Most people make a promise to pay and then miss the payment. Collectors will take that as evidence you don’t want to pay and are stringing us along. I don’t have time to deal with people who don’t make a promised payment or people being rude and hostile. I’ve got to move on to other calls because the system is flashing at me.”

He added, “By the way, thanks for that banana bread recipe you gave me last week. It was great. Talk soon. Bye.”

I mentioned a debt collector suggested to me I should file for bankruptcy. At that time, I didn’t fully understand that suggestion. Why would I do that if television and radio personal finance experts told me I had to repay my creditors to honor my promises or I was a failure?

Years after living through my debt crisis, I decided to take what I had learned and help good people with bad debt deal with their situations. So a friend and I started a non-profit credit counseling agency and got a chance to see behind the debt collection curtain.

During my credit counseling days, I had many opportunities to see what was going on in collection operations because collection companies and credit counselors were forced into a closer relationship as the years went by.

Once I was in a credit card company collection supervisor’s office, getting yet another tour of a collection center.

The phone would ring, and she would tell the person to file bankruptcy. This went on a few times, and I finally said, “I don’t understand; why are you telling those consumers to file bankruptcy if I might be able to help them?”

The collection supervisor said in an irritated voice, “Look. My bosses judge me each month on how much money my department collects.” And in a moment of stark truth, she blurted out, “People that file bankruptcy doesn’t count against my numbers, and it gets them off my screen faster.”

For me, someone that had previously felt shame over my own personal bankruptcy, a lightning bolt struck me.

It was true what my debt collector friend told me years before; no debt collector personally judged me as a person. Only I could do that.

I love the saying, “Don’t Believe Everything You Think.” Unfortunately, it really applies when it comes to debt collectors.

The only time a debt collector makes you feel they are judging you is as a technique to collect money.

Think about it this way, if the amount of time a debt collector can spend per call is limited and they are judged by getting payments, which will be most effective, aggression and creating stress or a casual attitude?

The reality is the debt collector is getting paid to do a particular task. They might not like what they do, and people are dumping on them all day and being nasty and rude.

Being a front-line debt collector is not a fun job.

But here is the core truth, the money the debt collector is trying to get is not their money.

If you owed an individual person money, typically, they would listen to your situation and try to come to some solution that worked for both of you.

That is not what a debt collector is doing. The collector isn’t trying to find a solution that you can meet or that is good for you. Instead, the collector is trying to meet their quotas and stay in the good graces of their bosses.

Any solutions the collector can offer are often beyond their personal control and dictated by the client they are working for or corporate bosses that have established a policy of what works best for the creditor, not you.

Hopefully, this will be a lightbulb moment for you. But, if the debt collector is trying to do what is best for them, shouldn’t you do the same thing?

Do you think it is reasonable for a debt collector to make decisions that impact your financial present and future so they can meet their quotas and make their bosses happy?

Or should you use this time to carefully evaluate your overall financial situation and devise a plan on how to deal with things moving forward?

Another honest and brutal reality is you don’t have the skills and experience to make good decisions on how to best deal with your debt collector situation. That is okay and perfectly understandable.

The moment of a broken tooth is not the best time to suddenly start studying dentistry.

The moment of a financial crisis is not the best time to become self-aware of the emotional pollution driving you to make bad reactionary decisions about dealing with your debt.

It’s also not the time to take advice from hostile anonymous forum posters or Facebook warriors that will result in decisions that will impact your future financial life.

The better approach is to seek professional expert advice. It is a moment to reach out to a professional like my debt coach friend Damon Day at damonday.com.

Unlike the typical debt relief mass-market operation out there trying to sell you credit counseling or debt settlement and telling you to avoid bankruptcy, Damon gives individualized advice and creates a plan that deals with the entire situation.

Think of Damon Day as a get-out-of-debt guide that leads you through the terrible unknown and to a better and brighter future.

And speaking of Damon, I think it’s time we invited him in to share some actual debt collection stories.

Damon and Steve Transcript

Steve Rhode: So with me, that is Damon day from Damon day.com. And I talked earlier about Damon being a debt coach and helping to guide people through the day to day struggles. When dealing with debt, I thought it was really critical to bring Damon on because. He can share with you some real life examples about how to deal with the debt collector, what he has seen, some of the good things, some of the bad things and some real life lessons.

Thank you, Damon so much for being here.

Damon Day: Steve. You’re welcome.

Steve Rhode: So let’s talk right off the bat. One of the things that I remember going through my financial problems were when I started getting calls from the debt collector, some of them let’s say most of them, uh, felt pretty nasty or aggressive, and people are fearful of those calls.

So let’s just start right out with, what is your advice about how to deal with a nasty debt collect?

Damon Day: Well, if you have find yourself on the phone with a nasty debt collector, you know, first off, most of them aren’t nasty, but if you do get one, you know, there’s different scenarios, but most of the time simply just, you know, politely getting off the phone with them and then waiting it out will get you a nicer debt collector later on.

Um, so just because a nasty person calls doesn’t mean if you talk to that company tomorrow, a different collector will. They rotate through ’em so it really depends on the circumstances, but the biggest thing is don’t be nasty back. Right? You get more flies with honey. And so being nasty back rarely helps the situation.

Steve Rhode: Well, I remember one example where, uh, a national debt collector told me, he goes, Hey, Steve, I’m glad, uh, glad you called coincidentally. I just got off the phone with one of your clients. He was just nasty and he was yelling and screaming. And he said to me, if you don’t like what I’m offering Sue me. And he goes, uh, so I.

Damon, uh, have you seen that sort of thing that NA uh, if you are aggressive or angry or nasty or rude with a debt collector, it can lead to unintended consequences.

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Damon Day: Well, it can, I don’t think it happens as much these days because of how kind of segmented segmented collection is, you know, certain and certain creditors can and absolutely do Sue and certain collectors, you know, don’t um, but it, it just goes back to don’t don’t feel righteous, you know, as a consumer, if, if you legitimately owe the debt.

You know, these guys are, or gals are just doing a job. Um, and so, you know, my favorite is I’ll hear like Facebook warriors all the time. They’ll say, oh no, you need to just, you know, demand to see the paperwork or file a validation letter or say, oh, they just bought the debt for 5 cents on the dollar. So offer ’em seven and they should love it.

And ha you know, and take it and then get nasty with them if they don’t. I mean, there’s just so much bad information out there. But the biggest thing is when you’re on the phone with the collector, if you’re on the phone with them, make sure you have a plan and be nice to them. And you’ll find they’ll usually be nice back and you want them to be nice.

You want them to like you, you want them to try to help you out. They have information that you don’t have, and if you’re nice to them, you might get it out of them.

Steve Rhode: Well, being nice is critical. It’s always good to work together towards a solution. One of the things that our listeners might not have. Is experience in dealing with debt collectors.

You know, you feel like you go through this alone and you feel lost alone, afraid, confused. You’re embarrassed or ashamed to talk about your financial problems with somebody else. But trying to make good, smart decisions about dealing with a debt collector. Having had no experience in doing this, uh, you can actually say too much or do too much that can bring a debt back to life or put you in a worse situation.

So Damon I always tell people they should seek expert advice. This is why I, I love you. And the advice and care that you provide to your clients because you treat them more as their guide. And take them through, you know, by hand through the process. And every situation is unique as opposed to some of the mass market things that I’ve seen, where people are sold.

One solution, a one size fits all solution that really fits nobody. So have, have you seen a situation where somebody has had financial problems and has been. Sold a solution that only made their debt collection situation worse?

Damon Day: Oh yeah. I mean, it happens all the time. In fact, unfortunately that’s where I get most of my clients is they find me after doing some heavy duty, you know, Googling or, you know, find a site and that refers me or something, and they’ve already been sold something and been in some program that they.

Quite fully understand or, you know, wasn’t sold to them correctly, if you will. And then after some research they have this, I call it an oh shit moment. , you know? Yeah. Like may, maybe I shouldn’t have done that. Uh, but now I don’t know what to do. And now I feel like it’s even worse. And then sometimes they feel like they’re stuck, even though they they’re now not comfortable with the process that they were, you know, originally on, they feel like it’d make it worse to get out of that and stop at midstream.

Oftentimes it’s not gonna make it worse, but you just have to have. An alternative plan, but it happens a lot with these debt validation programs where these companies are gonna send the magic bean stock letters as I call ’em to these collectors. Mm-hmm yeah. And essentially most of the time that just pisses the collectors off.

So the, the biggest thing is you need to have a plan, whether, you know, you’re calling a collector or you have a company, somebody at the company is calling the collect. And you, you have to understand what your goal is before you engage with the collector. Because if your goal is to reach some sort of mutually agreeable resolution, sending a letter, demanding that they validate a debt, or that they prove that they have the right to collect on the debt, or, you know, whatever you find out there on Facebook land, as far as the doers out there telling you to send all this stuff, If your goal is to try to reach a resolution, making onerous demands on a collector is not the best way to go about doing that in most cases.

Steve Rhode: No, it’s a good way to get negative attention and piss them off. That’s an excellent point about the plan, because from my point of view, You know, granted both you and I have lived through financial problems in our life, and we totally understand, and we commiserate we’re sympathetic for the same emotional struggles that everybody is going through, but once you learn to deal with it, and once you’re on the outside, helping somebody else, uh, developing a plan is critical because the goal is not necessarily dealing with this one creditor, but dealing with the overall situation.

So thinking about. What is my intention in dealing with my debt. And then using that as a master plan to start dealing with your individual creditors, Damon, it doesn’t do any good. Does it to come up with a deal with one creditor. If you now can’t afford to pay your others, it’s a incomplete unworking plan.

Damon Day: Yeah. And keep in mind when you’re on the phone with the collector, they don’t care about your other collectors, their, their goal. They, you know, they have a plan when they’re on the phone with you, they have a plan and a strategy and, and, and methods that they’ve devised to get to where they want to go.

So if you’re on the other end of the phone with them and you don’t have a better plan, you’re gonna be in trouble. Right. So, you know, they will. They will try to get money from you and they use all kind of different tactics, but let’s just say you agreed to a settlement agreement and, and say, it’s the greatest deal in the world.

Let’s say that you owe $10,000 and they agree to accept 1500 bucks, right. To settle that debt and resolve it. And that on the surface sounds. Awesome. Sounds great. Why not? I’m gonna save $8,500, but if overall you owe a hundred thousand dollars and you’ve got several other creditors and this $1,500 is like the only thing to your name and that’s all you have.

It makes no sense, even though that specific deal sounds really good. It makes no sense to take that deal. Wipe yourself out. You’ve got no money and then you may end up in a short order. Just filing for bankruptcy. If two or three of these other creditors come after you and Sue you, and you’ve got no means to work out a deal, you just wasted $1,500 is all you did.

You could have used that money to hire the bankruptcy attorney, but now you gotta come up with another 1500 to $2,000 to hire a bankruptcy attorney. So you don’t wanna be given any creditors’ money again. And I know I sound like a broken record, but until you have a freaking plan and you know what you’re doing.

Steve Rhode: Debt collectors, give people deadlines. I’m gonna call Tuesday. You need to make a payment by Friday. Tell us about these deadline. Are they real? Are they fake? What are they?

Damon Day: They always have deadlines. Debt collector is never not given a deadline. They’re always gonna try to create the sense of urgency.

Sometimes they are legitimate deadlines. You know, sometimes you might be dealing with a situation where an account is with the original creditor. It’s actually gonna charge off the options that they’re presenting today will be D. But most often a creditor will give a deadline just to create a sense of urgency or they’ll try to lock you down to.

Okay, well, you’re gonna go talk to so and so about getting the money. So how’s Tuesday for a callback and you say, oh, okay. Tuesday. Well, what time , you know, they’ll try to. Like really kind of create that appointment, or they’ll say, Hey, this offer is only good until Friday. So I have to have an answer.

Sometimes that’s complete BS. A lot of times it has to do with the cycle, uh, the collection cycle, how long they’ve had the debt. Sometimes they might say, Hey, look at the end of this month, this deal goes away. I can’t promise you. It’s gonna be there next month. Maybe there’s a better. Next month, but they’re not gonna tell you that.

Or maybe they don’t even know about that. Right. Or it, it could be possible that the end of the month is when they lose the account because they got the account maybe four months ago, they’re gonna work the file for a few months. And on January 1st, it goes back to the original creditor. So. There is a little bit of a song and dance, but just expect that collectors will always give you a deadline.

That doesn’t mean you have to meet it. Or, and if it is a legitimate deadline, it doesn’t mean that that’s gonna be the best deal. If you don’t meet the deadline, there could be a better deal behind it. So that’s the dance?

Steve Rhode: Well, let’s talk about deals because not every deal is what it is on face value. So Damon, you talked about settlements and offers from debt collectors, but you have a really good story that you told me recently.

A debt collector and working out a fake settlement tell us about that.

Damon Day: Well, yeah, it, uh, it wasn’t tech, it was a real settlement, but it’s just, you know, there’s, I mean, there’s so much background too, but when, when you’re dealing with collectors, they’re all different, but you gotta realize that just they’re just people they’re trying to do a job.

They have parameters that they, you know, have to work within and it’s their job to collect money. So I was actually working out a settlement for a client recently. I’ve been doing this for a long time. So for most creditors, I pretty much know the window. You know, what their, what their blanket is, what the lowest they’re they’re allowed to go.

Um, you know, so sometimes you have to do this dance, you know, with the collector, cuz it’s their job to try to look like, you know, we’re we’re negotiating. And of course it’s my job to, if I’m negotiating on behalf of a client to, to, to get that as low as possible. So anyway, I was bantering with this collector.

Most collectors and creditors that I work with. Love me because I’m just a funny guy by nature. So, I mean, imagine this, I know this is kind of sidebar real quick, but it it’s good, important information. Imagine being a debt collector. Imagine what most of your day is like people screaming at you, people ignoring you, people hanging up on you.

Like that’s like the worst job in the world, in my opinion, right now, imagine you’ve got this day going and then. You get on the phone with somebody who’s cordial or cracking jokes or talking to them like a real person and having a nice conversation. They’re gonna enjoy that conversation. And if they enjoy that conversation, they’re gonna wanna help out.

So anyway, back to the story, so we were bantering and I was, you know, just kind of throwing out details about the client’s situation and what we were gonna do. And we essentially came to an agreement pretty quickly about what the deal was gonna be, because I’d worked with that collector before for that client.

And I, and I knew what the parameters were probably gonna be. So. Pretty much came up with an agreement. It was an unofficial agreement. Right. And then she said it , I kind of was laughing at myself, but she’s because it was like, it was like common core math. Right. She was like, basically, and this is a recorded call.

The collector’s recording it. She’s basically saying, okay. But I have to, that’s what I’ll submit. I’ll submit this offer, but I have to show my work in the system. Mm-hmm so she goes, so I’m gonna make you an offer and it’s gonna be. And I need you to counter that offer. And I’m trying to read between the line, like I’m confused.

I’m like what . And then I finally figured out what she was saying, and I, I don’t remember the exact numbers, but let’s say we agreed on, you know, $5,000, you know, as a settlement. And, and it was a, you know, this to say it was a $10,000 account, right. So she tells me like, Hey, I’m gonna make you an offer. And then I need you to counter me.

Okay. And I was like, okay. And we’d already agreed to whatever the deal was, five grand. So she goes, we can settle this for $9,000. And I was kind of silent cause I was still trying to figure out what, what dance are we doing here? And, and then she goes, now you counter me and I go, okay. Um, how about, no, we can only do 2,500 and she goes, hold on.

you know, she click, click, click in the computer and she goes, okay, we can counter that at 8,500. She’s like now, what do you say? ? And I was like, I’m getting it now. Right? And I’m like, oh, okay. We have to show our work. You know, I’m like 44. So I, I’m not familiar with common core. I had like regular math, you know, where you just put the numbers down and you get the answer.

I’m like, oh no, we gotta show our work here. Okay. So then I, you know, okay. How 35? We can do 35. She’s like, yeah, we can’t do 35. Hold on. Um, so we can do 7,600 on this. And I was like, yeah, that’s gonna be too much. Um, you know, we might be able to do like 42 and she’s like, well, our best and final is gonna be 5,000 and that’s the lowest we can go.

I’m like, yeah, I think we can do that. Yeah, let’s do that. And that was it. it was the, it is the funniest thing. It was like, we did the deal ahead of time. And then we had to pretend to do the deal after. And it’s just because she needed to check a box. That was her job. , you know, even though the absurdity of the whole thing, because I’m thinking, yeah, can’t they just listen to this phone call and it’s like, they don’t care as long as they get the deal that’s within the parameters and everybody’s happy.

The client’s happy. The collector’s happy. The, you know, their client is happy, right? It’s like, it’s, it’s, it’s a game. It really is. One of the companies you regularly deal with. I’m sure they’re aggressive and, and pushy when it comes to consumers. And yet, because you have dealt with them time and time again.

And it’s not your debt personally, when, when you call they’re like dam yeah.

Yeah, that is true. It’s oh yeah. I mean, I have situations where they’ll pass me around the room, you know, they’re like anybody else need to talk to Damon, like, but it’s cuz I developed that relationship with them. They know they’re gonna get a deal.

My client, my job is to help my client get a deal that the creditor is, you know, is happy with or will at least take. Right. So why would I be adversarial with the collector? It doesn’t make sense. Why would I want a situation where it’s like, oh, this. This freaking guy is on the phone again, he’s gonna try to beat me up.

And then every time it’s like this battle versus, you know, like, oh, okay, we’re gonna get a deal done. And you know, there’s a certain level of respect that goes into that on both sides and okay. Damon’s telling me that client’s situation. So he is probably telling the truth. I’ve been working with this guy for 10 years.

So, you know, he’s telling me what this guy’s situation is. So yeah, let’s just get this deal done. I mean, it’s all about relationships.

Steve Rhode: Well, debt collectors will ask you. Oftentimes, why you fell behind and what is your advice? What people should say?

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Damon Day: Well, I know this is gonna shock you, but my advice is don’t get on the phone with the collector until you have a freaking plan.

Okay. You got to have a plan and sometimes, you know, when you’re trying to negotiate something or, or, or work out a payment plan with, with the collector or a settlement or whatever it is, They’ll ask you certain things. Usually it’s just things that the system is requiring them to ask. A lot of times it doesn’t even mean anything.

Sometimes it does, but they’ll ask things like, you know, what is your income? Are you currently employed? What are your expenses? Sometimes they’ll want to get into detail about your expenses. Sometimes they’ll just say, give me your major ones, right? Like, they’ll say, well, what’s your rent? What’s your car payment?

What other creditors do you have? Mm-hmm sometimes I’ll say things like, well, what about the other expenses for the client? and they’ll say, oh, we don’t need those. And it’s like, okay. Have to work with that. What information? Yeah. Yeah. Like what are they? You know, so they’re just checking a box because obviously if they have like your three big payments as your expenses and that’s it.

How are they possibly evaluating what you can afford or what you can afford, but you need to be careful when you’re giving them, you know, numbers, because sometimes you can talk yourself out of a deal where if, what you’re telling them, doesn’t meet the parameters that the system is requiring. For instance, let’s say.

You’re trying to get on a monthly payment plan with no interest over a couple of years to, to get this debt resolved. Let’s say. And now let’s say you tell the, the collector, uh, I’m on social security or I, I, I get unemployment income. My rent is 1200. My car payment is 500. My food expense is 800 and I have, you know, $10,000 in other.

Well, what’s gonna happen. You’re probably gonna get denied. Even if they would give you a payment plan. Let’s say whatever, a hundred bucks a month for 50 months, let’s say it’s a $5,000 debt and they would do a hundred bucks a month for 50 months. Well, the system’s gonna reject your, that offer. Simply because you just basically said your expenses far outweigh your current income, and there’s no way you can afford a hundred dollars a month.

Mm-hmm so again, you have to have a plan. You have to have an understanding of what you’re trying to accomplish on that phone call. And if your goal is to get on a payment plan of a hundred dollars a month. And they’re asking you for income and expenses, you don’t wanna lay it out. So it looks like you’re $2,000 a month upside down, or they’re probably not going to give you that because who wants to set up a payment plan?

That’s probably gonna default in two months, they don’t wanna do that. So you could get rejected a waste of everybody’s time. So exactly.

Steve Rhode: No, that’s a great point because one of the things that you. Bring up our being aggressive and debt collectors are gonna take anything that you have to offer. And somehow that you’re in total control.

It brings me back around to this comment you made earlier about Facebook warriors, right? About what people are saying online. They are making big statements that aren’t necessarily. In your best interest reality or something that you should do. So let’s just put it out there that if you’re listening to somebody on Facebook who is just posting something, make sure you got a plan first, because you cannot rely on that information.

Damon Day: Oh, there’s just so much just random bad information. If somebody’s giving you advice on Facebook, because you went on the forum and said, Hey, you know, uh, I, I owe $30,000 and I don’t know what to do. And all of a sudden they’re giving you solutions, right? It’s like they don’t know anything about you. They don’t know anything about your situation.

Mm-hmm . But yet, and, and I’m sure, you know, they’re, I call ’em do gooders. I’m sure. They mean, well, they’re trying to help out, but they’ll say things like, well, you just cut out your cable bill and you know, you gotta give every dollar a job and create a budget and you just gotta pay this all off or whatever it is that their advice is.

But it has nothing to do with the person’s actual situation because they don’t know what the person’s situation is. It’s it’s at best a waste of your time. To get those kind of suggestions because those suggestions could actually make things a lot worse or they’ll say, oh yeah, you know, you’ve got a collector threatening to Sue.

You just ignore them. They, they’re not gonna Sue you. They bought that debt for pennies on the dollar. So offer ’em 10 cents on the dollar. And if they don’t take it, it’s their loss. Just ignore ’em. And then what you find is you end up maybe getting sued and then you maybe get your wages garnished. Well, a lot of good that Facebook advice did for you.

You know, the creditor wouldn’t accept 10 cents on the dollar. so you ignored them and now you’re having 25% of your wages garnished. So that’s awesome.

Steve Rhode: Well, here’s another one. When the Facebook warriors say, you tell that debt collector that you’re not gonna pay a dime, unless they take that off your credit report, they have to remove that item.

That’s not the best advice either.

Damon Day: I really do like your, uh, Facebook warrior voice impression. I think it’s spot on

Steve Rhode: All right. So let’s talk about if you reach some sort of deal with a debt collector, get it in writing. What’s. What is your ultimate advice on.

Damon Day: This is a real tricky situation. Um, because debt collectors have their parameters. Some, some collectors, no problem. Right? You, you work out a deal verbally over the phone.

You ask for them to send it to you in writing. No problem. They’ll send it to you in writing. And then they’ll say, just call us back in a week when you get it. Or sometimes they’ll be able to email it to you or fax it to you. Sometimes they’re, they’re required to mail it. You know, certain creditors have to do certain require certain things.

So. If they’re gonna mail it, they’ll say, Hey, give us a call back in a week when you get it. And go ahead and set up a payment, other creditors and collectors, do things a little bit different where they don’t wanna waste their time, where they actually won’t send something in writing, unless they at least have a verbal agreement, you know, over the phone for whatever the deal is gonna be. And a future payment set up in the system for whatever that agreement was and your banking account information to draft that payment on whatever, let’s say, that’s the 15th of July. Okay. And, and you say, no, no, no, no. I read on Facebook.

I’m not giving you any banking information. Until I get that letter. And, and let’s say, this is a really good deal. If it was legitimate, it’s a really good deal. And that collector says, I’m sorry, our policy is, we’re not going to send that letter until we at least have a promise to pay with your banking information in the system.

So now, what do we have? We have you potentially snatching defeat from the jaws of victory here. You got a good deal on the table, but you’re not willing to work within that collector’s parameters. So you have to ha be able to give and take a little bit, and there’s things that you can do ahead of time to not put yourself at risk.

You know, things like setting up a separate bank account for only for a settlement. So then you let’s say you have a new bank account with no money in it. You give that to the collect. Just to kind of hedge your bed a little bit. And so they, they satisfy what they need to have, which is an authorization for a future payment on file two weeks from today.

And here’s this bank account information. Well now worst case scenario, if you never get that letter, they don’t give it to you or you call ’em back and you’re not comfortable. You don’t have to fund any money into that account and it would get rejected. That being said, I’ve been dealing with collectors for a long time, and I’ve never had a situation where an agreement was reached, um, at money exchanged hands and then a, a creditor then turned around and tried to claim that that didn’t happen.

And I’m not saying that can’t happen. You know, there are scams out there and things like that, but a legitimate collect. Is not gonna be playing games like that. That being said, you still wanna protect yourself as much as you can, but try to refrain from saying, Hey, this is the way I’m gonna do it as a consumer and trying to force a collector to do it your way.

If it’s, if they’re not able to do that, you need to work with them, especially if there’s a good deal on the table, because they’re not obligated to give you a deal at. If you owe $10,000 legitimately and you owe $10,000 and they’re offering to accept 3000 and call it good. There’s a certain amount of give and take that needs to happen in that transaction, that forgiving seven grand, you know, of the debt mm-hmm that you legitimately owe in this example.

So you can’t be, you know, high and mighty here about no, I’m not gonna give you my banking information. I’m gonna send you a personal check whenever I damn well feel like it. That’s not gonna work. So, you know, don’t, don’t screw yourself out of a good deal, just because a creditor is not willing to send a letter before they at least have authorization from you to pay because some collectors that’s their.

Parameter, they cannot send that letter. The system won’t generate the letter until that authorization is there. Other creditors have no problem with it. So again, be careful with Facebook warrior advice, you can’t make, give general advice and have it apply to all scenarios in all creditors.

Steve Rhode: Probably the most dreaded debt collector situation I live through everyone else lives through. And you might have also is the debt collector calling. And if they can’t reach you, they start to call family or friends or call you at work. What advice do you have for people to deal with that situation?

Damon Day: Yeah. And, and that could happen typically, especially if it’s a third party debt collector. If they start calling relatives, things like that, you know, people get very upset naturally.

They, I don’t understand how they, you know, even got my, you know, stepmom’s, niece’s aunt’s number. Because they have nothing to do with this debt, but somehow they called her looking for me. Well, you know, there’s skip tracing software and things like that. We got social media these days. It’s not that hard for a collector to figure out who you might know right now.

If they do call. Somebody else, a friend, a family member, something like that. Number one, they’re not allowed to get into detail, you know, it’s, it would be illegal for them to, I mean, you could literally hire an attorney and Sue them. If they call up, you know, aunt June and start talking about, Hey, John owes us $50,000 and he hasn’t paid and this, that, and the other thing mm-hmm that that would be really bad for them.

So that kind of stuff doesn’t happen, but what they do or what they will do sometimes is call and just say, Hey, this is so and so, you know, from such and such. And I’m calling, looking for John. Haven’t been able to reach him. Do you know where he is now? They are allowed to call and try, you know, if they’re trying to locate you, obviously, that’s a very embarrassing thing for a lot of people.

And then aunt June will call John and Hey, bank of America just called. They’re looking for you. What’s going on? Are you in some kind of trouble? You know, that kind of stuff. Right. But what this tactic is used for, it’s used to smoke you out, right. Because maybe you’re ignoring them. And they don’t, you know, they haven’t been able to get you on the phone, but guess what you call aunt June and you call your, your stepmom from 10 years ago and your ex-girlfriend from high school.

And now all of a sudden the debtor is picking up the phone and calling the collector, cuz they’re all pissed off and freaked out and they’re, they’re calling and saying, you know, stop calling my relatives. And then the collector says, okay, no problem. Uh, but since I have you here on the phone, what about this $10,000 that you owe us?

You know, so it’s a tactic that they can use to get you on the phone. But if you, now, when you call and say, Hey, I don’t, you know, you can’t reach me at that number. That’s my stepmom. And that’s my ex-girlfriend from high school. Thank you very much. Or whatever the situation is, and you say, I need you to remove those numbers.

They will do that in very rare cases. They might, if they’re a scam or they’re really trying to harass you, but it’s not, it’s not likely to happen. As soon as you say you can’t reach me there, here’s the number. But again, don’t make that phone call and tell you have a plan of how you’re gonna deal with that collector on that debt.

But you can call and tell them to stop calling these other numbers. And they typically will do 99% of the time. They’ll stop.

Steve Rhode: And when you’re emotionally charged up, you’re calling cuz you’re pissed off cuz they called aunt June, whatever you do, never, ever, ever make a promise to pay that you can’t meet.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

And Damon tell everybody why that’s a bad idea.

Damon Day: Well, you don’t wanna make a promise to pay that you can’t meet because then it could get you labeled in their system as a refusal to pay. And you don’t wanna ever be a refusal to pay, cuz that could escalate. And again, every situation’s different, but it could escalate to maybe just a referral to an attorney, um, that could potentially then, you know, go into litigation.

Then you’ve got that whole mess that you have to deal with. It’s it’s much better to ignore a creditor. In their system, then it is for them to label you as a refusal to pay. So again, when you’re talking to them, have a plan, don’t get on the phone with them and just say, I’m not gonna pay this. I don’t care.

Screw you all, whatever it is. You’re gonna say, even if you say it in a nice way, you need to always essentially be saying I’m working on it. I’m coming up with a plan. I’m applying for jobs. Whatever it is. You just, you wanna avoid being labeled as just somebody that refuses to pay, because then it puts them on a decision.

If this guy’s gonna refuse to pay, we either don’t collect from him or we escalate it.

Steve Rhode: Well, Damon, we could go on for hours and hours on debt collection topics, but let’s, let’s end it here. And if anybody has any questions about debt collectors, You can always visit me at, uh, get out of debt.org. I’m the get out of debt guy.

If you need a hand and you need somebody to guide you through a difficult situation and more importantly, to help you come up with a plan, then I always encourage people to visit Damon day at Damon, damonday.com. You’ve heard him, you’ve heard the good advice. He’s there. He can be your friend when you’re in trouble.

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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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