3 tips for when collectors come calling

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Dear Debt Adviser,
I got caught up in payday loans a few years ago. I got caught up in the stereotypical things that happen with people who use these loans. Because of this and my own negligence of my responsibilities, I have many items that went to collections. I am ready to pay them and have the ability to make payments monthly, but it’s so overwhelming, especially since these companies are selling my debt to other companies and I don’t know who to deal with.

I’ve seen debt management programs for credit card debt, but is there a company that does the same thing for items in collections? It would be nice to get some guidance and send my payments to one company who will send my monthly payments to these agencies for me.
— Lisa

Dear Lisa,
Here’s some background on what I see going on in your case. Debt selling and buying is a big business today. Many original creditors will try to collect a past-due account until the accounting people make them write off the account as a loss. This doesn’t mean they have given up on collecting the debt. No, ma’am. Debts have more lives than a cat these days! A company that wants to get a quick return on a bad debt can sell the debt for less than full face value to another company that may specialize in debt collections. In your case, this seems to have happened more than once and who you currently owe the money is unclear.

Your idea to look into a debt management plan is a good one. I know you believe you are ready and able to begin monthly repayments, but your creditors may think otherwise. Often they ask for more than you can afford. In the case of multiple collectors, each one may want more than you have available if you are to repay them all. A counseling agency may have better luck getting them all to accept an affordable payment than you would.

The not-so-good news is that not all collectors will work with a credit counseling agency. However, it is worth talking with a certified counselor at an accredited nonprofit agency to determine if the collectors who are calling you will work with them. You can find a list of agencies on the Web sites for the Association of Independent Consumer Credit Counseling Agencies or by calling 866-703-8787, and the National Foundation for Credit Counseling, 800-388-2227, and see what they can do for you.

If you have some collectors who are not willing to work with you through a credit counselor, I suggest that you follow these three steps when dealing with the collectors yourself:

  • When you receive a phone call from a collector or you make contact on your own, don’t expect a warm reception. You are the one who broke a promise, even if it was for a good reason or circumstances beyond your control. Try to keep matters on a strict business footing by requesting that they send you a verification of the debt. This accomplishes two things. First, you will verify that the debt is truly yours. And second, the verification will include the contact information for the collector. Then, you will have what you need to communicate with them about repayment.
  • Once you have contact information and you have verified you do indeed owe the debt, send a written monthly payment offer via certified mail with a return receipt to the collector. Also, offer only a monthly payment amount that you know you will be able to pay each month until the debt is paid in full.
  • Expect the collector to try to get you to increase your offer. Once everyone agrees to the amount, request that the collector put the agreement in writing and send it to you. Try to not make your first payment until you receive the written agreement from the collector.

    Should you find it difficult communicating with the collectors or would prefer to get professional help, you could also consider contacting an attorney with debt-collection experience. Your attorney would communicate with the collectors for you and work out repayment plans. Of course, you would have the additional attorney’s fees to pay, but for your peace of mind it might be worth it.

Good luck!

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