After considerable anguish you have concluded there’s just no way to continue paying your bills. Squeeze as you may, the money just isn’t there. So, now what?
The first thing that is going to happen is, you’ll begin receiving notices in the mail that you have missed a payment and to please bring your account current.
These letters will will become more and more frequent as the amount of time between your last payment and the current date becomes further apart.
On the second month, you’re going to start receiving phone calls. You really should answer these. Because depending on your situation, the lender may have an option that will work for you. Also, most of the folks working in the collection departments of the original creditor are fairly professional.
Though, often this job is farmed out to third parties. You can expect to get calls from call centers in India - so be prepared. And you’ll receive calls from folks with chips on their shoulder who assume you are a devious person purposely trying to skip out on your debt.
There's no way to have a constructive conversation with either. The folks calling from out of the country stick to their script. If you try to speak logically to them, they simply repeat the script. The guys with a chip on their shoulder - well, their coming for blood. They're going to say whatever they can to minimize your self worth and make you feel like dirt.
You need to be recording these calls! Though there’s not much you can do about callers who have attitude, you do need to arm yourself.
There's no way to have a constructive conversation with either. The folks calling from out of the country stick to their script. If you try to speak logically to them, they simply repeat the script. The guys with a chip on their shoulder - well, their coming for blood. They're going to say whatever they can to minimize your self worth and make you feel like dirt.
You need to be recording these calls! Though there’s not much you can do about callers who have attitude, you do need to arm yourself.
First thing you’ll want to do is check with your state laws regarding recording conversations. You need to know what the law is, to be informed. But, you’re going to want to seriously consider recording any conversation you have with your lender and/or debt collector. If for no other reason than to create a written document of the conversation.
If you don’t want to talk to the debt collector, tell them you’re recording the conversation and they will disengage almost immediately. That, in itself, ought to raise a red flag for you.
Why would they be so adamant that you not record the call, when they are? What do they have to hide?!
If it were me, I’d record the call, and not tell them... But, that’s just me. You can pick-up an inexpensive recorder at Radio Shack or check your local CraigsList.
One thing this will do - psychologically, it makes you more calm. If you know you’re being recorded, you’re less likely to cop an attitude. I'll get back to this in a moment.
You may want to turn the recording over to an attorney if the collector has violated the Fair Debt Collection Practices Act (FDCPA). Even if the attorney can’t use the recording itself, he can recreate a written document of the conversation.
Keep good records - include dates, times, who you spoke with and what is said. Even though most debt collectors use aliases, still write down their contact name.
The next thing you’ll want to do is get on the internet and look up FDCPA. Read through that - and not just once. Take notes!
Look up the Fair Credit Reporting Act, too. This is dry reading, but you should know your rights.
Be sure to look up the Federal Trade Commission (FTC), the Better Business Bureau and your State Attorney General. If you need to file a complaint, these are some of the organizations you’ll be filing the complaint with.
There are things debt collectors can and can’t do and say, and some debt collectors are notorious for abusing the FDCPA rules. There are attorneys who do nothing but sue these guys - at no cost to you. Keeping a good record will help an attorney make a case on your behalf. You can Google "FDCPA violations" and you'll probably see one or two attorney's advertised in the right column.
I got a bank rep on tape calling me a dirt ball, as he hung up the phone. I also was able to prove a debt collector called my work after they were specifically told not to and after they agreed not to call my work! (I had them on tape). That’s a clear violation of FDCPA rules.
If you do mail anything to a collector, like a Cease and Desist letter, send it certified, return receipt. Don’t even consider mailing in a letter via normal mail - ‘cause it’ll be lost, and you won’t have any way to prove you mailed a letter to them.
That’s why recording conversations is important. It’s your word against theirs, and debt collectors, for the most part, have very weak memories. Try proving you sent a Cease and Desist letter to them, without a return receipt.
If you do agree to some sort of payment get it in writing, and do not send any payment until you have a clear understanding of the amount of the payment and how that payment will be applied.
The Internet is littered with complaints about unscrupulous debt collectors taking your money, and then losing it or applying it in a manner that was not agreed upon. If it's not in writing, it just doesn't mean diddly...
Oh, and this is important... As you get further along in the process and your debt gets sold to various collection agencies, you need to know that there is a “clock” running on the Statute of Limitations. That time line will affect how long they can pursue you for collections. If you make a payment of any amount, that payment re-sets the clock to zero - starting the timeline all over again. They will work really hard to get you to make any payment, just to keep that clock ticking.
You know, if you get to feeling bad about the situation - especially because you have always been a responsible, bill paying consumer until the world as we knew it got turned upside down, just remember the entire system is designed to screw the consumer.
Let's say you have a $1,000 dollar VISA you're unable to pay, for whatever reason. Did you know that one of the reasons those late fees and other fees are imposed, is to simply create value? the lender will make some attempt to collect, but at some point it's no longer to their advantage to collect.
You see, as those fees add up, the value of that debt increases. For example, once that original back due balance of $1,000 reaches $1,500 including those nasty fees, they'll sell that debt to a collector for a discounted price of $1,000!
They just got their money back!
Now, that collector owns a debt worth $1,500 that they only paid $1,000 for! What a steal! If they collect the full $1,500 they have made a whopping 50% on their investment! They can generously negotiate that debt down, because they "feel bad" for you, and still make 25%.
Now I know, there's more to it than that - but you get the gist. There is nothing about this system that is designed to benefit the consumer.
You know, if you get to feeling bad about the situation - especially because you have always been a responsible, bill paying consumer until the world as we knew it got turned upside down, just remember the entire system is designed to screw the consumer.
Let's say you have a $1,000 dollar VISA you're unable to pay, for whatever reason. Did you know that one of the reasons those late fees and other fees are imposed, is to simply create value? the lender will make some attempt to collect, but at some point it's no longer to their advantage to collect.
You see, as those fees add up, the value of that debt increases. For example, once that original back due balance of $1,000 reaches $1,500 including those nasty fees, they'll sell that debt to a collector for a discounted price of $1,000!
They just got their money back!
Now, that collector owns a debt worth $1,500 that they only paid $1,000 for! What a steal! If they collect the full $1,500 they have made a whopping 50% on their investment! They can generously negotiate that debt down, because they "feel bad" for you, and still make 25%.
Now I know, there's more to it than that - but you get the gist. There is nothing about this system that is designed to benefit the consumer.
While you're speaking to these debt collectors, remember there's a very good probability that they are earning a commission based on what they convince you to pay. They have a vested interest in you paying something. Not only that, but their continued employment may be tied to their "production." A lot of these guys have quotas to meet.
They are extremely motivated to convince you to pay something, one way or another! How this payment or their continued calling impacts you and your family is of absolutely no concern to them.
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