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How to deal with debt collectors

Debt collectors ringing your phone off the hook and sending intimidating letters can frazzle anyone's nerves. But you have various forms of protection and many techniques available to deal with them.

The Fair Debt Collection Practices Act sets guidelines for what debt collectors may or may not legally do when attempting to collect a debt. They can't, for example, call before 8 a.m. Or after 9 p.m., nor threaten to garnish wages in states in which it's illegal, or harass you with continual phone calls if you tell them to stop.

[For the full text, see: http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm#801]

As a consequence, you have several options. You can simply refuse to take the call. Most answering machines allow screening your call before picking up and if you have caller ID/call blocking you may be able to filter the call out entirely.

If you choose to pick up, you can insist that you not be contacted any more, and the agency is legally obligated to stop calling - if you've sent a 'cease and desist' letter. Of course, legal action of that kind can be expensive, so you may want to employ other techniques first.

First, you should consider actually paying the debt, if you can and if you actually owe it. You took on the load, and the creditor is entitled to be paid. But, if you're seriously short of funds, you can couple this with negotiating for a reduced rate.

If you follow up on the commitment, the phone calls will stop. Bill collectors, despite their sometimes unpleasant attitude, are just performing a service for which they get paid. They will move on to others, once an agreement is in place.

Be sure you keep a diary of any calls made or accepted, and note any terms agreed to. Note if you've insisted they stop calling you, especially if you've been called at work. You can tape the call if that's legal in your state. (Sometimes it requires notifying the other party that you are doing so.)

Few debt collectors will make any statement that's out of line if they know they're being recorded. That recording or diary can be especially important if you have negotiated a reduction in the debt.

Most debt collectors have the authority to accept substantially less than they're asking for. Naturally, since they get paid a percentage of what they collect, they're going to try to keep the amount as close to the original as possible. But they will accept less if you press. They know that 50% of $500 is better than %100 of nothing.

Part of the agreement should involve a commitment on the debt collector's part not to put any black marks (beyond what may already be there) onto your credit report. You should take that one step further and insist they report quickly any payments you do make and to adjust any amount owed.

Get it in writing before you send anything more than a token good faith payment. It's ok to send some money to demonstrate the sincerity of your commitment to the agreement. Send too much and they have little incentive to make the effort to comply with the terms binding them.

Patience, realism and maintaining your calm during discussions will go a long way toward making an inherently unpleasant situation less stressful.

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