How to Deal With Collection Agencies

Whether it's because of illness, unemployment, or unexpected financial disasters, you might someday have to deal with a collection agency. This won't tell you how to avoid paying off your old debts; it will tell you how to deal with the phone calls in a way that you and the agency rep will both be satisfied.

Prepare a complete script, and keep a copy next to each telephone in the house. This script will start off as follows: "Before you go any further, I need to tell you that I’m extremely willing to work with you. However, the moment you become threatening, aggressive, rude, or disrespectful, I will hang up and will not take another call from you. Can you agree to this?" If they start to argue ("Sir, that's not how we work..."), hear them out and re-read that phrase in a calm and well-modulated voice until they agree to your ground rules. Then continue: "Now, before we start, I need to get your name, your company’s name, and a telephone number." Many collectors will get flustered by your calmness and direct approach. They will say " I will mark you down as being uncooperative" or something like that. Tell them you are not being uncooperative, you are asking for their cooperation. Write down this information, along with the time and date of this call. Put all this information into a file, and save it, as this process can go on for a very long time.

They will usually tell you that they are going to record the conversation "for quality assurance purposes." If they do, ask if you may also tape the conversation; do so.

Once they've agreed to your terms, ask for your balance at this time and jot it down.

Have an amount already affixed in your head beforehand that you know you can, without fail, send them every month or week, no matter how small that amount might be. They'll most likely push for more. Stand firm, and explain that this is the amount of money you have, and you can't possibly pay more than that. At all times, maintain that you want very much to resolve this debt, but, at the moment, this amount is all you can do. Explain that, if they accept this offer, you will agree to re-converse with them in six months to see if you'll be able to increase the amount at that time. Do not agree to have the money ripped from your bank account by EFT.

Be sure that they agree to stop trying to collect interest on the debt. Tell them to stop calling you unless it is to return your call.

When they agree to your payment, ask them to sign and fax you a note with your balance and the agreed-upon terms on it that you will then sign and fax back.

Be sure to read the note over carefully before signing it, as this will be a legally [and certainly ethically] binding contract.

You must keep a calm, reasonable and well-modulated tone of voice. Any yelling, name-calling or other verbal tactics will erode the image you're working to project.

If they speak to you in any way that you find objectionable, give them one warning, as mentioned in your opening statement. The second time, ask to speak to their supervisor. When you're connected, start again from step one.

Write down everything--the date and time of the call, data on the rep calling you, what they want, what you're offering, etc.

As you continue to talk with different creditors, you'll pick up new tips. Be sure to write them down for the next time.

It may be a good negotiating strategy to reduce your monthly offer by 15% to 20%. It will give you negotiating room and many collectors believe you have done this anyway.

If your finances are really starting to hit the skids, go to the Yellow pages and look for an organization that helps with credit counseling. This agency, if it is a good one, will not charge you for their services.

Despite recent changes in the law, bankruptcy is still available and is an alternative under the correct circumstances. See a bankruptcy attorney. If you do not know who to call, call your local bar association or law school and ask for a referral or for the head of their bankruptcy committee or department.

You must remember that, legally, you do not have to put up with collection agencies. All you need to do is to write them letter demanding that the collection agency stop all collection activity. It is advisable to send the letter by certified mail. If collection activity ensues, you should contact an attorney.

Whenever you send letters to them, send two copies at a time. One with return receipt with signature, and the other with just delivery notification. In this way, if they ever claim that they did not receive the letter, you can produce these proofs of mailing.

Many times the names of the collectors are not their real ones. One way to figure it out is to send the signature receipt letter addressed only to that one person. If they sign back with their signature on the letter, they must be that person (otherwise it becomes a federal offense of mail fraud).

Sometimes you just can't win, they won't listen to reason or acknowledge that you legally are not obligated to the debt. In this case, establish a long paper trail indicating that they did not wish to collect on the debt in good faith. When they file your collection with the credit agencies, mail copies of your paper trail to all three, with documentation that they violated the Fair Debt Collection Act and demand removal of the claim from your credit report immediately.

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