Receiving a call or letter from a debt collector can be a scary experience. Here's what you need to know and what to do so that you don't have to be afraid:
- Debt collectors (for the most part), are just trying to collect monies owed. They are not "evil" or "our to get you". If you follow my advice, you should be able to work with them to resolve your debt problem.
- Having said that, some (yep, there's always a few) go too far in their debt collection efforts. I'll show you how to handle this type of collector.
- No matter how serious you financial and/or debt situation is, there is a solution. DON'T BE AFRAID!
- A debt collector can be from an attorney's office. There are many lawyers that only practice debt collection. You can work with them as well.
- Regardless of what a debt collector says, you are not going to jail or have all of your belongings seized or confiscated!
You probably already know this, but let me briefly explain the debt collection process:
There are several reason why you find yourself barely able or unable to keep up with your debts. (For the sake of this article, I'm only dealing with UNSECURED DEBT (credit cards, medical bills, personal loans, etc.) and not SECURED DEBTS (debts secured by the item itself (house, car, etc.)
Having been helping people deal with the stress, frustration and seemingly hopelessness of have too much debt, in about 99% of the time, something like this has cause the financial hardship:
- Unemployment for a long time
- Divorce or separation
- Trying to make ends meet on a fixed income after retirement
- Long illness or disability
- Death of spouse or partner
Using credit cards or credit in general may help in the short term, but when your situation doesn't improve or change over a long period of time, then you get to the point where is is very difficult or impossible to just make the minimum payments!
NOW WHAT?
So when you start missing payments or don't make the required minimum payments due, the calls and letters start!
I'll show you how to put a stop to the calls later, but for now, it is very important that you realize what to DO AND NOT DO, when the original creditor calls or writes.
Unfortunately, the original creditor (Visa, Macy's, Home Depot, etc.) that issued the card or account, has the legal right to call you when you miss payments. You can do one of two things:
- Not answer the call (just let all calls go to a recording), or...
- Answer the call.
While your account is still with the original creditor (and it will be for 3-4 months), you might want to answer at least one call to see "where you are at" with this creditor.
Here's what I mean:
Depending a various circumstances, once you've be delinquent on making payments for a couple of months or more, you may get an offer (usually in the form of a letter), with a reduced payment plan or even a reduced balance settlement that could work for you.
Let's say that you've been unemployed for about 6 months, used up all (if any) of your savings, and have been using credit cards to make up for the lack of income for things like groceries, gas, or even a cash advance to keep the lights on!
But, GOOD NEWS, you've found a new job and the pay is pretty close to your last job.
One the one hand, this is great! But, on the other hand, you are so far behind in paying your credit card debt, it looks like there is just "no way" you can catch up!
You really only have a few options:
- A Debt Management Program
- A Debt Settlement Program
- Bankruptcy
Debt Management is a program offered by most creditors, whereby they agree to reduce and/or eliminate interest rates and fees until you get "caught up". This used to be referred to a Credit Counseling Program.
If you qualify, you will have ONE PAYMENT that is pretty close the total of all the minimum payments that are currently required on all of you cards or accounts.
The problem is that with a Debt Management Program, that payment may be too high for you to be able to qualify.
If you would like to learn more about this and/or see if you qualify, click below:
If you do not qualify for a Debt Management Program, then you should consider a:
Debt Settlement Program
By now, most or your credit cards and other accounts most likely have been placed with a Debt Collection Agency.
Sometimes the accounts are even sold by the original creditor for "pennies-on-the-dollar" to companies.
Now, these collectors or "debt buyers" will start to contact you by phone and mail.
Whereas before, when your account was still with the original creditor, you could not stop calls, once the account is assigned or sold to a collector, you CAN PUT A STOP TO THESE CALLS! Here's how:
At this point in the collection process, most likely you will get or can negotiate a SETTLEMENT.
The debt collector who has the account (or the debt buyer) can offer to settle the outstanding debt for less than the full amount.
This can be done in a LUMP SUM or even in several, interest-free PAYMENTS.
Check out some actual settlements we have negotiated for our clients:
Once the account has been settled, not only will you be done with this debt, but your credit report/score will start to improve.
It won't happen over night, but over a relatively short time (3-4 months after settlement), your scores will increase!
Finally, if you cannot qualify for a Debt Management or Debt Settlement Program, you may need to seek BANKRUPTCY PROTECTION from your creditors.
The law allows (in certain situations) for someone to basically "start over with a clean slate" through bankruptcy.
While I believe you should try to either take care of your debts through Debt Management or Settlement, if you just cannot do either, then seek the help of a Bankruptcy Attorney!
The attorney will offer you a FREE, Initial Consultation and he/she will explain your options.
As you can see, when dealing with the stressful situation of having too much debt and too little income, you don't have to fear the debt collection process.
But, you just can't "put your head in the sand" and ignore the problem.
There are answers and freedom waiting for you:
