Communicating With Credit Card Bill Collectors

Image of a bill stamped with PAST DUE

One of the most stressful aspects of having a financial difficulty is dealing with collection calls. No matter how many times you ignore them, the calls keep coming and coming. It seems like there's nothing you can do.

How to Deal With Collection Calls

Shortly after you stop paying on the debts that you owe, you'll find that the calls will start rolling in. Your creditors will attempt to reach you to acquire the money that you owe them. Once your debts have become delinquent they will be sold off from your creditors to a collection agency. Both the creditors and the collection agencies will start to employ some annoying tactics to get you to answer their calls and pay what you owe. It's important to know that you do have options. You can choose to either ignore these calls, ask them to stop calling you (which might not be in your best interest, although appealing), or contact them to discuss the situation. Whatever you decide, make sure you do some research before you could possible make your situation worse than it already is, but more importantly you should know your rights.

The first thing to keep in mind is that a collection call is just that, a phone call. As unpleasant as it may be, don't let a phone call ruin your day! Most people receiving collection calls arrived at their current financial situation for dire reasons such as a result of job loss, income reduction, illness, the death of a spouse, or they simply lack the proper money management skills. Whatever the reason is, you didn't use your credit cards with the intention of defaulting on your bills. We know one thing for sure, you certainly didn't incur debt because you enjoy collection calls.

Common Collection Tactics

Collectors and collection agencies are trained to get paid as quickly as possible. Many collection agencies work off of commission, or some combination of salary and commission. Here are some tactics and phrases that are common to all bill collectors:

"We need a check over the phone TODAY."

There is no requirement to make a payment by check by phone, Western Union Quick Collect, or overnight mail. If you are comfortable with these methods of payment than by all means, go ahead. However, do not feel obligated to pay by check over the phone. If you are not comfortable, tell the collector you will mail the payment through regular mail.

"If this situation is not resolved today, we MAY have to take further action."

You will not usually hear this until your account is three or more months behind. Notice two things about this statement. One, they "MAY" have to do something. It is illegal for a collector to say they WILL do something unless are intending to, so saying that they "may" do something is technically alright. Second, they use the phrase "further action" without specifying what that action will be. The collector is intentionally vague to make sure he/she does not violate the law. If the call gets to this point, the collector is assuming you are not going to pay and trying to intimidate you into doing so. Ask them to clarify what that action is.

"I understand you're having a hard time, but your account is three months behind and requires a payment immediately. I find it hard to believe that over the last three months you haven't been able to send us anything at all."

Collectors will use guilt to get you to pay. If a collector questions the debtor's integrity many people will pay, even if they truly can't afford to, in an effort to show their good intentions. This approach is also useful to the collector, because debtors almost always volunteer more information about their situation in an effort to justify their delinquency. No one wants to be accused of skipping payments intentionally, and the collectors know how to use this well.

"That is not acceptable."

Collectors will flat out refute and refuse what you have to say. This will occur when there is a large amount due, but the debtor can only offer a small, partial payment. Do not get upset or intimidated, and do not argue. You know how much you can afford to pay - make it work for you. Tell the collector how much you can afford and ask if it is enough to begin a re-age or payment plan. If it isn't, find out how large of a payment they would need to begin a payment plan or re-age. It will usually be about two percent of the balance. If you do not have enough, just tell the collector that you will send what you can, when you can.

"I'm going to note that you're refusing to pay."

This is another intimidation tactic. You are not refusing to pay; you are unable to pay. Don't panic. It doesn't matter what the bill collector notates on the account. Banks do not favor a judgement to sue based on a collector's account notes. They have many criteria, including balance, credit history, how many other creditors you owe, and how far behind you are. If a collector threatens to notate false information on your account such as this, do not be afraid to ask for their supervisor and clarify that you are not refusing to pay.

There are many more tactics and phrases that collectors use, and they are all designed to convince you to pay immediately. The Fair Debt Collections Practices Act governs what a bill collector can and cannot do. The law's definition of a bill collector as a third party includes collection agencies. The law does not bind a creditor's in-house collection department, but the vast majority of creditors have adopted the FDCPA as their company policy. If at any time you feel a collector has violated this act, contact your Attorney General's Office or the Federal Trade Commission.

Prepare Ahead of Time To Contact Them

If you haven't already, start keeping a log of when the creditor calls you, which company they work for, which debt they are collecting on, and who you are speaking with. This will help you keep track of your debts. It will also help you keep your collectors honest about any discrepancies that may occur.

It is important that you identify your essential needs first, such as mortgage/rent payments, groceries, transportation to and from work, utilities, and insurances. These costs are essential to living; they are the 'needs' and not the 'wants'. You do not want to be in the position where you are paying the bill collector who is screaming the loudest and letting your needs fall by the wayside. Bill collectors are paid to collect as much money from you as quickly as possible. Looking out for yourself is important. Create a budget and see what you are able to afford to pay towards your debts each month, if at all. You want to be informed and ready to when you call your collectors, because you want to make these phone calls only once. Even if you are truly unable to afford a payment to your creditors, you will be able to explain your situation to them. Also, NEVER promise them more than you can afford!

Legal Issues

Under the Fair Debt Collections Practices Act (FDPA) is a federal act that prevents collectors from using unfair, abusive or deceptive practices in order to collect from you. Some of the actions the collectors are prohibited from using are using profane or obscene language, falsely proclaiming they will take legal action, disclosing your debt to other parties without your consent, and threating violence or imprisonment. If they're calling you at work, inform them that your employer does not allow you to talk while you're at work and they must stop.

Some debts may be too old to collect on, and the collectors are hoping that you don't know that. Different states have different statutes of limitations on the life of a debt, so make sure you do some research before deciding your debt has aged out. If your debt has passed your state's statute of limitations and you make a payment on it because you were unaware, it will re-age the debt. No matter how small the payment, it will re-start the clock.

Threatening to sue you if they have no intention of doing so, is illegal for the collectors. However, they CAN sue you for your debts before they move to collect off of your property, wages, and/or bank accounts. Why wouldn't they just sue you for the money right away, without jumping through hoops to call and contact you? Simply, it costs the collection companies money to sue you. They would rather try and get you pay on your own. A lawsuit is most likely going to occur near the time of the end of the statute of limitations on your debt. The looming fear of a lawsuit is something no one should have to contend with, that's why we recommend contacting your collectors and working towards paying off your debts.

Call Your Collectors

Now, the difficult part is putting all of your anxieties aside and reaching out to your collectors. Believe it or not, most collectors have a very good understanding of your situation. Many of them will even appreciate hearing from you. An experienced bill collector will know that you are stressed, at least a little scared, and they know that you ultimately want to pay the bills - most people do.

However, be weary! Not all collectors are going to be polite and forthcoming. It's up to you to remain calm. They may become a little aggressive when you begin to explain that you're having difficulties with your payments, don't let this deter you. Remind them that you are dutifully reaching out to them, you've prepared an honest budget that you're willing to discuss, and you want to be debt free just as much as they want your money. Nevertheless, don't' forget that these collectors are under as much pressure to get money from you, as you are to pay back your debts. Don't let them intimidate you with false urgency, offering you deals with a deadline.

When the Cardholder Has No Money

If you cannot pay, the calls will keep coming, but the best thing someone in this situation can do is to call to the collectors on your own time. Convey your situation, why you cannot pay, and when you think you will be able to start paying. Explain that you've created a budget and that there's no way that you can afford the payments right now. Your situation will be notated on all of your accounts. The creditors will know your situation, and may even offer a hardship payment plan to assist you. It is very important not to make any promises you cannot keep. Do not bother telling them the "check is in the mail" because they have heard it before. Do not set up a check by phone if you know it will bounce. The goal here is to open up a line of communication, and if benefits occur because of that communication-great, if the phone call doesn't go so well- this might be a good time to call a non-profit counseling agency to see what your options are. Perhaps declaring bankruptcy is an option.

The collectors will vehemently try to convince you to pay after you tell them you cannot. They will suggest borrowing from family, selling assets, or maybe even paying with another credit card (signing up for more debt will only get you into more trouble). Simply repeat that you have no way of paying and politely get off the phone. There is no reason to get into an argument. Be honest, yet firm, but remember these debts need to be addressed.

When the Cardholder Has Some Money

If you have the ability to make a partial payment, you will put yourself in a better situation. Making a payment will probably slow down the telephone calls. Also, if you are still communicating with your original creditor and not a collection agency, you may be able to have your account brought current and stop the calls altogether. The creditors have the ability to 're-age' a debt. A re-age occurs when the creditor accepts a payment of a specified amount (usually two percent of the balance) for two to three months in a row. Once these payments are made, the account is brought current, with no need to make up any further back payments. Keep in mind that the calls usually continue until the account has been brought current, so be prepared to inform them that you have set up a re-age with another representative. Be sure to make the next scheduled payment on time.

Depending on the creditor and the amount of money you have available, you may be able to negotiate a payment plan. Many creditors have hardship plans that reduce payments, re-age accounts to bring them current, and reduce interest rates. These plans usually last between six months and one year, and are not designed to pay off the account. They are intended to bring your account current and to reestablish a good payment pattern, which is precisely what you want to do at this point.