MercuryNews.com recently posted an interesting article with advice on how to ease the stress of dealing with debt collectors. Below is a snippet from the article, but you can view the full text by clicking here.

1. DON’T HIDE:
It’s tempting to avoid creditor calls when you don’t have enough money to pay, but that’s a big mistake, said Bruce McClary, spokesman for Clearpoint Financial Solutions, a national credit counseling service.

“When you duck the calls, the situation gets worse,” he said. “You can put yourself in the driver’s seat by telling the person what’s happening.”

If you don’t answer the phone or return calls, creditors will call more often and may call your friends and relatives to try to find you.

It’s best to contact your creditors before you start making late payments, McClary said. But if it’s too late for that, just explain what’s happening and what you’re trying to do about it.

2. DON’T PAY DORMANT DEBT:
If you’re being contacted about an old debt, the first thing to do is consider whether you actually owe the money, Detweiler said. Every state has a statute of limitations that specifies how long you can be hounded about an unpaid debt. Typically, once that limit — typically three to 10 years — has been reached, you no longer need to pay.

That doesn’t mean the debt collector can’t sue you. But the statute of limitations is a perfect defense, Detweiler said. Don’t let the collector intimidate you into making a payment on a debt that is past its expiration date — that can make things worse.

3. DISPUTE INFLATED DEBTS:
In many cases, an old debt will be inflated by late fees and debt collection costs. You may be liable for those charges, Detweiler said, but sometimes the amounts can exceed limits imposed by state law.

If the debt seems inflated, you have the right to dispute the amount, which gives you more time to investigate whether you owe as much as the collector says you do. Check with your state attorney general’s office to find out what charges are allowed.

4. STOP ABUSIVE CALLS:
Federal law bars debt collectors from calling repeatedly “with the intent to annoy, harass or intimidate” you, McClary said. But exactly what qualifies as annoyance or harassment isn’t clear. In any case, you don’t have to listen to abusive calls — those in which the collector swears or insults or threatens you. Also, you have the right to bar collectors entirely from calling you at work.

If the collector is impolite or overly demanding, ask to talk to a supervisor or hang up, McClary suggested. If that doesn’t work, you may need to contact the Federal Trade Commission, which enforces debt collection laws, or your state attorney general.

5. DON’T CUT OFF COMMUNICATION:
One reason to talk to debt collectors is to keep them from suing you. If you lose in court, the judge may allow the collector to garnish your wages — taking a piece of every paycheck— and may hold you accountable for court fees, significantly increasing the amount you owe. If you are cooperating and communicating, your case typically won’t end up in court. That saves everybody time and money.

6. CHRONICLE CONVERSATIONS:
Keep every piece of correspondence and keep a log summarizing the phone calls you have with collectors, Detweiler said. This can help you if you get sued.

7. NEGOTIATE:
If you have more debt than you can afford to pay, the creditor may be willing to take less than what’s owed to keep you out of Bankruptcy Court. That’s what ultimately happened with Ruiz. Once she dumped the settlement company and signed up for credit counseling, her creditors became convinced that she was doing all she could. At that point, she said, they began to work with her. One $1,900 debt was settled for $654, she said. A $900 debt was cut to $450.

8. DON’T DRAIN YOUR HOME EQUITY OR NEST EGG:
Debt collectors will urge you to sell assets to repay debts. That’s fine if it’s something you don’t need — such as a spare television. But creditors don’t have rights to certain assets, even in bankruptcy, Detweiler said.

Retirement savings, for example, are almost always protected from creditors, as is some home equity as well as some equity in the car that gets you to and from work. And a court will not deny you life’s basics to repay your debts.

“What I hate to see is when consumers get so pressured by these debt collectors that they put those bills ahead of keeping the lights on or putting gas in the car,” she said. “It does no one any good if you can’t get to work.”

Tags: credit card debt, credit cards, debt collectors

This entry was posted on Tuesday, December 9th, 2008 at 3:52 pm and is filed under Credit, Debt Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.