It happens to most consumers sooner or later. You fall behind in your credit card payments, You use one credit card to pay another card’s payment. Then, things start to snowball.
If you find yourself hitting the wall, you need to understand the position you’re facing. As Huffington Post says, “As a consumer, the most important thing you can do is to try to understand the debt collection process and know your rights.”
Check these 8 key principles in dealing with creditors:
- Keep track: It’s smart to keep a diary of all your interactions with the creditor. You should save emails and take notes on phone conversations. That includes the names of the contacts and numbers assigned to claims.
- Need to know: You have a right to know everything there is to know about your account. You can’t negotiate or discuss the collection issue if you don’t understand the starting point. A debt can be complicated with accumulating late fees and interest rates, you should know what’s at issue. You have the right to question the collector and request clarification of any term or process.
- Get it in writing: If you agree to anything, you have a right to see it in print. If you are working this out on the phone, you can request an email version before you sign anything. The collectors usually have standardized forms so you can insist they customize your forms to your name and deal.
- Take the lead: If your delinquency has reached the collection agency stage, you might take the lead in the negotiation. The collector wants a one-time, lump-sum payment. They are getting commissions on the amount collected so they will go for your gold. But, you can undercut them by offering 50 percent of the lump sum. Any creditor would rather agree to a repayment plan.
- Talk to the creditor: A collection agency will tell you to communicate with them only. However, you can still deal directly with the credit card company. They may be open to deals for compassionate reasons and hardship cases. They will come to solutions to reduce their obligation to their own collection agency.
- Stop the calls: Collectors must call after 8:00 am and before 9:00 pm. But, you also have the right to tell them to stop the calls altogether. So, it helps if you accept the calls sooner than later.
- Keep your cool: You should expect respect from creditors. But, they may respond in kind if you lose your temper. You should avoid the melodrama on your end, but if they are confrontational and angry, you can report them.
- Demand confidentiality: Collectors are prohibited from discussing your debt with your spouse, friends, and employer. They do have a right to order a garnishment on your incomes, but it takes a long process to reach that stage. Creditors prefer not to go that route because of the cost to them.
Getting out of trouble
You can start to get out of debt with an honest assessment of your problems. If you have maxed out a credit card or can’t meet the minimum monthly payment, you are in credit trouble.
These are signs it’s time to prioritize. The Houston Chronicle suggests taking inventory, “First, make a list of every debt you have, along with the interest rate and minimum payment. Then, list your income and expenses for each month to assess financial obligations.”
But, if you find you’re still over your head, it’s time to get professional help.