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Credit & Finances

5 Tips for Handling Debt Collectors

Jeff Hug, Senior Defender
December 29, 2020

5 Tips for Handling Debt Collectors

I wanted to jump on and give five quick tips for handling debt collectors that may be currently bugging you, or maybe in the future.

With COVID and everything that’s been going on in 2020, the great year that it has been for a lot of people (a little dark humor), there is bound to be a lot more debt collections going on in 2021 and beyond.

I mean, let’s face it, $600 every six months just isn’t going to cut it for most people. So unfortunately, there are alot of people hurting and they’re going to need some help. So let’s get into some ways to deal with collection agencies or even the original creditor/lender that’s trying to collect an alleged debt.

Debt Collection Tip 1: Put Down The Phone

Do not discuss anything on the phone. I know this seems kind of extreme, but let’s face it, the debt collector is recording every conversation they have with you. It’s one of the first thngs they say and they’re going to use anything on that phone call against you.

If you’re talking on the phone with them there’s a good chance you’re going to slip up and say something that’s not in your benefit. So just stay off the phone and do your correspondence through gold ol’ fashioned snail mail (USPS).

I know it can be hard to do, but it’s in your best interest to stay off the phone with them, whether the debt is valid or not. Note that it does not mean to simply ignore them, because staying in communication is important. We’ll get into how to respond next.

Debt Collection Tip 2: Demand Debt Validation

You may be wondering, “If I don’t discuss on the phone, then how will they ever get ahold of me?” Well, the collection agency or crediter should send what’s called a “dunning letter”, which essentially says their records show you owe money and they’re trying to collect it.

Even if you miss the letter (which is easy with all the junk mail we get these days), I’m sure you’re getting plenty of phone calls from them. IF they call (they pretty much never leave messages any more) and you answer, there’s only one thing you should talk about on that call… debt validation. I recommend the below when talking to a collector on the phone:

  • Do NOT verify you are the person they’re looking for. I’m not at all suggesting to lie, but I’m all for the omission of information. There’s a big difference between lying and not incriminating yourself. Have you ever heard of pleading the 5th?
  • Do NOT say you are aware of the debt or admit responsibility for it.
  • Simply tell them they need to send a debt validation letter to the person they’re trying to reach, with proof they owe the money and the collector has legal rights to it (we’ll go into more detail on this later).
  • If you want to be more agressive and shut them down, consider asking them to not call again and informing all correspondence should be done via mail.

Requesting debt validation is really underused and overlooked in the industry, which is a shame, because it’s very powerful. What this does is let them know they’re going to need to bring proof and it also buys time. If you utilize this in the first 30 days, then they’re required to not report to the credit bureaus, and that’s a big step. If it’s not reported to the bureaus, then you never need to request having it removed, whether it’s erroneous or not. It doesn’t mean it can’t be reported in the future, but it forces them to investigate and follow a timeline before doing so. Here’s a breakdown of the debt collection timeline:

  • Borrower has 30 days from initial collector letter to request debt validation (they should note this in their letter)
  • Collector or creditor has 30 days to respond to the request
  • If validated, debtor and collector have 30 days to reach an agreement
  • If no agreement is reached, the collector can further pursue the debt and report it to the bureaus

This essentially buys 90 days before a debt is reported to a credit bureau, and in many cases it will buy more. Maybe, just maybe, if you stick around to the end I’ll provide a free debt validation letter example.

Important Note: A credit report and a debt are two completely separate items. Just because you get something off your credit report, it doesn’t mean you’re no longer responsible for that alleged debt. You can still potentially be sued for the debt if it’s not on your credit report. Also note that the above timeline is only for the credit report. There are different laws governing a collector’s ability to sue for a debt.


Debt Collection Tip 3: Negotiate


Is the debt valid? If so and you’re in a position to pay a portion of it, don’t be shy with your negotiations. This is another reason to communicate via mail. Most people will not negotiate well on the phone, but they’re completely comfortable doing so in a letter.

Many people that come to us want to start negotiating at 50%, but you’re really doing the collector a favor here (especially if that collector bought the debt, rather than having it assigned). You want to really try negotiating at 10, 15, maybe 20% of the alleged debt (I always try to use the term “alleged”. You never really want to confirm that it’s your debt, whether valid or not).

Keep in mind that debts are bought for pennies on the dollar. Sometimes as low as one half of one penny for every dollar! To put this in perspective for regular people like you and me, that means they can pay $50 for $10,000 in debt! Do you think that they’re willing to negotiate… maybe just a little? Trust me, they have some room there, so keep in mind that while it may not feel like it, you do have some leverage. Use it.

Debt Collection Tip 4: Demand Pay-for-Delete


If you do reach an agreement and you decide to settle the debt, then you’re going to want to demand a pay-for-delete. What this means is that the creditor/collector will agree (IN WRITING) to delete the account from your credit reports. If you’re going to pay it (even if not the full, original amount), again, you have some leverage.

The collection agency wants to get paid. They will probably push back and say “no” for a while, but at the end of the day they’re probably going to work with you. They’ll likely agree to delete it from you credit report, so just keep pushing, because they just want as much money as they can get in a timely, simple manner. That’s what they really care about.

Debt Collection Tip 5: Is it a Legal Collection?


Verify the debt collector and their collection attempts are legal. Many people are going to assume that they can collect a debt they’re calling about, but there are a lot of scams and shady players in the space, so don’t assume anything with them.

Let’s say that you know the debt is yours. When you get that first call from someone trying to collect the debt, your first thought is probably, “Oh yeah. I owe this money and they’re just trying to get the money I owe them.” Well they may not have rights to it. They may have not even properly bought it. Maybe they don’t have all necessary documentation or it’s past federal or state statute of limitations (the timeline when they have rights to collect). Sometimes they’re not even a licensed debt collector in that state. Missouri is one of the very few states that don’t require licensing to collect debt, which is ironic considering they require licensing to repair credit reports due to debt. To check if your state requires licensing and to search if they are licensed, most states have a website with a search tool for this. You would go to the website for the Department of Finance for your state. They’re the ones that handle all the extortion. Whoops! I mean “licensing” (that’s what they call their money grab any way).

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