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Ten Things Bill Collectors Don't Want You to Know
by John Barnes
Copyright © 1994 Nolo Press
- The More You Pay, the More They Earn
- Payment Deadlines Are Phony
- The Don't Need a 'Financial Statement'
- The Threats Are Inflated
- You Can Stop Their Calls
- They Can Find Out How Much You Have in the Bank
- If You're Out of State, They're Out of Luck
- They Can't Take It All
- They May Not Know a Thing
- You Can Pay Student Loans in Installments
- Side Bar--How They Find You
For many people, the cold call from the bill collector is an
even humiliating experience. They are unprepared to deal with
collectors, who are
trained to handle every type of response. Relentlessly assertive,
focus on "the close" -- your commitment to pay.
The less knowledgeable you are about your rights, the more confident a
becomes; the more worried you are, the less concerned the collector
Collectors know that it's easier to manipulate a conscientious debtor
payment plan that benefits the collector, not the debtor.
You'll be in a better position to resist collectors' pressures, and
sensible repayment plan, if you're prepared for the tactics they're
use. Here, then, are ten of the best-kept collection secrets.
1. The More You Pay, the More They Earn
Collectors get commissions -- usually 30 to 50% -- on money they bring
often double or triple their salaries. This means they have a strong
press for a big "down payment" from you, even if this deepens the cycle
Collectors hoping for a big commission may claim that the boss insists
on a big
down payment. In fact, blaming it on a mythical manager is designed to
your anger away from the collector.
2. Payment Deadlines Are Phony
Payment deadlines set by collectors are meaningless. Collectors simply
create a sense of urgency, because the longer it takes to get you to
less chance there is of collecting the debt.
3. They Don't Need a 'Financial Statement'
Collectors often claim they need a "financial statement" from you, so
work out a realistic repayment plan. You'll notice, though, that the
they ask for -- bank account numbers, references, place of employment
-- is far
more than they need for that purpose. They're fishing for information
help them find you if you move or sue you if you don't repay the debt.
4. The Threats Are Inflated
Collectors always graphically detail the disastrous consequences of
pay a debt. "Your credit rating will be ruined," they warn. (Not
it's probably already not so good, since a collection company is after
"Your personal possessions, including your car, could be seized and
sold at a
public auction!" (Never mind that this virtually never happens; it's
some states and impractical because of the expense.) Probably 95% of
collectors go after only bank accounts and wages.
5. You Can Stop Their Calls
You have the right, under federal law, to tell a collection agency to
contacting you. Just do it in writing, and contacts must stop, unless
tell you that collection efforts have ended or the agency is going to
specific action (like filing a lawsuit) against you.
6. They Can Find Out How Much You Have in the
A collector who has your bank account and social security numbers can
easily find out the balance of the account. Because big banks now have
account inquiry systems, the collector doesn't even have to speak to a
being; all it takes is a phone call to the automated voice-mail
service. When the
account number and social security numbers are punched in, the computer
supplies an up-to-the-minute account balance.
7. If You're Out of State, They're Out of Luck
Collection agencies routinely call out-of-state debtors to demand
payment. But if
a creditor has sued you and won, you are probably safe from enforcement
you bank and work outside the state where the lawsuit was filed. That's
to collect, the collection agency must transfer the judgment to your
is prohibitively time-consuming and expensive.
8. They Can't Take It All
Certain income, such as social security, pensions and 75% of your
is exempt from enforcement action. You can file a claim of exemption
garnishment of the other 25% of your wages if it would cause you or
9. They May Not Know a Thing
Sometimes a collection agency lawyer, trying to collect a judgment
questions on a court form asking about your income and assets. (These
"post-judgment interrogatories" or "information subpoenas.") This is
for you -- it means that the agency has no information and is hoping
you will be
intimidated enough by this legal questionnaire to complete it. Many
because the forms list sanctions, such as fines, for not doing so. But
it is too expensive and time-consuming for an agency to go to court and
10. You Can Pay Student Loans in Installments
If you are behind on student loans, you can apply for what every
agency hates: "reasonable and affordable payments" under the 1992
Education Act. If you can document financial hardship, a collection
accept as little as $10 per month for at least six months. As long as
the payments, you are eligible for Title IV Student Aid, and you can
payments unless your circumstances change.
Side Bar--How They Find You
It isn't hard for collection agencies to locate most debtors. Here are
their common sources:
Your credit file is a wealth of information. To see whether a credit
and therefore a collection agency -- has information on where you work
request a copy from TRW, Trans Union or Equifax. (But realize that when
the company where to mail your report, that address will make its way
Even if your phone number is unlisted, a collector always checks the
you have an unusual name, the collector calls all numbers with that
for a relative. A favorite technique is to leave a message with a
asking you to call a number collect. If you call, the collector accepts
charges -- and contacts the operator to find out the number you called
The Post Office
Using a post office box as your mailing address doesn't deter a
agency. For a small fee, the post office will provide a box holder's
address if it's available.
Most consumers' addresses (and sometimes, phone numbers) have been sold
companies that collect mailing lists and sell them to collection
Collectors may call persons you listed as references on a credit
ask for your phone number. It's against the law for the collector to
lie and say
it's a friend calling, so a reference may be able to stop the calls by
directly "Are you a bill collector?" Of course, some collectors simply
break the law.
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