How To Stop Collections Calls

When I was on the road last week, I received a call from an unknown caller. I picked up the call as I was striding down the airport concourse and on the other end of the line I heard the sounds of a call center. A perfectly pleasant person said they were with a collections agency.

I stopped in the middle of the busy terminal.

They were calling for another person. I told them I have had this phone number for a number of years and someone must have given them some wrong information. The abnormally cheery person on the other end took care of it for me and said they wouldn’t hear from them again.

Five years ago, this sort of call would have made me anxious. Why? They would have been calling for me. I know many people are in this boat today because of the economy and job loss but I even had a job and I was in trouble.

Dark Financial Days

From 2004 to 2005 was the darkest financial time for me personally. Reckless debt spending during college coupled with low paying, entry-level jobs had finally caught up with me. Not only that, I was the only breadwinner for our household. My fiancee was finishing school and her part-time job had laid her off. I played the role of cool and calm guy but on the inside, my stomach turned when I had to answer the phone or get the mail. Another generic looking envelope with just an address. Another generic letter inside telling how much I owed. Another drone on the other end of the handset hassling me for a payment.

After we were married, I was committed to turning it around. How did I start? I answered every phone call and I responded to every letter. I even negotiated away fees, penalties and back interest in almost every single case. That’s right, a guy without a leg to stand on financially negotiated away about $3,000 in fees and penalties. I paid off $4,000 in collections debt total. Notice that the fees and penalties were almost as much as the amount owed. We paid off almost $10,000 of credit card debt in two years while we were at it. It sucked but we are better off for it now. Missing a paycheck would’ve been the end of the world for me five years ago. Now we can do it and not sweat that much.

Stop It Through Negotiation

Negotiating with collection agencies is actually really simple once you understand how these places do business and sell their services to creditors (Note: My lawyers want me to tell you that I am not a lawyer. So this isn’t legal advice and you should consult an attorney too.):

• Almost all of the collection firms I spoke to cared the most about collecting the entire principle amount and not as much about interest, fees or penalties. If you openly commit to paying the entire principle balance but want a reduction in interest/penalties, you’d be surprised how happy some of them are. So start with the idea that you’ll pay the principle only and work your way up from that number.
• If you are willing to send them money (even a small payment), they become much easier to talk to about any options. $50-100 was my starting point depending on the size of the debt and it seemed to send the message that I was willing to put some money down in exchange for them reducing or eliminating fees.
• They are far removed from the original debt so they are more willing to negotiate some of the unreasonable fees that accumulate in the lead up to the collections process. Some may tell you that they can’t reduce fees or penalties but that simply isn’t the case in my experience. Remember, every dollar of a reduced fee or penalty can go straight to paying off your principle obligation.
• Most collections agencies are paid by the percentage or are paid a flat fee and bonus for obtaining a certain collections level. Also, collections agencies are often used for short periods of times which means if one isn’t effective at collecting for that creditor, they’ll move on to another collections agency. That puts pressure on them to negotiate so that they can show results to their client.

If you’re not comfortable with this process though (or if the collection agency is being a complete jerk), there’s another way you can go too.

Last Resort: Stop Collection Calls Using The Law

When the FTC isn’t going after us helpless bloggers, they’re putting together helpful resources that help you stop harassing collection calls. It takes you step by step through the process. Yes, you have to send a letter. By snail mail. And you’ll most likely have to go to the post office because you can’t send certified mail very easily otherwise. If you think post offices are annoying though, try getting four calls a day, six days a week from a single collections agency.

Follow the FTC guidelines and if you’re in that situation, read the entire page too. There is a lot of helpful information in there. And if you’re seriously being harassed, speak to your state’s attorney general office too.

I’m a big believer in personal responsibility and I do think people have an obligation to pay back what they borrowed but collection agencies don’t have the right to make you feel subhuman or anxious to pick up your phone either. If you can’t deal with them directly (especially in a high stress environment that the person on the other end can make it), you can at least take your phone back so that you can clearly think about how to get out of the hole you’re in. I have to believe that’s what most people want to do too.