by Thom Fox

All sorts of things can happen in life, many of them unpleasant. You may experience a financial setback that causes you to become delinquent on your bill payments. This situation can be stressful, especially when you have to deal with collection calls. Collectors are notoriously aggressive. No matter how many times you tell a collector that you can’t afford to make a payment or can pay only a little, the calls keep coming and coming.

Believe it or not, most collectors already have a very good understanding of your situation. An experienced bill collector knows you are stressed. What you’ll find is that some collectors are overly aggressive, bossy, and impossible to negotiate with. This type of collector will prey on your fears.
 
Other collectors may be polite, pleasant, and persuasive. These collectors are trying to get you to relax and let down your guard.

Many collectors are somewhere in between. They typically start off politely, but if you tell them you can’t pay, they may become more aggressive.

Let’s review some common situations:

Cardholder With No Money

This situation is perhaps the most difficult to be in because it virtually guarantees an onslaught of phone calls. Generally speaking, if a cardholder is able to make even just a partial payment, the collectors will probably not call again for about a week. If you cannot make even a partial payment, it is possible that you will get another call the very next day, depending on your state laws.

The absolute best thing someone dealing with a financial setback can do is talk to the collectors. Tell them your situation, why you cannot pay, and when you think you will be able to start paying. Under no circumstances, however, should you tell collectors about your current job, how much money you make, or even how much money you owe them. If you talk about your situation discreetly but honestly, your creditors may even offer a hardship payment plan to assist you. It is also very important not to make any promises you cannot keep. Don’t bother telling them the “check is in the mail” when it’s not, because they’ve heard that lie a million times before. Don’t set up a check by phone if you know it will bounce.

Cardholder With Some Money

If you’re in the process of getting back on your feet financially, you’re not going to be able to satisfy the demands of all the collectors. Too often, consumers try to satisfy one collector and leave nothing for the others. Ultimately, you’ll have to satisfy all the collectors, not just the one who is most persistent. Be sure to take care of your essential bills first (mortgage/rent, utilities, car loans, etc.). Work with the collectors using the funds you can put toward your accounts after your essential needs have been satisfied.

Cardholder With a Newly Stabilized Income

If you’re in the process of starting a new job, you may not be able to give the collectors the amounts they’d like. At the very least, you should send the minimum payments on the accounts that you’ve been able to pay in the past. Such a payment confirms your commitment to repaying your debt and can help protect you in the event that a creditor pursues legal action.

If you are still communicating with your original creditor and not a collection agency, you may be able to have your account brought current and stop the calls altogether. The creditors have a tool called a “re-age”. A re-age occurs when the creditor accepts a payment of a specified amount (usually 2 % of the balance) for two to three months in a row, and once these payments are made, the account is brought current with no need to make up any further back payments.

Getting behind on your debts may be stressful, but don’t add to your stress by making promises you cannot keep. Before agreeing to a payment of any kind, make sure you evaluate your entire financial situation. It’s extremely important that you make payment arrangements based on your ability to pay, and that you prioritize your obligations.

Thom Fox is a public speaker and personal finance author who has helped develop numerous programs for young people and adults. As an expert in the field of personal finance, Mr. Fox has served as a guest lecturer for the Bruce Wells Scholarship Upward Bound program at Clark University and a panelist for the Nichols College “Cycle of Debt in America” student Q & A and the California JumpStart Coalition “Innovative Financial Literacy for Youth” conference.