8 Tips for Dealing with Bill Collectors

If you have ever been on the receiving end of menacing phone calls from a bill collector, the title of this article probably spiked your blood pressure.

Yes, this is a stressful experience, but it doesn’t have to be a nightmare.  These tips will help:


1. Know your rights.

The Fair Debt Collection Practices Act spells out exactly what bill collectors are allowed to do and what they are not allowed to do.  Remember: when they violate this Act, they are breaking Federal Law.  For example, a bill collector:

  • Is not allowed to call before 8 AM or after 9 PM, your local time.
  • May not (and I quote from the act) “engage in any conduct the natu­ral consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.”  Note that threats, obscenity, or calling repeatedly are all forms of harassment and are therefore illegal.
  • Must cease all communications if the consumer notifies the collector in writing to do so.  Note: this is not normally a wise thing to do because it will often trigger a law suit.
  • Must supply – within five days after initial communication – a written notice containing the amount of the debt and the name of the creditor.

2. Understand their tactics.

Because the collector knows that people who are experiencing strong emotions will make decisions they would not make otherwise, he will try to evoke fear, anger or guilt in hopes to get some money from you.

3. Create a budget.

Your goal (to get out from under this debt load) will never happen if you don’t manage your money.  Instead of being paralyzed by this anxiety, allow it to motivate you to create a budget and develop a plan for getting this debt out of your life.  Doing so will help some of that anxiety melt away.

4. Communicate . . . on your terms.

The collector has a right to contact you, but not harass you by constantly calling you.  You should talk to him on your terms: once every two weeks.  If he persists in calling more often, remind him that you will talk to him on the agreed date and then hang up.

5. Prioritize your finances.

Reality is this: if you have less money coming in than bills due, someone isn’t going to get paid.  You should therefore prioritize your finances so you won’t succumb to the collector’s tactics.  Here is a sample priority list — note that credit card payments are at the bottom:

  1. Groceries.
  2. Mortgage or rent
  3. Utilities
  4. Insurance
  5. Secured debts
  6. Gasoline
  7. Unsecured debts

6. Don’t give electronic access to your account.

Although a bill collector will offer all kinds of inducements for the right to draw money directly from your account, don’t allow him to.  Why?  Because he might lie to you and take it all.

7. Settle the debt.

Your collector bought your debt at a discount, so he will be open to a debt settlement.  Of course the discussion is a moot one unless you have some money, but, in case you happen upon a windfall (do I hear income tax refund?), be prepared to ask for a settlement.  Important note: before sending any money for a settlement, insist on getting a written statement from your creditor that paying the agreed amount will “settle this debt in full.”

8. Control your own life.

You are not the first person to be hounded by a collector and you will not be the last.  You WILL make it through this.  In the meantime, you need to maintain control of your life instead of relinquishing it to a stranger on the telephone.

Readers: have you been contacted by bill collectors?  How was your experience?  Any tips for other readers?

Photo By maebeitsme

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  1. Agree with everything here except #4: communicating on your terms means communicating by snail mail only, for the most part. You need a paper trail to document any settlement amounts that you agree to, and for future legal action against the collection agency should it be necessary within small claims court (yes, you can use small claims courts against unscrupulous collectors – which are numerous).

    I would recommend changing your number altogether if you have too many collectors coming after you, and the calls are too frequent every day. Then be VERY careful about which friends and family get the new number, under strict instructions to NEVER give out your number to anyone. Collectors are shameless in using underhanded tactics to get phone numbers and addresses.

  2. Hunter

    Along with communicating in writing only, I would be proactive about making contact. Under promise and over deliver. If unsecured, and money is tight, collectors rarely have leverage over you. I recommend only taking on debts you can repay, but pay on your terms if financial emergencies have overwhelmed you.

  3. Lea Sadler

    I agree with only communicating via the USPS mail. Also, keep in mind that if the bills are mounting up and stuff isn’t getting paid, it is a good idea to stay in good standing (regular, on-time payments) with at least one general purpose credit card, if you can manage it. That way, if the other cards end up canceling your account because of payment problems, at least you’ll have one card you can still use for emergencies, and the like.

  4. Joe Plemon

    I like the idea of communicating by snail mail, but I doubt that doing so would reduce the phone calls from many collectors. Yes, changing one’s phone number and keeping it a secret will stop those hyper-callers, but changing phone numbers can be a hassle. If one doesn’t want that hassle, do you have any other suggestions for dealing with constant calls? An air-horn perhaps? Just joking. Sort of.

    Great idea. Being proactive and keeping good records is sound advice. How about sending collectors a copy of your current budget, which substantiates your inability to pay more than you are currently paying?

    I agree with staying in good standing with at least one credit card company, as long as it is for emergencies only.

  5. Gregg Pechmann

    Thanks for sharing Joe….ala dave ramsey

  6. Joe Plemon

    You “found me out”. Yes, much of this advice comes from Dave and is well worth passing on.

  7. Gregg Pechmann

    absolutely my friend….keep shouting from the mountain tops!

  8. Kathy

    While refinancing our home for a lower interest rate we discovered a negative report on my credit from an unpaid medical bill. Our refinance guy told us he used to work for a collections agency and advised us on how to proceed. As you said, collections agencies purchase the debt for pennies on the dollar; therefore, send them a letter by registered mail offering them about 40% of the original debt and require that they agree to remove the negative report from all credit reporting agencies. Pay the debt once they have responded in writing that your payment will settle the debt in full and everything will be removed from all credit reporting agencies.

    I haven’t tried it yet, but he claims that this is a very effective technique for removing negative marks from your credit report.


  9. Joe Plemon

    I would add this: once you get that letter stating that the agreed amount will settle the debt in full, hang on to it forever. When you send the actual payment, send it certified mail, return receipt requested, so you will have documentation that the payment was received.

    Yes, this will take the unpaid debt off your credit report, but you will still have a slight ding because of the settlement. Also…you may receive a 1099 from the collection agency for the discounted amount. I am not a tax expert, but I understand that this amount is taxable. Still, paying the taxes is better than paying the full amount.

    I hope it goes well.

    I hadn’t thought of how the debt settlement company might trigger that law suit, but it makes sense. As scummy as many of these companies are, I understand that most of them still try to maintain communications with the collectors. But, like you say, many collectors may prefer legal action to dealing with a debt settlement company. A debt settlement company fighting with a collection agency is not a pretty thought…kind of like Swamp Monster meets Godzilla.

  10. Stan

    Just a point of clarification here. I agree that it would be unwise to send a full-fledged “cease and desist” letter to a collection agency as that may lead to a lawsuit being filed.

    However, you can write a limited cease and desist letter in which you tell them not to contact you by telephone, but allowing for continuing written contacts from them. If you send this request to them, they MUST follow it per the FDCPA. I would also recommend sending it certified mail, return receipt requested (CMRRR), which you can do through any post office — that way, you also receive confirmation the letter was received.

  11. Joe Plemon

    Great points. I totally agree that the “limited cease and desist” letter is a good idea. Also agree with sending it CMRRR.
    Thanks for jumping in here and giving us some good common sense ideas.