If you are behind on payments to a creditor, you know the sinking feeling when your phone rings. Creditors and debt collectors can legally contact you frequently, as long as they don’t harass you, lie to you or threaten you. Nevertheless, a conversation with a debt collector is seldom a pleasant one, and you would be wise to learn the boundaries in which creditors must act when collecting a debt.
On the other hand, you may be able to use phone calls from creditors to your advantage if you know how to negotiate. With the right skill and calm demeanor, you may be able to obtain a resolution that works for all involved.
Your chance to make a deal
When a debt collector calls, the following steps may help you protect your own rights and reach a positive outcome:
- Verify that the collector is legitimate. In this age of scams, it is worth your while to obtain the name, number and address of the agency contacting you and search for information about the company’s license.
- Confirm that the debt is valid. If the agency contacting you refuses to provide you with a letter validating that you owe the debt, you may be dealing with a scam or at least a collector with incorrect information.
- Do not admit you owe money or offer to send a payment unless you are certain the debt has not passed the statute of limitations in Tennessee.
- Don’t be afraid to ask the caller about options for repaying your debt, such as a lower payment, reduced interest or a partial repayment to satisfy the debt.
- You can also ask your creditor to report the debt positively, such as paid in full, to the credit-reporting bureaus to protect your credit history.
- If your creditors agree to a settlement or change of terms, request that they send you a written copy of your agreement, including how they will report to the credit bureaus, which you should review before sending your first payment.
A creditor who is unwilling to negotiate with you should know that you have bankruptcy as an option. It may not hurt to mention that this is an alternative you are considering, although it is not a good idea to use it as a threat. Creditors of unsecured debt who think you are looking at bankruptcy may be more willing to negotiate a settlement than risk having the debt discharged through bankruptcy.
While you may be able to handle negotiations with your creditors on your own, you have the option of seeking legal assistance whenever you deal with creditors. You have a lot on the line, and having a skilled and experienced advocate may relieve some of the pressure.