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Step 1
Learn your rights. The Federal Trade Commission (see Resources below)says collectors can get in touch by phone, mail or fax. They can only call between 8 a.m. and 9 p.m., and have to honor your request not to call you at work. They're also restricted in what they can say. Don't believe a caller who threatens to have you arrested or garnish your wages. A judgment must be awarded to the creditor first before your wages can be garnished. Many states have their own debt collection laws. Look at attorney general's website in your state.
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Step 2
Prioritize your bills. No matter what a debt collector says, an unpaid credit card bill is not the most important bill you have to pay this month. Providing necessities for your family, such as paying your mortgage, automobile notes and utilities come first.
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Step 3
Estimate how much you can pay and offer less. Don't offer amounts you clearly cannot afford. Avoid sending postdated checks to a debt collector or agreeing to automatic electronic payments from your checking account. Debt collectors may tell you that you have to pay by debit card or ACH. Tell them that you will mail a money order to their office. If they say no, then tell them that you have nothing further to say and hang up the telephone.
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Step 4
Keep private information private. Don't give a debt collector personal information such as where you work, where you bank or your checking account number. Never give anyone your Social Security number.
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Step 5
Tape the call if you can. Using a tape recorder is a great way to keep a debt collector in line. Plus, you get a record of the call. Thirty-five states and the District of Columbia allow you to secretly tape your phone conversations. In the other 15 states, you can tape with the other party's permission. And if you tell the debt collector you are going to tape and he keeps talking, that's considered giving permission.
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Step 6
Get proof of the payment agreement in writing. Send a letter to the debt collector outlining the payment agreement. You'll want to send this letter via certified mail so you'll receive a receipt once the letter is delivered. Keep a copy for your records.
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Step 7
Fix your credit report. Ask a debt collector to remove any negative information he has placed on your credit report. At the very least, insist that your account be listed as paid in full rather than paid in settlement. Once they agree, get it in writing.
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Step 8
Negotiate at the end of the month. Because commissions for debt collectors are based on what they do each month, you may want to try negotiating near the end of the month. You could land a really good deal.
