Working with bill collectors can be challenging. They come in different flavors and styles—some low key and professional and others harsh and downright rude. A frequent complaint I hear is that they won’t take payments and demand the entire balance be paid at once or they will sue. The new model of bill collection firms is to invest in technology systems that implement rigid collection procedures that reduce reliance on individuals who exercise personal judgment about when to sue and when to establish payment plans. Many collectors just don’t offer payment plans these day and that causes many debtors to give up making any payments at all.
Here is what you should do when attempting to pay off a debt owed to an inflexible bill collector machine.
- Figure out if you can really pay the debt at all. Some debts are just too big to pay. If all you can afford is $100 per month on a $50,000 medical bill, there is no point in making any payment. Are you paying enough each month to pay off the debt in a reasonable time? Most bill collectors want the debt paid in 12 months or they will start litigation. If you don’t see the debt getting paid off in a reasonable period of time consider other options like bankruptcy or debt settlement.
- Can a Bill Collector Sue Me if I am Making Payments? The answer is yes unless you have a written agreement allowing you to make payments. Many people make a token payment of $20 under the false belief that if the collector accepts the payment they cannot sue. Wrong.
- Send a Payment. Don’t believe bill collectors when they say you cannot make payments. Nonsense! I’ve never seen a bill collector return a payment. That does not guarantee that you won’t be sued for the debt, but at least the balance is decreasing. When a bill collector sees payments coming in they treat you better and may hold off on litigation.
- Don’t Send a Personal Check. Even if you are making payments the bill collector may start litigation and obtain a judgment for the debt. If you are making payments with a personal check you are telling the bill collector where you bank and they will send a garnishment summons to the bank. Instead, make payments with a Money Order or use PayPal so they don’t know where you bank.
- Change Bank Accounts. If the bill collector obtains a judgment and you have been using your bank account for a long time, chances are the collector may know where you bank . To avoid a garnishment open a new account at a bank you have never used before. Even better, open an account in another state. With online banking and debit cards it is really easy to open an account in a place the bill collector would never discover.
- Demand Verification of the Debt in Writing. Bill collectors are governed by the Fair Debt Collection Practices Act. That law requires the bill collector to send written verification of the debt if you send them a letter demanding they verify the accuracy of the debt. If nothing else sending a verification letter slows them down so you can make payments.
- File a Written Response to the Lawsuit. Over 90% of all collection lawsuits result in Default Judgments because the debtor fails to file a written response to the lawsuit with the Clerk of the Court. Always file a written response to any lawsuit to slow down the process and to verify that you are paying the true amount owed. At the very least, filing a written response will give the debtor another 60 to 90 days to pay the debt.
Image courtesy Flickr and GrBusinessGroup
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