Life happens. An unexpected expense comes up and all of a sudden, your carefully planned budget falls apart and you find yourself with a bill or two that you cannot cover, so you don’t pay. You probably meant to make it up as soon as you could, but now a month or two has gone by and reality didn’t let that happen so you’re getting letters, calls and emails from collection agents. This can be a very stressful situation and there are many ways to deal with this but few of them are actually constructive. Here are some helpful tips so that, if you do end up in this type of situation, you can manage your way through it without raising your anxiety levels too high and clear your debt before it turns into a major issue.
- Collection agents are there to help you
We’re starting with this one because it sounds
like a load of hooey, but it is not. The agents may tell you this as well and
it can be a bit hard to believe when you feel like they are only harassing you
to pay. It can seem like all they care about is getting their money which may
be the case as their job is to collect on debts however it’s important to
remember that both you and the agent handling your file share a common goal.
This goal is to find a way to reach an agreement to repay your debt without
having to resort to escalation such as legal action or transferring your file
to an external collection agency.
These types of escalations are no more
beneficial for the party to whom you owe a debt than they are to you. Taking
legal action costs the company money for lawyers and court fees and collection
agencies will only pay them a fraction of the actual amount that is owed. Lending
companies will resort to these measures only when they have deemed that there
is no other alternative to settle the debt and will almost always be willing to
work out a payment arrangement with you before doing so.
- Never ignore communication
Ignoring emails, hanging up on agents and generally refusing to discuss your debt when requested is the fast track to escalation which will lead to legal action or more aggressive collecting from a third party agency. Not only that, but while you ignore these calls, interest and possibly fees as well are accumulating on your account balance. Your credit could also be taking a hit.
If the agents cannot communicate with you at all, they cannot work out a way to get your debt repaid and this is when they will deem that the only solution will be to take more drastic measures. It can be nerve racking to get a call from a collection agent, especially if you have no idea yourself how you are going to get your payments back on track. Even if this is the case, you should still take the time to acknowledge the communication and schedule a time to discuss your debt if you are occupied at the time that the agents try to contact you. Collection agents deal with these situations on a daily basis so even if you are not sure how you can go about fixing the situation, they might have a solution for you that you hadn’t thought of.
Take the time to explain the situation to the agent and ask them if there is any way that they could help you. You might just be pleasantly surprised by their answer. If you do have an idea of how you could repay your debt, even better! Suggest what you have in mind to the agent and see where it goes from there.
Before resorting to escalation of any kind, collection agents will attempt to contact you by other means such as calling your references or even your place of employment. This can sometimes lead to embarrassing situations that you can easily avoid by responding when they try to contact you directly. As long as agents are able to have a direct conversation with you about your debt, they will never need to resort to calling your references or work place so even if you do not have a solution in hand, it is always important to keep an open line of communication with the party to whom your debt is owed.
- Collection agents are people!
Remember that the agent on the other end of the line is a person just like you, doing their job and really just trying to get through the day like anyone else. They have procedures that they must follow and when they call you, it’s not because it brings them great pleasure to bother you. The agent you are speaking with has most likely been hung up on, yelled at and verbally abused dozens of times already on the same day that they are speaking with you. They will most likely not bat an eye at these types of actions if you try them but it may push them to take action that they would not have otherwise taken if you had cooperated.
In many cases, they will have the right to schedule additional debits into your bank account and even attempt to debit the full amount that is owed which could leave you short on funds or cause fees from your bank. It’s important to remember that, although the agents will act professionally and will follow their procedures, they are still people with emotions, tempers and reactions just like everyone else. If your collection agent was having a bad day and you decide to tell them to commit indecent acts upon themselves, you may just find yourself with an unpleasant surprise that will not help your financial situation. Be polite, act cordially and show a genuine desire to clear your debt and any self-respecting collection agent will recognize this and do their best to help you.
- Avoid lies and sob stories
Collection agents have heard every story in the book. If you think you just came up with the one that will fool them, rest assured that they have probably heard it before. In any case, whatever tall tale you decide to recite, this will not change what they can do to help you within their guidelines. Stick to the truth, the agents have heard the true stories as well and will be able to tell which is which. If you have lost your job or fallen ill, do not hide this information from the agent. They may have procedures in place to help you with such a predicament.
When you do explain your situation to the agent,
it is ill-advised to try to pull them by the heart strings. Your situation may
be tragic and the collection agent might show empathy on the phone but they
hear this kind of stuff all day and will be playing the world’s smallest violin
the minute you get off the phone. That’s not to say that you should not explain
your situation to them in detail, but do not expect them to shed a tear or offer
additional leniency out of pity as this will not prove to be an effective
Tell a collection agent things such as “I have to feed my kids!” or “You can’t get blood from a stone” and you will be able to hear their eyes rolling over the phone. The fact is that everybody has expenses, everybody has to survive and if you could not repay this debt, their opinion will be that you should not have taken it on in the first place. A collection agent will never accept “I cannot pay” as an answer. If your intention when conversing with an agent is to try to convince them that you will never be able to pay and to simply let the situation slide, you will not be successful in this endeavor as no company will allow their collection agents to accept this.
The worst thing you can possibly do is to start making threats such as saying you will contact your attorney under the guise that the company is acting illegally or that you will enter this debt into an insolvency.
Unless of course the company you are dealing with is actually taking action that they are not legally authorized to do, in which case it would actually be well advised to contact an attorney, never say something like this as the agent on the other end will stop taking you seriously the second that you say the word “lawyer”. They hear this dozens of times a day yet they will seldom get contacted by an actual attorney. This will not scare them, especially not if they are acting legally which the vast majority of collection agencies and departments do as the consequences for such actions can put them out of business. What it will do is show them your unwillingness to cooperate and speed up the escalation process.
If you do actually believe that the company you are dealing with is taking action that they are not authorized to, a good idea would be to read the agreement you signed with this company before making any claims of illegal action as usually, the agreement they have you sign will give them the authorization they require to take such action.
Threatening to enter your debt into a consumer proposal or bankruptcy may seem like a good idea at first but if you have not yet signed for insolvency, it’s actually a bad idea to mention this to a collection agent. You may tell them this thinking that they will now have to cease all debits and collection practices however the fact of the matter is that until the insolvency papers are signed by yourself and your trustee, they may still proceed as usual. Knowing now that your intention is to enter the debt into one of these programs, they will most likely do everything in their power to try to collect on the debt before your papers are signed which can lead to some unpleasant surprises as mentioned earlier.
If you do actually plan on entering
insolvency, don’t let the agents know until you have actually signed as doing
so may defeat the purpose. If you are not actually planning on entering
insolvency, never say that you will be as this will only accelerate their
efforts and they will not stop taking action until the signed papers are
received on their end.
As we’ve mentioned, collection agents are people and people are not all the same. You can’t just throw them all in the same bag and expect that the same action will work with everyone. They will try different things on a case per case basis and you may need to adapt as well depending on the person you are speaking with. One thing that you can request which they don’t have the opportunity to do is to speak to someone else. If you find that the person you are speaking with is not helpful, not being understanding or just generally has a bad attitude, ask if you could please speak to another agent about your debt. In most cases, the agent you are speaking with will have no choice but to abide by your request. Some people are better at their job than others and this cannot be avoided.
Collection departments and agencies have a very high employee turn-around so you might be speaking with someone who has not been doing this very long and isn’t really sure how to handle the situation properly. If that turns out to be the case, try to get your situation into the hands of someone who is better suited to assist you.
The best thing you can possibly do when your payments are defaulting is to take matters into your own hands by devising a payment plan that would work for you and taking the first step by contacting the party you owe money to before they contact you. Your initiative will not go unnoticed by whoever takes your call and having your own plan ready takes some work away from the agent as well. After a long day of chasing after people who are being uncooperative, someone who calls in to get their payments back on track is like a breath of fresh air to the agent who picks up the phone.
What a collection agent wants to see is that they are able to speak with you when required and that you show a willingness to work with them. You’ll find that in most cases, if you take the time to reach out to the company, explain your situation and suggest a reasonable payment arrangement, the conversation will actually go very smoothly and you’ll be one step close to having this debt out of your hair for good.
Make a budget and try to see how much you
could possibly put towards your debt each month or each pay day. Unless you are
suggesting something ridiculously low for the amount that is owed, agents will,
more often than not, be willing to work something out with you as they will
profit from the interest and save costs by not having to escalate the issue.
If you only remember one thing from this
article, it should be the following: Always
keep an open line of communication with the company you owe money to.
Whether you are able to cover your debt or not, if agents are able to communicate with you and you don’t go out of your way to make their job more difficult, it is usually very easy to avoid harassment, legal action and third party collection agencies.
We hope that you never end up with a debt in collections but if ever you do, keep this information in mind so you can easily remedy the situation and ensure it does not get out of hand.