Talking to creditors and debt collectors SHOULD'T be scary!!
Most of these questions are very straightforward. Facts, numbers, and dates are based on the day you have the conversation with your creditor, and how many days past due the account is at that time.
We also learned that situations can vary from creditor to creditor, which is why we want to take a record each time you speak with your creditors.
Most of all, you just need to know the facts, as well as the consequences of non-payment, and what options the creditor has to help you get back on track.
QUESTION 1: What is the current total balance?
This is the easiest question of them all. What’s the total balance due?
QUESTION 2: What is the minimum due?
Each month you fail to make a payment, the minimum due gets larger, plus late fees and possibly over-the-limit fees. We can't forget monthly interest charges, on a balance that is getting larger every month, not smaller.
Take down the total amount that will bring the account CURRENT. It can also be helpful to ask if there is a portion of the total due that you could pay instead to ‘buy’ a little more time?
QUESTION 3: When is the due date?
Another very straight forward question. There will always be a monthly payment due date. Even if the account is charged off, most 3rd party collection agencies operate monthly. As in, “How much can you pay by the end of the month,” is always their #1 question.
QUESTION 4: How many DAYS past due is the account?
In my opinion, this is The Most Important Question to ask!! How many days past due is the account?
You basically have 3 stages of collections, and your repayment options often vary widely by creditor and from each stage. Unfortunately, the best way to learn all this info in a short enough time to be able to do something about it, is to talk to your creditors.
Find out how delinquent each account is so you can begin to make some very important decisions with your limited funds such as, “Do we keep making small monthly payments on this closed account? Or let it charge-off and we can possibly settle at a later time when we can save up the money.” (More on that in the next blog post)
QUESTION 5: What is the ‘Date of Last Activity?
In most cases*, the date of last activity is the last payment made on the account. This is way for you to keep track of how many ‘days past due’ the account is at any given time. Also, it’s so you don’t have to call the creditor back to get this information.
QUESTION 6: What is the interest rate; and any fees charged?
Without having to go back through paper or online account statements to total up all the fees, or search to find your interest rate, just ask them directly. They have to provide that information, which can be a negotiating opportunity if you are able to pay on the account.
If you have never asked for fees to be waived before, many creditors will be willing to reduce or eliminate fees, so long as you are able to make a payment to bring the account current. Plus it is NEVER a bad idea to ask if they will give you a break and remove any fees.
QUESTION 7: What happens if I can’t pay by the due date?
There are only so many outcomes to an unpaid debt. And all of them will negatively impact your credit. But what really happens?
Once the account is charged off it will go to collections, either to a different department with the original creditor, or in most cases to a 3rd party company.
(Note: debts don’t usually get ‘sold for pennies on the dollar’ until they are a few years old. Most collection agencies are ‘hired’ to collect on the original creditors behalf, paying the agency a percentage of everything they collect.)
Regardless of who is collecting on the debt… debt is debt no matter WHO is calling to collect!! The game now is avoiding the collection agency from ‘suing you.’ Which is usually in the form of garnishing your paycheck, or if you own property they may try to get a court judgement against your property.
The smaller the balance owed the LESS likely any ‘suing,’ garnishment, or courts will ever get involved. It’s financially not worth it to them. What kind of funds are they going to get from someone on social security with no property?
For nearly 80% of unpaid debts, “further collection activity” is the worst thing they can say to you. And if you are sick of all the phone calls, write them a Cease & Desist letter requesting them to only contact you in writing.
QUESTION 8: CAN YOU HELP ME?
Now this is where conversations can get interesting. Again, going along with the idea that you don’t get what you don’t ask for… Ask For Help!!
Creditors would MUCH rather work something out with you instead of dealing with hiring a collection agency to collect the debt, get paid nothing if you wind up filing bankruptcy, or worse deal with a debt settlement company. (No one should work with debt settlement companies, but that is a topic for another day.)
Most collectors are willing AND able to negotiate payment arrangements on a case by case basis (so one last time) it won’t hurt to ASK!!
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*Situations vary from creditor to creditor or from state to state.
Disclaimer: This content is for informational purposes only. All materials and information do not constitute financial advice. Always consult a financial professional before making financial decisions.
Author - Kyra Jones
Debt and Financial Crisis Coach