Copyright (c) 2008 Stephen Lau

In the present financial climate, debt collection is commonplace and many people may have to deal with debt collectors due to delinquencies. To deal with creditors is an art.

If you are among one of them, you may think that debt collectors are inhuman: they may have harassed you relentlessly.

Nowadays, many individuals have become debt collectors simply because they need a job, because they want to help others, or, for some, because they have a strong need for control and power. Whatever, debt collectors get trained, but do not go to school to become debt collectors.

Remember, debt collectors are just human, like everyone else. They, too, may have problems paying their own bills.

Understanding the human side of a debt collector may help you deal with one successfully. You must understand that their work environment is always filled with negativity. They need to call you incessantly and relentlessly: they would like to see as many as possible their clients become current. Like most other types of work, they have their own daily, weekly, and monthly goals to meet too.

As a smart consumer, learn how to deal with a debt collector. Dealing with debt collection is less of a hassle if you have the know-how.

According to Sun Tsu's famous book "Art of War", "Know the enemy and know yourself; in a hundred battles you will never be in peril. When you are ignorant of the enemy, but know yourself, your chances of winning or losing are equal. If ignorant both of your enemy and yourself, you are certain in every battle to be in peril."

So know your debt collector (your imaginary "enemy") and know yourself, and you will resolve your financial problems successfully.

As a smart consumer, it is important to make your account current. It is to your own advantage if you do. Ignoring your debt or delinquency problem - what most consumers choose to do - will not make the problem go away. Make your account current through a plan (knowing yourself, such as how much payment you can afford, and what to do with your current emergency debt situation) and good communication with your debt collector (knowing your "enemy", such as making the debt collector help you resolve your financial problems).

Knowing yourself also implies adopting a positive and confident attitude before and when you make your initial contact with your debt collector. Remember, you are not a bad person just because you cannot pay your bills. When you put down your name on the dotted line to obtain a credit or loan, you probably did it with good intention. When you are having a financial problem, take care of yourself first and foremost. Do things that may lift up your spirit - things that do not require further straining your finances, such as going camping or fishing (but certainly not going on an expensive vacation).

Be open-minded; avoid being neither defensive nor aggressive when you contact your debt collector. Remember, he or she is human, just like you. An attitude is never a good communication skill, and will not get you anywhere.

Rest assured, your debt collector knows your name and address, your home and work phone numbers, the amount of loan, whether it is secured or unsecured, your payment history, your late payments, and your last payment date and amount. Your debt collector has everything in front of his or her computer when speaking to you. Therefore, you must have the same level of information, otherwise you might feel being intimidated while speaking to a debt collector. That is to say, you must also be as prepared as your debt collector to stay in the same level of information.

As a smart consumer, always request a copy of the payment history and a copy of your contract for the delinquent account (if you have not already done so), and have them mailed to you. This may not only buy you more time, but also show your intention to resolve the problem. To protect yourself, you must read your contract in its entirety and review your account payment history. If errors occur, use them to your advantage.

Review your state's laws regarding collections and the federal Fair Debt Collection Practices Act (FDCPA) to know your rights as a consumer. Know what a debt collector can and cannot do. If you do not wish your debt collector to call you at work, fax a request to that effect. A debt collector cannot disclose your debt information on a telephone answering machine without your prior permission, or by mailing you a postcard.

If you are knowledgeable of the law and your rights, your debt collector will know that he or she cannot intimidate you.

(Part Two will be on the communication with a debt collector.)

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You've probably been told that a debt discharged in bankruptcy is not collectable. But that won't stop some shady debt collectors from trying.

In some cases, they try many years later - long after the 4 year statute of limitations has run out. You may become a target because they're working old files in hopes of making a few dollars, or because they've seen your credit report and know that you have now rebuilt your credit and are paying all your accounts as agreed. That's a sign that you probably have the money and can pay them if they can convince you that you must.

Here's how they do it: They file a lawsuit against you to gain a judgment. Then, instead of actually having you served with the lawsuit, they use what is commonly referred to as "gutter service." This means that the process server literally throws the lawsuit papers into the gutter, so you never see them. Thus, with no answer from you, the judgment is granted.

But you don't have to pay it.

Not only are you not obligated to pay a debt discharged under a bankruptcy proceeding, you aren't obligated to pay a debt if it has gone uncollected for 4 years since your last charge or payment.

If this happens to you, simply tell the collector that you have no obligation to pay. Fax and mail a certified letter to the collection agency telling them WHY you are not obligated to pay. Include proof that the debt was discharged in your bankruptcy, or that the debt is so old that it is no longer collectable.

Some collectors will try to scare you into sending a payment - and that is the worst thing you could do. Just one dollar paid on that debt will re-set the statute of limitations, and they can legally hound you for another 4 years.

Other debt collectors will cite your moral obligation to pay the debt. Perhaps you agree that you have a moral obligation - but not to the collection agency. If you have an obligation to anyone, it would be the person or company that extended credit to you all those years ago.

The problem for you, right now, is that this shady debt collector will have placed a notice on your credit bureau file - and it will affect your credit scores. In this case, your next move is to dispute the claim.

You'll need to file a dispute report with each of the three credit bureaus. They will then have 30 days in which to investigate and when they find that it is, indeed, a debt that was discharged years ago, they will remove the information from your credit report.

All negative information remains on your credit report for 7 years, so if your debt is only 5 or 6 years old, don't expect it to be removed just yet. The bankruptcy itself will remain for 10 years.

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