Ten Things Bill Collectors Don't Want You to Know (2024)

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Ten Things Bill Collectors Don't Want You to Know

by John Barnes
Copyright © 1994 Nolo Press

1. The More You Pay, the More They Earn
2. Payment Deadlines Are Phony
3. The Don't Need a 'Financial Statement'
4. The Threats Are Inflated
5. You Can Stop Their Calls
6. They Can Find Out How Much You Have in the Bank
7. If You're Out of State, They're Out of Luck
8. They Can't Take It All
9. They May Not Know a Thing
10. You Can Pay Student Loans in Installments
11. Side Bar--How They Find You

For many people, the cold call from the bill collector is anintimidating andeven humiliating experience. They are unprepared to deal withcollectors, who aretrained to handle every type of response. Relentlessly assertive,collectorsfocus on "the close" -- your commitment to pay.

The less knowledgeable you are about your rights, the more confident acollectorbecomes; the more worried you are, the less concerned the collectorbecomes.Collectors know that it's easier to manipulate a conscientious debtorinto apayment plan that benefits the collector, not the debtor.

You'll be in a better position to resist collectors' pressures, andnegotiate asensible repayment plan, if you're prepared for the tactics they'relikely touse. Here, then, are ten of the best-kept collection secrets.

Collectors get commissions -- usually 30 to 50% -- on money they bringin, whichoften double or triple their salaries. This means they have a strongincentive topress for a big "down payment" from you, even if this deepens the cycleof debt.

Collectors hoping for a big commission may claim that the boss insistson a bigdown payment. In fact, blaming it on a mythical manager is designed todeflectyour anger away from the collector.

Payment deadlines set by collectors are meaningless. Collectors simplywant tocreate a sense of urgency, because the longer it takes to get you topay, theless chance there is of collecting the debt.

Collectors often claim they need a "financial statement" from you, sothey canwork out a realistic repayment plan. You'll notice, though, that theinformationthey ask for -- bank account numbers, references, place of employment-- is farmore than they need for that purpose. They're fishing for informationthat willhelp them find you if you move or sue you if you don't repay the debt.

Collectors always graphically detail the disastrous consequences offailing topay a debt. "Your credit rating will be ruined," they warn. (Notmentioning thatit's probably already not so good, since a collection company is afteryou.)"Your personal possessions, including your car, could be seized andsold at apublic auction!" (Never mind that this virtually never happens; it'sillegal insome states and impractical because of the expense.) Probably 95% ofthe time,collectors go after only bank accounts and wages.

You have the right, under federal law, to tell a collection agency tostopcontacting you. Just do it in writing, and contacts must stop, unlessthey're totell you that collection efforts have ended or the agency is going totake aspecific action (like filing a lawsuit) against you.

A collector who has your bank account and social security numbers canprobablyeasily find out the balance of the account. Because big banks now haveautomatedaccount inquiry systems, the collector doesn't even have to speak to ahumanbeing; all it takes is a phone call to the automated voice-mailservice. When theaccount number and social security numbers are punched in, the computerpromptlysupplies an up-to-the-minute account balance.

Collection agencies routinely call out-of-state debtors to demandpayment. But ifa creditor has sued you and won, you are probably safe from enforcementaction ifyou bank and work outside the state where the lawsuit was filed. That'sbecauseto collect, the collection agency must transfer the judgment to yourstate, whichis prohibitively time-consuming and expensive.

Certain income, such as social security, pensions and 75% of yourtake-home pay,is exempt from enforcement action. You can file a claim of exemptionfrom agarnishment of the other 25% of your wages if it would cause you oryour familysevere hardship.

Sometimes a collection agency lawyer, trying to collect a judgmentdebt, sendsquestions on a court form asking about your income and assets. (Theseare called"post-judgment interrogatories" or "information subpoenas.") This isgood newsfor you -- it means that the agency has no information and is hopingyou will beintimidated enough by this legal questionnaire to complete it. Manypeople do,because the forms list sanctions, such as fines, for not doing so. Butnormally,it is too expensive and time-consuming for an agency to go to court andforcecompliance.

If you are behind on student loans, you can apply for what everycollectionagency hates: "reasonable and affordable payments" under the 1992HigherEducation Act. If you can document financial hardship, a collectionagency mustaccept as little as $10 per month for at least six months. As long asyou makethe payments, you are eligible for Title IV Student Aid, and you cancontinue thepayments unless your circ*mstances change.

It isn't hard for collection agencies to locate most debtors. Here aresome oftheir common sources:

Credit Checks

Your credit file is a wealth of information. To see whether a creditbureau --and therefore a collection agency -- has information on where you workand bank,request a copy from TRW, Trans Union or Equifax. (But realize that whenyou tellthe company where to mail your report, that address will make its wayinto yourfile.)

Telephone Information

Even if your phone number is unlisted, a collector always checks theaddress. Ifyou have an unusual name, the collector calls all numbers with thatname, lookingfor a relative. A favorite technique is to leave a message with arelative,asking you to call a number collect. If you call, the collector acceptsthecharges -- and contacts the operator to find out the number you calledfrom.

The Post Office

Using a post office box as your mailing address doesn't deter acollectionagency. For a small fee, the post office will provide a box holder'sstreetaddress if it's available.

Mailing Lists

Most consumers' addresses (and sometimes, phone numbers) have been soldtocompanies that collect mailing lists and sell them to collectionagencies.

References

Collectors may call persons you listed as references on a creditapplication andask for your phone number. It's against the law for the collector tolie and sayit's a friend calling, so a reference may be able to stop the calls byaskingdirectly "Are you a bill collector?" Of course, some collectors simplybreak the law.

Books

• Chapter 13 Bankruptcy: Repay Your Debts
• Money Troubles: Legal Strategies to Cope With Your Debts
• How to File for Bankruptcy
• Stand Up to the IRS
• Nolo's Pocket Guide to Consumer Rights (California Edition)

The above links are connected to Nolo's on-line store where you willfind a detailed description of each product.

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