What if a collector calls you?

What would you do if a collector called you? First, assume that this isn't a case of identity theft or a wrong number. You just got a call from a collector, they say you owe such and such, and you know it to be true. What should you do? Here's what I would do...

1) Don't admit to the debt. Get their phone number, case number, and mailing address. Hang up, ignore all further calls.

1a) If they refuse to give you this information (and many will) just hang up.

2) Pull your credit report. Go to annualcreditreport.com and obtain a copy of your report. There is a section that will show you what agency is after you (usually at the top under "In Collections". If not, you can see what companies probably reported you. Call THEM and find out what agency they sold/outsourced your debt to.

3) Write a certified letter with receipt request to them informing them that they are not permitted to contact you regarding this debt. They can still send letters - that's okay - which is what you want. In my experience, all collectors are scum. Assume every word they say is a lie, you need everything in writing.

4) Write a letter demanding verification of the debt. Write the company directly with a copy of the letter.

5) Pay your debt if you can. You owe it, you should pay it. Write another letter saying you will pay it in full and that they must report the debt as "Paid in Full", or "Paid as Agreed", something similar. Make sure they agree to those terms in writing before giving them any money.

5a) If you can't pay, write to them and tell them what you CAN pay. This may take a few letters back and forth, but eventually you will probably come to some kind of agreement. You are of course keeping copies of all your outgoing and incoming letters, and they are all going out certified with receipt requested.

6) Send them a check, cashiers check if you prefer, of the agreed upon amount.

7) Check your credit report after a month to verify that the debt shows paid. Repeat every month until it does. If it doesn't after a couple of months, write them again with copies of your original letters showing the agreement as well as verification of the payment. Repeat until they comply. If a couple letters don't work, write to the attorney general, bbb, anyone you can think of.

8) If all else fails, get a lawyer. If you can't afford one, and you've already been through steps 1-7 and somewhere along the line they decided to break the law and violate their agreement, you can always file in small claims court. Sue em. It costs you around $35 depending on the county. As long as you have all your documentation, any sane judge should rule in your favor. I'd even ask for loss in wages and court filing fees, though I wouldn't expect it.

Getting a debt settled with a collection agency isn't easy, and isn't quick. The problem is that so many of them generally screw people over on a regular basis. So you need to do everything by snail certified mail, so it will take a while (maybe a few months) just to get to the part where you actually agree to pay them something. This is okay. If you are trying to buy something (like a house) and instead finding yourself dealing with collectors, don't sell yourself out and open yourself open to being screwed by going the easy route and giving them a credit card number over the phone to pay them and assume everything will be hunky dory. Just wait to finance that whatever.