If youre in debt, chances are debt collectors will find you.
Thats their job, after all.
Heres what you should do when debt collectors start calling.
There are so many scams out there.
Theyll usually threaten you with lawsuits or jail time.
They demand payment immediately: Again, regular collectors have time-sensitive requests, too.
But a scammer will usually demand payment today, along with a threat.
Someone answers immediately when you call: Most companies have phone systems.
If someone answers right away when you call, it may be a scam.
Also, be wary if you keep dealing with the same person.
Legit companies have multiple agents.
It also helps to know the law.
Luckily, its pretty easy to expose these scams.
The collector has to send you written notice of your debt within five days of initial contact.
CreditCards.compoints outthat legit collectors will usually send this before calling, anyway.
What is the name and address of the debtor youre trying to reach?
What are the last four digits of the debtors Social Security number?
This is why its important to keep tabs on your credit reportso you know what you owe.
Of course, when you have a multitude of debts, this isnt going to be fun.
If you havent already, requesta free copy of your credit report.
But knowing your debt payoff plan can help you prioritize the debt in question.
The collector might call it adebt managementplan when they offer it.
Of course, since the term is extended, youll be paying more in interest overall.
Wevequestioned the moral gray areaof debt settlement before.
Heres what you should know before deciding to settle.
They hold it while they attempt to negotiate a lower amount with the creditor.
In the meantime, youre missing payments and your score will take a beating, as he puts it.
They consider your forgiven amount taxable income.
In some cases, a debt settlement can work for you.
Just keep in mindits often not as quick and painless as it seems.Know what youre getting intobefore settling.
attempt to Negotiate Your Settlement
In addition, its possible to negotiate your settlement amount.
And if youre interested in this option, there are a few strategies.
Credit expert John Ulzheimersuggests offering 10 to 15 percentof what you owe.
Then, expect to settle in the neighborhood of 30 to 50 percent.
According to Bankrate, you’re able to also suggest something called apayment for deletion.
This isnt illegal, but its often frowned upon, and many collection agencies may refuse.
Do this before making any payments.
ensure the agreement includes full details of your deal, including the amount, terms, and any interest.
You have the option of contesting the judgement, trying to settle the debt, or declaring bankruptcy.
If you ignore the judgment, theyre allowed to start taking money from your earnings.
The Department of Education cant garnish more than 15% of your pay.
State laws might be different, depending on where you live.
Either way, you should know what youre getting into before making any big decisions.
Illustration by Sam Woolley.
