Dealing with Bill Collectors

You should know that bill collectors almost always use an alias. This allows them to get really nasty with you and not have to fear that you are going to show up at their home with a gun.

Bill collectors get a bonus for any funds they can pressure a debtor into sending by overnight service or bank wire transfer/Western Union. So ignore any threats they may make to force you into paying quickly.

Most bill collectors will first demand an immediate full payment of the entire outstanding balance. But will reluctantly settle for a protracted payment plan if they are convinced that that's all you can afford. But remember their whole approach is to make you as miserable as possible so you'll divert money you had earmarked for other payments to them just to get them off your neck.

They will assume that you have the means to pay them, but are just unwilling and so must be intimidated into changing your priorities. You have some cards to play here so pay close attention.

You can offer to pay them something each month. How much they will take will take some negotiating. Many people believe that if you offer them some piddling sum like ten bucks a month, they will immediately accept it and will have no further right to bother you.

This is simply not true. Your bill collector wants to hit a home run, not a single. He wants the whole sum right away and doesn't want to have to bother with a long term payment plan.

Remember- he's probably paid on some sort of plan where he gets a percentage of what he actually collects. He knows that there is always the chance that you may go bankrupt later which will end the matter once and for all and leave him (and his firm) out in the cold. Or you may die or get behind in your payments. Any of these outcomes complicates the bill collector's life and he will therefore want to avoid them if at all possible.

Be as reasonable as possible. Bill collectors are used to hearing every excuse in the world. Most are lies and they know it. So if you sound like an honest person who is truly going through a bad period, it may buy you a little time.

Offer a small monthly payment that you can easily manage. Leave yourself some room to maneuver as he'll no doubt want more. If this debt is the only negative item on your credit report, now would be the time to mention your interest in getting this item expunged from your credit report. This will usually trigger more negotiation.

Stick to your guns and you should be able to strike a mutually beneficial bargain. Of course you can depend on the fact that your bill collector will want to bleed you dry. They don't care if the money you send means your mother will have to wait for her operation or your kids will go unfed. If he is entirely uncooperative move onto the next tactic.

If you can afford it, offer to give him a partial final payment. Explain your terrible financial situation. Make it sound like you are honestly trying to pay your bills but the load is just too great. Tell him that you are eager to dispose of this debt as soon as possible. Hint that your financial situation may soon decline.

Then offer to settle the debt for 50% of the entire outstanding balance. Experienced bill collectors know up front what the creditor firms requirements are for cash settlements. Some will accept 50 or 60% while others insist on 75% or more. Negotiate a settlement but only if you have the ready funds to follow through. Then pay it off and forget about it as soon as possible. If he won't settle - move onto the next tactic.

Now we move onto the more drastic tactics. This one is hard core and must be done with some dramatic flair to be effective. When he demands full payment you moan under your breath when he mentions the sum. Tell him that it's highly unlikely that you'll be able to pay even a small part of that huge sum anytime soon.

Tell him of your terrible finances and you might want to mention an ongoing medical problem or possibly that your wife is talking divorce. End your sad story with the line - "I'm in so much trouble I've actually talked to an attorney about bankruptcy".

Bankruptcy is the last word a bill collector wants to hear. It's like telling a winning poker player that the game is over. Most bill collectors will respond by lecturing you on the evils of bankruptcy.

They will tell you that bankruptcy is terrible and must at all costs be avoided. He will make it sound like the end of the world. (Don't believe him - they just want their money and couldn't care less about what they have to put you through).

Today there are over a million and a half personal bankruptcies filed each year and when a personal bankruptcy is completed - all debts are wiped clean and a bill collector is left entirely empty handed.

If he believes you are in earnest and your financial situation is really that bleak, he will back off and become much more cooperative in setting up a payment plan. He will be much more ready to accept partial payment.

Be very careful if the sum you owe is for the lease of a car or other vehicle. Though it's blatantly illegal under state laws, many leasing firms will put a paragraph in their standard leasing contract that says they have the right to repossess the vehicle should you file for bankruptcy protection. Mention the word bankruptcy and in the morning your wheels may have vanished forever.

A bankruptcy filing is supposed to freeze your entire financial world and give you time to come up with more funds. But that doesn't stop leasing companies. They’re very afraid that you will legally drive their car around for months racking up mileage without having to make any payment while your bankruptcy is being processed through the courts and that's why they break the law by illegally grabbing cars.

Remember - the assumption a bill collector operates under is that you are not paying because you are a jerk and if they just pressure you hard enough, you'll pay up. If they thought you were really flat broke, why would they even bother to call? You can't get blood out of a turnip!

Here's a super-hardcore tactic that will work wonders. The problem with threatening bankruptcy is you have to make the person on the other end of the line believe you. In effect you have to become an actor that puts across a line.

Playing Financial Hardball with Bill Collectors

But there is one way to convince them that you are REALLY going to follow through and go bankrupt. Should you visit a bankruptcy attorney, the first step in the process is the filling out of huge numbers of forms. The paperwork is incredible.

Then the attorney submits a form to the bankruptcy court and in return the court issues you a bankruptcy filing number. This is like getting a place in line. When it comes time to schedule your court appearance, your filing number will determine where in the schedule you belong.

Obtaining a filing number does not require you to actually go through the entire bankruptcy process. It only establishes the possibility that you might actually pull the trigger.

Give that filing number to a bill collector or creditor and it will stop them cold. Send them a copy of the document from the court and they will be left with no question of your resolve in the matter.

They will know that you're entirely and completely serious about getting bankruptcy protection and relief. It will prove to them that you're on the level and the threat is not an empty one.

Problem is - getting the filing number can cost you several hundred dollars in attorney and court fees. But it's an extremely powerful tactic if used right.

Old Lawyer's Debt Settlement Trick

This is an old lawyer's trick. They live like emperors, run up huge bills taking luxurious world cruises, dining at the very best restaurants in the world and generally enjoying the high life.

When the bills start to overwhelm them they obtain a bankruptcy filing number and send off letters to each of their creditors offering a debt settlement payment of say 30-40% of the bill. Of course they attach a copy of the court's filing number notification which documents the letter's credibility.

Most if not all of the creditors will fold and grab what they can before the bankruptcy cancels out the entire debt and leaves them empty-handed.

In this way they live like kings for less than half price! And the good news is they can pull off this ploy as often as they like. There's no need to wait for six years as is the case when you go bankrupt.