Debt Collection

Understanding how Debt Collection works provides the confidence needed to address any Debt Issue

The Collection Industry

Certified Debt Specialists would be at a significant disadvantage in negotiation without a thorough understanding of the Collection Industry, its background, practices and priorities. This section of the training focuses on Collection, Creditors, Collectors and Attorneys. Background - Defining the Basics of the Collection Process:
Firstly, let’s list the process that collection follows in simple numeric order:


Payment Missed
- Friendly Reminder

Payment still not made
- Another friendly reminder

Payment still missed
- Possible Phone call

No Payment received
- Firmer letter (revoke credit, etc....)

No Payment
- In-house collection

Still no Payment
- Collection Agency

Process starts again (letters, calls...)

Types of debt Collection


Debt collection often starts with the company you own. Their internal collection team(if applicable) will contact you about the debt, leading up to the charge off stage.


Third-party collectors will take over the account on behalf of the original creditor. This group represents "traditional" collection as most of us think of it. This group is regulated by the FDCPA

Debt Buyers

Debt buyers purchase old accounts in portfolios and even in online auctions at pennies on the dollar. They continue to collect the debt, sometimes even after the statute of limitations has passed.

The system of negotiation that we use to deal with our client’s debt follows the same rules whether we are dealing with the Creditors accounts department, with a third party collector/collection agency or Attorney.

Questions and Answers About Debt Collection

From obtaining business to receiving payments, debt collection may be one of the nation's most misunderstood professions. Defining the basics--what collection professionals do and how they work--is the first step toward providing a clear picture of one of society's most misunderstood industries.

What is a professional debt collection service?

Third-party debt collection services collect on past-due accounts referred to them by various credit grantors--including credit card issuers, banks, car dealers, retail stores, healthcare facilities, funeral homes--any business that extends credit or offers payment installment plans.

What does a typical professional collection office do?

Often creditors cannot locate their consumers because they move or change their phone numbers. The first thing a collection service must do is locate the consumer's current address or phone number through a process called skiptracing. The collection office then sends the consumer a notice that allows him or her to dispute the validity of the debt and/or request verification of the debt. Once the notice is received, a collector may call or write to the consumer and ask for full payment of the debt. If payment in full is not possible, the collector will use many tactics to try to collect the outstanding debt. The collection agency only gets paid when outstanding debt is collected and the amount of payment is based on the amount collected, so the motivation is to collect as much as they can persuade the debtor into paying in as short amount of time as possible.

Why are accounts referred for collection?

Most accounts are referred for collection because they have gone unpaid for an average of four to eight months and the creditor has not received any communication from the consumer. Since third-party collection services use specialized phone systems, computers and software designed specifically for the collection industry, along with proven collection tactics, they are more effective than credit grantors at retrieving payment on delinquent accounts.

What's the difference between in-house collections and a third-party collection?

Third-party collectors are directly regulated by the Debt Collection Practices Acts, (Both in U.S. and Canada) , which is administered by the Federal Governments. The Acts set forth strict guidelines designed to protect consumers from abusive, misleading and unfair debt collection practices. Credit grantor collection techniques are covered by law only under certain conditions.

Is there a typical debtor?

No. People from all walks of life face financial problems. These problems can stem from poor money management and budgeting skills to from unforeseen circumstances. Statistics in North America show that of all DEBTORS IN COLLECTION, 87 % live month to month on the edge and a major expense like an automobile repair will put them over the edge, 10 % are in collection due to a major disaster in their lives such as divorce, job loss or health issue and the other 3 % are people who plan not to pay their debt obligations.

What about those who have fallen into debt because of unexpected or catastrophic events?

The collection industry Code Of Ethics requires Debt Collector members to "show due consideration for the misfortunes of consumers in debt and to deal with them according to the merits of their individual cases. Because every account is unique, collection professionals are supposed to carefully listen to the consumer's situation, and find a mutually agreeable solution to their individual payment problems. This is often not the case as the Collection Agency is a “For Profit” business who only get paid on the collection of the debt and cases need to be dealt with as quickly as possible, so the intimidation tactics are their most effective tools, and some agencies rely heavily on these tools.

How has the collection industry changed over the past several years?

In addition to more thorough training in the most effective tactics for collection agents, the greatest changes in the collection industry resulted from a significant increase in automation. Several years ago, most collection offices kept track of accounts on paper cards, information was recorded manually and collectors dialed their phones themselves. Today, offices are computerized and use collection-specific software and sophisticated telephone systems with automated dialers. The typical collection agency is a collection of computer terminals, telephone headsets and a pressure environment to collect with more pay and bonuses going to the most aggressive collectors.


Or the collection agencies as we call them. If you are one of those unfortunates who must deal with these fellows bear in mind that preparation is the name of the game. You must prepare yourself for their tactics and make a case for the settlement you wish to make. Collection agencies only get paid when they collect; so the more they can get the more they earn. Here's where you have to stand firm and not let them get you to repay the entire debt. Professional debt negotiators are invaluable to debtors in this regard.

The negotiator's weapons for dealing with the collection agency is to state that you want to be fair to all of your creditors, but you only have so much money to give to each. And if all of them decided to use a collection agency to get their money you might be forced into bankruptcy. If you need to deal with the bill collector personally, then address him courteously, pointing out the reasons why you were late and the settlement you wish to make. You must sound convincing to get his attention. If the bill collector refuses to go along with your idea, make sure you leave him with a good taste in his mouth. That is, you've treated him with respect and appreciate the reception he gave you.

Suppose the collection agency won't accept any of your proposals. Suppose the collection agency says they are going to take you to court to collect. Then your next recourse is to employ the services of a Professional third party negotiator to work out a settlement plan . The negotiator will tell the bill collector (collection agency) that you'd much rather settle the matter before it goes any further. Both of you can avoid a lot of trouble by making a reasonable settlement.

Why make an offer at all?

You want to prevent your having to apply for bankruptcy. What's more, the creditor will be happier to deal with a settlement payment which pays off the debt. He gets nothing if you go bankrupt. And a bankruptcy on your record will be the worst thing you can do.

Bill collectors are not allowed to harass you if you don't want them to do so. The Fair Debt Collection Practices Act (U.S.) gives you the right to write the collection agency for whom the bill collector works and tell them to stop bothering you. You usually use this right when things get out of hand. You have the right to:

The letter must contain material which relates to your ability to pay, when and what you will be able to pay. State the abuse the collector has inflicted on you and your family and make a specific demand that the collector stop contacting you. You must be tough and stick to your guns at this point. Don't let them get away with it, The law is strictly on your side!

The law mentioned above protects you only from the BILL COLLECTOR being overly zealous. The CREDITOR can take up contacts with you without worry. Normally he doesn't do this when the collection agency tells him they couldn't collect. He just files it away for the future. And usually forgets about it. Unless one fine day he sees you driving an expensive car.

Below is another article on the subject, the laws mentioned although specific to certain jurisdictions are found in similar form in most jurisdictions in North America.

FAST FACTS: DEBT COLLECTORS article by the Editors of Nolo Press.

The law prohibits creditors from using abusive or deceptive tactics to collect a debt. The law, however, also grants powerful collection tools to creditors once they have won a lawsuit over the debt. Here are six frequently asked questions and answers about debt collectors.

1. Collection agencies have been calling me all hours of the day and night. How can I get them to stop contacting me?

It's against the law for a bill collector who works for a collection agency (as opposed to working in the collections department of the creditor itself) to call you before 7 am or after 9 pm. The law, the Fair Debt Collection Practices Act (FDCPA), also bars collectors from calling you at work, harassing you, using abusive language, making false or misleading statements, adding unauthorized charges and many other practices. Under the FDCPA, you have the right to demand that the collection agency stop contacting you, except to tell you that collection efforts have ended or that the creditor or collection agency will sue you. You must put your request in writing.

2. I'm also getting calls and letters from the collections department of a local merchant I did business with. Can I tell that collector to stop contacting me?

No, the FDCPA (Fair Debt Collection Practices Act) applies only to bill collectors who work for collection agencies. Several states, including California, Florida, Louisiana, Maryland, Massachusetts, Michigan, Oregon, Texas and Wisconsin, have laws which bar all debt collectors--both working for a collection agency and working for the creditor itself—from harassing, abusing or threatening you or making any false or misleading statement. These state laws, however, don't give you the right to demand that the collector stop contacting you. There is one exception: Residents of New York City can use a local consumer protection law (Rules of the City of New York sec. 5-77(b)(4)) to write any bill collector and say "Stop!"

3. I just got a form collection letter with a lawyer's mechanically reproduced signature on it. Is this a legitimate collection technique?

Perhaps not. Under the FDCPA (Fair Debt Collection Practices Act), a lawyer must review each individual collection case before putting his or her name on a collection letter. The lawyer can't simply authorize that a form letter be sent and then let the bill collector send it, with the lawyer's signature, if the lawyer hasn't reviewed the particular debtor's file. To put a stop to it, you may be able to sue the lawyer for up to $1,000 in small claims court for violating the FDCPA.


No, and it could add a lot to your debt if you did. Many collectors, especially when a debt is more than 90-days past due, will suggest several "urgency payment" options, including:

  • Sending money by express or overnight mail - this will add at least $10 to your bill; a first-class stamp is fine.
  • Wiring money through Western Union's Quick Collect or American Express' MoneyGram - Another $10 waste.
  • Putting your payment on a credit card not at its maximum - You'll never get out of debt if you do this.

5. I've moved a lot and recently heard from a collector on a bill that's almost three years old. How did the collector find me?

In this technological age, it's easy to run but harder to hide. Collectors use the following primary resources to find debtors: * relatives, friends, neighbors and employers--collectors pose as long-lost friends to get these people to reveal your new whereabouts * post office change of address forms * state motor vehicle registration information * voter registration records * a former landlord * banks

6. Can a collection agency add interest to my debt?

Not unless it was called for in your original agreement or allowed under your state's law. Many states do authorize the collection of such interest. In California, for example, collection agencies can add interest because the Civil Code (sec. 3289(b)) permits a creditor to charge interest after default, even if the contract is silent.

Note: The following material refers to training of the Collector and is meant to familiarize you with the psychology and mindset of debt collection and debt collectors:

Excerpt from Collector Training program

A collection program cannot be tentative in nature. It must be direct and it must be obvious. You can't beg for your money. You have to put your cards on the table and call the hand. If you have done a proper job of dealing with the debtor from the start, you have a hand full of aces.

When you reach this stage, you should have signed purchase orders, guarantees, delivery receipts and detailed information on the current financial condition of the debtor. To counter your efforts, the debtor has a variety of psychological weapons, which are meant to shift the burden of payment off his shoulders or delay payment indefinitely into the future. The more you have prepared, the less effective these psychological weapons become.

If you are prepared, you have an impressive arsenal of weapons. You have all the evidence you require to obtain a judgment against the debtor and, since you know his bank account number, you can have the sheriff take the money out of it. You have a personal guarantee, which will allow you to pursue the debt personally if you can't get paid by the business. You have all the necessary documents signed by the debtor. You are no longer talking to the debtor about if he will pay but when and under what terms the payment will be made.

Al Capone once stated that you will get a better response with a gun and a nice word than with a nice word alone. While the temptation is certainly there to force a debtor to pay, your weapons are limited by laws and common sense. SOLID collection is designed to use those weapons to their best advantage. There is nothing you can legally do to produce a perfect collection record, but SOLID collection will give you the tools to improve the ratio of collections you can make in house.

SOLID collection is based upon an acronym device to make it easier to remember. The program falls into five basic sections: Set-up, Opening, Lead the Debtor through excuses, Insist on a commitment and Don't hesitate. They spell SOLID because we wanted them to spell solid. You will find it easier to remember.

Set-up for the call. Nothing gets a debtor off the hook faster than a caller who is unprepared. You are going to ask for something the debtor does not want to give up. Your conversation should be pleasant, but you are on opposite sides of the fence. Your best interests are contrary to the debtor's best interests. Do not expect the debtor to help you collect. If you don't have your facts straight, the debtor is off the hook.

Here is what you need

Order information

Who said to do the job?

You should not only know their name but have their signed order. You should also have them listed on the credit application as one of the company representatives that may place orders.

Approval Information.

Who said the specifications were acceptable?

This should also be in writing and should also be from somebody the debtor company listed as having the authority to deal with your company.

Shipping Information.

Who signed the bill of lading?

You should have a copy of the shipper's information so you can snuff out any notion of shipping problems. If there was a problem, it would be on the bill of lading.

Invoice Copy.

What was sold under what terms?

This document should match closely with the purchase order provided by the debtor. You should know when it was mailed to the debtor and if the debtor has received additional copies of the invoice.

Customer satisfaction information.

A good vendor calls customers to verify what is received in writing. You should make notes of these calls, who you spoke to and what they said. Problems that did not exist after two weeks have no right to appear after two months.

Follow up information.

When were statements sent out or second and third copies of the invoice?

You cannot stop a debtor from pleading ignorance, but you can keep it from being blamed on you.

Now you have a complete picture of the sale. You can not only provide details to the debtor, you can stuff most of the debtor's lame excuses right back in their faces. You have the names, the dates and the activities right in front of you. It will take less than two minutes to review this information, but you will save many phone calls, not to mention money, by preparing for your collection calls.

It would be unlikely that you are the only credit problem facing the debtor. A simple and successful stalling tactic used by many debtors is nothing more than to question some aspect of the debt. This will send you scurrying through your files and may take quite some time. The debtor can work this stall successfully for quite some time and you may not even realize he is stalling. I am not saying that your debtor is intentionally lying. If you make it easy, however, it could take you weeks just to get out of the starting gate.

Open Strong. Don't ask. Don't beg. Don't whimper. Don't whine. Don't request. Above all, don't give hard luck stories. Unless, of course, you want to get involved in a game of I can top that with the debtor. You may get some interesting stories, but you won't get much money. You have to come on strong.

Coming on strong demonstrates your sense of urgency and your intent to make this issue a priority. It sends a clear message to the debtor that you mean business. Here's how you do it

Speak to the right person. One of my favorite scenes from the movie The Pink Panther from United Artists was when Inspector Clouseau, noting a dog sitting near a hotel manager, asked

  • Does your dog bite?
  • The manager didn't hear and Clouseau repeated the question several times. Finally the manager answered.
  • "No, Sir, my dog does not bite!"
  • Clouseau went over to pet the dog who promptly bit him. Upset and angry, Clouseau confronted the manager.
  • "I thought you said your dog did not bite?"
  • To which the manager replied with a perfectly straight face:
  • "Yes, Sir, but that is not my dog."
  • If you are talking to the wrong person, you are wasting your time. If anything, you are making the collection task more difficult by creating a situation where the debtor can come back at you and demand an apology for your aggressive, harassing behavior with one of the employees.
  • Give your name and company. Yes, this will alert the debtor and provide an opportunity to avoid speaking to you, but we've already covered how to handle that problem. If you have taken on the debtor before, he will already know that you are not a person to be dismissed. It is not necessary for you to establish fear in the debtor, merely respect and the knowledge that you will not be put off. The debtor should know that, if he will not speak to you now, he will be bothered by your call again in half an hour.
  • Tell the debtor why you are calling immediately. Don't try to dress this up as a sales call. Dive right in. In an attempt to demonstrate your relationship with the debtor, you may try to establish a rapport through small talk. This not only sidetracks the issue, it provides the debtor with time to consider options such as having to get to another phone call. The longer you delay, the greater the opportunity for the debtor to wiggle out of the call with any number of possible business interruptions.
  • “Tell the debtor you are calling about invoice number XX for XXX dollars, dated XX/XX/XX. Tell the debtor the work was ordered by so and so and approved by what's his name. Let the debtor know you are aware of follow up calls in which whomever said the work was totally acceptable. Note the age of the bill. Send a loud, clear message that you are in control. “
  • You are calling for one single reason: You want to resolve a past due bill. If the debtor tries to move the conversation to another subject, don't be afraid to tell him that, while you understand his desire to discuss this other issue, that is not why you called. You called to discuss his past due bill and you would like to resolve that issue before moving on to another subject.
  • All The Money Now!. Insist On Now that you have clearly demonstrated your knowledge of the debt; now that the debtor is aware that you are a force to be reckoned with; now you begin to negotiate. Very few debtors will want to pay you everything immediately. They would rather pay you very little as late as possible. What you are doing by asking for everything now is establishing one extreme of the negotiations. The debtor establishes the other when he replies.
  • By going first, however, and insisting on the fulfillment of the debtor's obligation, you are exerting strong psychological pressure on the debtor to give you more than he wants to give. Nothing works all the time, but you will NEVER get more money than you demand. Keep in mind that the debtor's bargaining position is weak.
  • There are times when you want to retain a customer. In those cases you will be negotiating with the debtor. I will discuss that situation later. In a great many cases, you have already written this debtor off as a bad credit risk. You have everything you need to force the collection of your money. The only question at stake is how and when the money will be collected.
  • You can expect to wait at least three or four months to get paid through the courts. Usually it takes six months to two years. Keep that in mind when you consider a payment schedule or a settlement offer. Since you hold most of the good cards, you should insist on some form of written acceptance for any payment schedule that includes penalties if the debtor should fail to meet his obligations.
  • Lead The Debtor Through Excuses. What kind of excuses can you expect to hear? Just about anything you could dream up. You'll hear sad stories and apologies of every conceivable dimension. It doesn't matter. Be polite, because you are still speaking to a customer, but be firm. You understand the problem, but goods were delivered, there was no problem with the quality and the money was due and not paid. The sympathy you may have for the debtor's problem does not reduce the responsibility for the debt to be paid. A good phrase to keep in mind is Yes, I understand but... The bottom line, the 'but' if you will, is that the debtor contracted for what you provided and failed to live up to the contract. If the debtor is unwilling to rectify the situation, breaching the contract in a show of bad faith. There is no reason you can accept for non-payment.
  • If you have all the signed documents we have mentioned earlier, the debtor's best weapon has been reduced to an excuse or many excuses. Review the section on stalls until you can recognize all of them for what they are. Then, as they arise, cut them down. With no excuses, the debtor is much more likely to move your bill higher in his list of priority payments.
  • Insist On A Commitment. Now that we have carefully moved the debtor through the maze of excuses and stalls, we can consider the ultimate solution to our problem. The ultimate solution to any stall is to exact a specific commitment from a debtor. After discussing the matter, you may feel that you can accept two half payments, four quarter payments or whatever. You must obtain an agreement with the debtor that the payments will be a specified amount of money paid on a given date. I'll pay something as soon as I can is a terrible commitment that could usually be translated into I'll pay nothing for as long as possible. If you accept that commitment, you are putting yourself on the very bottom of the list of creditors to be paid. There is nothing to guarantee that a debtor will live up to the promise, but you can deal with that problem from a much stronger hand if you get a specific commitment. You can't honestly expect a debtor to come forward and volunteer a quick full payment.
  • Don't be afraid to say something like I need one thousand dollars on Friday. You can tell the debtor you will send an employee or courier to pick up the check, which will help even more. As a general rule, you won't want to send a salesman. He works too hard being a friend to the debtor and can be more easily manipulated than somebody the debtor doesn't know.
  • If you are going to set up a payment schedule, make it just as specific. Tell the debtor you expect five hundred dollars every month in your office by the fifteenth of every month starting July fifteenth. Have the debtor called four days before the check is due to remind them of their commitment.
  • Make sure you tell the debtor to write down the commitment. Let him know that you are also writing down the commitment and intend to follow it up conscientiously. To be certain both you and the debtor are in agreement on this commitment, insist on something in writing such as a note that can be faxed to your office. You have a right to expect compliance with this request and you should treat any attempt to avoid written confirmation as a stall.
  • Don't Hesitate. If the debtor pays, you start to think in terms of a customer again, but all debtors don't live up to their word. If you expect a check from a debtor on your desk on July fifteenth and its July sixteenth and you have not yet received any money, call the debtor. Remind them of their commitment. Tell them of your disappointment. Find out what has caused the delay and then, before you hang up, put the hammer down.
  • Tell the debtor he is running out of time. It is obvious that he is trying to avoid paying. You have made a payment agreement and he has not only ignored the payment, he has failed to call you and explain the reason for the delay. Unless you receive the payment within five days, you see no alternative but to place the debtor with an outside collection agency. If your professional organization has a local credit bureau program, you can also mention that you will be forced to reluctantly put the debtor's name on that report. You would like to avoid litigation, but the debtor must show good faith and send you the check immediately.
  • Because it is unpleasant to call somebody's bluff, we often find ourselves giving the debtor a few extra days. We rationalize about slow mail delivery and the debtor's bookkeeper being on vacation and anything else we can think of that will allow us to avoid confrontation. We tell ourselves that we are just giving the debtor the benefit of the doubt. What we are really doing, however, is letting the debtor off the hook.
  • The debtor had promised to pay you one thousand dollars on Friday. It is Monday and you have not yet been paid. Yes, the check may have been mailed, but the point is you don't have the money. Call the debtor immediately. Now is the time for you to bring out your big guns. He promised and has not delivered. You have no reason to believe he will live up to any future promise. It is now or never, payment or litigation. You may choose to accept a lower payment or a short extension but make certain that the debtor understands that you have reached the end of your rope. That should move you to the very top of his priority payment list. If you don't get paid then, it is likely that the debtor has no means with which to pay and you should send this bill out for collection immediately.

Priorities of the Collector

It is important to understand the PRIORITIES of the collector; we will discuss them in order:

1. PIF (payment in full)

The collector (Collection Agency) will want to collect the entire amount which is outstanding as their FIRST priority, this is where the scare tactics are put to best use by the collector.

2. Possible settlement

The second most favorable situation for the collector is to arrange for SETTLEMENT of the account for as much of the outstanding debt as is possible to get.

3. PA (payment arrangement)

If an amount of money is not immediately available to SETTLE the account, the third option of arranging for payments to come in over a long period of time. This is a much longer process for the collector to deal with and is much less desirable to them than settlement. It is also not a situation which leads to the best negotiated settlement of the outstanding dollar amount in dispute for the debtor.

4. Sue

The collector who is not successful with one of the other solutions has only two options left and the next option is to sue the debtor. This is not a very good option as the process is very time consuming and expensive. The parties after a long, stressful and expensive battle seldom are where they could have been through negotiation earlier. If a judgment is granted to the creditor it will last for ten years, this is not good for either party as the creditor has to keep the file open and keep checking on the debtor who has the judgment continually hanging over his/her head. Often the cases end up here because of a deteriorated relationship due to the collection process and the lack of a third party to get negotiation on track. This is where a Professional Arbitrator is invaluable.

5. Close

If the collector decides that suing the debtor is not a good option due to circumstances they will simply close the collection file. This will result in very negative information to be added to the debtor's credit record, which will haunt them for a very long time. The collector also does not WIN as no funds were collected.

The following is an example of typical collection calls :


Hi, Mr. Smith, this is Joe from Acme Collection Agency in Anycity. Your file has been placed with us by “Credit Card Co.” for collection in the amount of $5000.

Do you have a pen and paper?

Our company name is Acme, our address is 555 Debtor Street, and our phone number is 555-5555.

My name is Joe Collector

  • Now Mr. Smith I need certified funds in my office today by 3pm in order to avoid further action.
  • The debtor will usually say they don't have the money.
  • Mr. Smith this debt is seriously in arrears.
  • Let me update your financial position.
  • Let me update your financial position.
  • Are you still employed with.
  • Are you currently banking at.
  • Your monthly income is.

The collector will now carry on with his/her own style. Some collections will be very firm with little room for the debtor to breathe. Other collectors will try the "nice guy approach and help the debtor source for funds.


Collectors' styles vary with personalities. Some are very aggressive while others seem very meek. Good collectors are best to deal with as they want to get the account resolved and understand that bullying and intimidation doesn't work. They will help you in getting the best possible settlement.

Inexperienced collectors have just gone through their training and really don't know how to get settlements done. It's our job to help them. Some of these collectors may be difficult to deal with due to their insecurity and feelings of lost control.

Bad collectors may be experienced or inexperienced. They may feel threatened and insecure by you as well. They may be trying to avoid conflict. You can't push them; you must let them feel like they are in control of the matter.

Introverts and Extroverts:

Introverts like to analyze situations. They will consider questions before they speak. They need information (financial statements, POA, etc....) Extroverts like to talk out the situation. They need to feel in control. Let them talk. Don't interrupt.

Good guy, Bad guy Approach:

Some Collectors will work in teams. The first collector will call using a very aggressive manner, demanding payment. If they find that this is not working, they may send in the non-confrontational (nice-guy) collector who will suggest that they look into all possible avenues to clear the debt (relatives, banks...). The debtor may not respond to the aggressive collector but often the less demanding collector will have amazing results.

Debt Collection Acts

Debt collectors are regulated in Canada and the U.S. by Debt Collection Practices Acts and need to abide by strict rules. The Fair Debt Collection Practice Act is included with the course materials for your reference.

Debtor Client Counseling Section

This section deals with Dealing with Creditors & Collectors - advice that a Certified Debt Specialist should provide to their clients. The material is presented here in the same verbiage you may use when advising and presenting the subject to your client.

  • Dealing with Your Creditors
  • How To Deal With Contact From A Creditor or Collector

Although the process for eliminating your unsecured debt is generally painless, there is one area that can cause frustration, and that is receiving calls from creditors. You have given us the authority to act on your behalf to settle with your creditors. You have also agreed to cease talking to the creditors, and not to negotiate with them on your own. Your creditors want to be paid; trying to contact you by both phone and mail are normal business practices. Your job is to avoid talking to them.

We have a few suggestions on how to most effectively deal with these calls. You should consider the following options and make the decision that is best for you.

  • Change your phone number to an unlisted AND unpublished number. This is the quickest way to stop calls. If you get an unlisted number, they will be unable to reach you by phone, and will be forced to either call us, or contact you in writing, which is the preferable procedure. We understand that the process of changing your number is not convenient, but it is much more convenient than fielding creditor calls. It is definitely the most effective method of stopping calls before they start.
  • Contact your phone company and order privacy screening. This service will block all computer-generated calls, as well as calls made from toll-free numbers. Most creditors will fall under these categories, but you should understand that some might have ways around this feature. This feature has different names, such as Privacy ID (Sprint) and Privacy Plus (AT&T), but your provider should offer a similar option.
  • When a creditor calls, obtain the company name, person's name, telephone, and extension of the caller, and the FAX number. Give them our Customer Service number and hang up the phone, all without discussing our program. The information you obtain should then be emailed, faxed or mailed as needed to us for follow-up.
  • We will follow up on call records for you, but we need your help to educate your creditors to the fact that they are dealing with us and not you. Compliance is less than 100%, and it helps if you understand that. It takes a bankruptcy to eliminate collection procedures under the law.
  • Under the Fair Debt Collections Practices Act, we can stop collection agencies from calling. Original creditors however, can continue to contact you unless they indulge in what can be called harassment. This includes calling at inappropriate times or calls to your place of employment after they have been informed not to contact you there.
  • If you receive harassing calls or your debt is assigned to a third party collection agency or attorney, you should email or fax us, a creditor call record. Once you send a creditor call record, we will provide that creditor a copy of your Power of Attorney authorizing us to act on your behalf. Some creditors will contact us after receiving a copy of the Power of Attorney. Many will not. Additional contact from us may to be required. The more aggressive creditors and collectors may continue to make collection calls until the point a settlement is paid.
  • The collection process is designed to put you at an emotional disadvantage so that you will feel that only you can deal with them and that you must do so immediately. Your creditors have been at this for a long time and every word they say and every technique used are skillfully designed to put pressure on you to act to their benefit. Few industries are as skilled at using the psychology of guilt and "impending doom" as collections. They may tell you that they do not deal with our industry or our company, or even that we are not a legitimate business. None of that is true.
  • Please be relaxed. These creditors cannot hurt you. They may report late payments to the credit bureau - that's okay. They may "write off" your account or sell it to a collection agency - that is okay. These actions are part of the expected process and will create the environment in which the best settlements can be negotiated. Hanging up on an aggressive creditor may even be satisfying. Eventually, our tactics lead to success, and the calls stop.

Your Rights In Debt Collection

If you use credit cards, owe on a personal loan, or are paying a home mortgage, you are a "debtor." If you fall behind in repaying your creditors, or an error is made on your accounts, you may be contacted by a "debt collector."

You should know that in either situation, the Fair Debt Collection Practices Act requires that debt collectors treat you fairly and prohibits certain methods of debt collection. Of course, the law does not erase any legitimate debt you owe. Here are answers to some commonly asked questions about your rights under the Fair Debt Collection Practices Act.

What debts are covered?

Personal, family, and household debts are covered under the Act. This includes money owed for the purchase of an automobile, for medical care, or for charge accounts.

Who is a debt collector?

A debt collector is any person who regularly collects debts owed to others. This includes attorneys who collect debts on a regular basis.

How may a debt collector contact you?

A collector may contact you in person, by mail, telephone, telegram, or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts.

Can you stop a debt collector from contacting you?

You can stop a third party debt collector from contacting you by writing a letter to the collector telling them to stop. Once the collector receives your letter, they may not contact you again except to say there will be no further contact or to notify you that the debt collector or the creditor intends to take some specific action. Please note, however, that sending such a letter to a collector does not make the debt go away if you actually owe it. You could still be sued by the debt collector or your original creditor.

May a debt collector contact anyone else about your debt?

If you have an attorney, the debt collector must contact the attorney, rather than you. If you do not have an attorney, a collector may contact other people, but only to find out where you live, what your phone number is, and where you work. Collectors usually are prohibited from contacting such third parties more than once. In most cases, the collector may not tell anyone other than you and your attorney that you owe money.

What must the debt collector tell you about the debt?

Within five days after you are first contacted, the collector must send you a written notice telling you the amount of money you owe; the name of the creditor to whom you owe the money; and what action to take if you believe you do not owe the money.

May a debt collector continue to contact you if you believe you do not owe money?

A collector may not contact you if, within 30 days after you receive the written notice, you send the collection agency a letter stating you do not owe money. However, a collector can renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.

What types of debt collection practices are prohibited?

Debt collectors may not harass, oppress, or abuse you or any third parties they contact.

For example, debt collectors may not

  • use threats of violence or harm.
  • publish a list of consumers who refuse to pay their debts (except to a credit bureau).
  • use obscene or profane language; or.
  • repeatedly use the telephone to annoy someone.
  • False statements.

Debt collectors may not use any false or misleading statements when collecting a debt. For example, debt collectors may not:

  • falsely imply that they are attorneys or government representatives.
  • falsely imply that you have committed a crime.
  • falsely represent that they operate or work for a credit bureau.
  • misrepresent the amount of your debt.
  • indicate that papers being sent to you are legal forms when they are not; or.
  • indicate that papers being sent to you are not legal forms when they are.

Debt collectors also may not state that

  • you will be arrested if you do not pay your debt.
  • they will seize, garnish, attach, or sell your property or wages, unless the collection agency or creditor intends to do so, and it is legal to do so; or
  • actions, such as a lawsuit, will be taken against you, when such action legally may not be taken, or when they do not intend to take such action.

Debt collectors may not

  • give false credit information about you to anyone, including a credit bureau;
  • send you anything that looks like an official document from a court or government agency when it is not; or
  • use a false name.
  • Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, collectors may not:
  • collect any amount greater than your debt, unless your state law permits such a charge;
  • deposit a post-dated check prematurely;
  • use deception to make you accept collect calls or pay for telegrams;
  • take or threaten to take your property unless this can be done legally; or
  • contact you by postcard.

What control do you have over payment of debts?

If you owe more than one debt, any payment you make must be applied to the debt you indicate. A debt collector may not apply a payment to any debt you believe you do not owe.

What can you do if you believe a debt collector violated the law?

You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, you may recover money for the damages you suffered plus an additional amount up to $1,000. Court costs and attorney's fees also can be recovered. A group of people also may sue a debt collector and recover money for damages up to $500,000, or one percent of the collector's net worth, whichever is less.

Where can you report a debt collector for an alleged violation?

Report any problems you have with a debt collector to your state Attorney General's office and the Federal Trade Commission. Many states have their own debt collection laws, and your Attorney General's office can help you determine your rights.

What Can Your Client Do If a Debt Collector Violates the FDCPA?

share this with information with your client advising you will assist with all remedies

Here's what you can do if a debt collector harasses you or otherwise violates the law when trying to collect a debt from you.

The federal Fair Debt Collection Practices Act (FDCPA) offers consumers protection against overly aggressive debt collection actions by debt collectors and debt collection agencies. If a bill collector has violated federal law in its dealings with you, there are steps you can take depending on your goal. These range from suing the debt collector to reporting the collector to government agencies to using the violations as a negotiation tactic on the debt.

If a debt collector violates the FDCPA, you have several available remedies

Sue the Debt Collector in State Court

The consumer may bring a lawsuit against the debt collector in state court. In the lawsuit, you must prove that the debt collector violated the FDCPA. If successful, you may be able to collect $1,000 in statutory damages, and possibly more if you suffered harm from the violations.

In these lawsuits the consumer is almost always represented by an attorney. The amount of money that the consumer sues for includes the consumer’s attorney fees and costs. Suing in state court is almost always the most time consuming and lengthy of all remedies, but a successful lawsuit can award the consumer the highest monetary damages.

Sue the Creditor in Small Claims Court

Small claims courts may be a better option for consumers who do not want to hire an attorney or spend the time required for a full-blown state court lawsuit. Small claims courts allow individuals to argue their case without an attorney and through an expedited process. These courts typically offer the consumer one shortened hearing in order to argue the case to a judge.

Usually, you file a simple court document to start the case. Hearings are usually held less than two months after the lawsuit is filed. At the hearing the judge may issue a ruling on the spot or take the case "under submission" and mail you the ruling at a later date.

The disadvantage of using small claims courts is that Small Claims Courts limit the amount of damages that you can get.

Report the Action to a Government Agency

The Federal Trade Commission (FTC) is charged with overseeing debt collector actions and ensuring that the FDCPA is not violated. Consumers can contact the FTC with FDCPA concerns. You can file an online complaint using the FTC's Complaint Assistant at

Consumers may also contact the Consumer Financial Protection Bureau (CFPB). The CFPB takes consumer complaints, passes those complaints along to the creditor, and then works with the consumer and creditor to find a solution to the problem. You can submit an online complaint with the CFPB at

Report the Action to the State Attorney General

In addition to violating the FDCPA, the debt collector may also be violating state laws. The consumer may want to contact the state Attorney General’s office in order to receive guidance on a possible FDCPA lawsuit and for any possible state law actions against the debt collector. Many of these offices also receive complaints against debt collectors -- if it gets enough against one collector, it might prosecute on behalf of the state.

Use the Violation as Leverage in Debt Settlement Negotiations

When you are trying to settle debt and the collector violates the FDCPA, you (we) can use the violation as leverage to settle the debt. This often works because collectors know that a FDCPA lawsuit can be costly to defend and may result in a judgment against them.

How much leverage you get from the threat of a FDCPA lawsuit depends on the strength of your case. If you have strong facts proving a violation (multiple letters, records of multiple phone calls, testimony of coworkers who received phone calls, etc), you will have much more leverage in debt settlement negotiations.

IAPDA can provide you with a certified, licensed professional that specializes in Consumer Protection solutions. Get the professional help you need. Click the HELP button for a free consultation.