Debt collectors pursuing delinquent debts, such as credit cards, have one objective: to collect as much of the debt as possible in the shortest amount of time. Sometimes that means asking debtors to make payments for a certain amount each month. The debt collector has every right to make the request, but debtors don't have to agree or even listen to the debt collector's demands.
Federal Law
The Fair Debt Collections Practices Act is a federal law regulating debt collectors. It clearly spells out what debt collectors can and can't do while attempting to collect a debt. Debt collectors can't physically threaten, humiliate, harass or intimidate debtors. Without a court order in the form of a monetary judgment, a debt collector can't demand that a debtor do anything.
Payment Plans
Debt collectors may offer payment plans for resolving delinquent accounts. The debt collector may insist on a certain amount each month, but the debtor doesn't have to agree to that amount. Debt payment plans are a voluntary agreement between two parties: The debt collector and the debtor must both agree on the terms of the arrangement. A debt collector unable to convince a debtor to pay a certain amount does have the right to end the discussions and file a civil lawsuit to collect the debt. However, lawsuits are sometimes expensive for debt collectors, so usually their preference is to work out a payment plan or settlement.
Strategy
Debtors dealing with aggressive debt collectors should take control of the situation by taking a firm stance on what they can afford to pay. One strategy is to offer small payments over a number of months while preparing to make a larger offer later for a settlement. Debt settlement allows a debtor to pay off debts for less than the full balance, sometimes for as low as 20 percent of the balance, according to SmarMoney.com. The usual range for debt settlement is 20 percent to 70 percent. Staying in touch with the debt collector with payments as low as, say, $25 a month is a better option than agreeing to payments that aren't affordable.
Credit Repair
Making monthly payments for a certain amount to the debt collector doesn't improve credit scores --- another important consideration for debtors who feel forced to make high monthly payments. Usually by the time a debt collector receives an account, damage to the debtor's credit has already taken place because of late payments, a charge-off and the notation of a collection account on the debtor's credit. A payment plan to the debt collector doesn't erase the negative credit entries, although eventually resolving the debt, perhaps through settlement, is important for rebuilding credit over two or three years.
Communication
Federal law gives debtors the right to decide how they wish to communicate with debt collectors. The law gives debtors the right to insist that the debt collector not contact them at work or that they make contact only in writing. Negotiating a payment plan in writing may be a preferable option because it creates a paper trail and is often less stressful than telephone discussions.
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