Divorce = Debt. Tips & Tricks You Need To Know

By JENNIFER LANE

Yes, I used to work for the dark side as a collection agent. As a former insider I know what pushes collectors into giving you the best deal. There are a few simple rules to playing the collector’s game, and you will always end up winning.

Collectors get paid on commission and are desperate to hit their numbers or they will lose their jobs. Where I worked I used to get 20 percent commission, but I had to collect almost $17,000 in gross dollars before even hitting commission. The credit card company took almost half of every dollar the agency brought in. I had to collect four times my base salary in order to overcome that threshold.

This meant collecting a net amount of $8,400 before I even saw any extra money, and most months I did it without a problem. Keep in mind though, that means getting at least 10 consumers to pay before it even really counts. Whenever someone would collect a payment through a check by phone we would ring a bell loudly and cheer. It was exciting, but the truth is consumers don’t really pay debts because they are sick of some collector bugging them. Consumers pay off debt when they want to clear up their credit usually to buy a house or a car, but sometimes just for the sake of a higher score.

All collectors knew when a consumer called in it usually meant they had the money to pay. If they didn’t have any money to pay, then we thought that they must not be too smart. That just makes a collector think you have the money to pay. So if you don’t have the money to pay, don’t ever call a collection agency. You won’t get sympathy, or a listening ear. You are wasting the collector’s time and yours, too.

Even if by chance you get a collector like I was, you would just attract more attention to yourself because it would instill a glimmer of hope that you had the money to pay. At that time, I would hope for your money to pay for the things I had wanted, a nice wedding, and a trip to San Francisco. I would persist in calling you every day. Then I would get you on the phone realizing that you were broke and I’d be so mad that I wasted my time. You’d be mad because you would have gotten called every single day and had several messages on your machine regarding a “personal business matter.”

The purpose of that is to understand the collectors mindset so when you do have the money, you can get them to do what you want. The goal is to have the collector at your mercy, rather than to have it the other way around. Some collectors love tormenting consumers, so what can you do to torment them back? The answer is simple. When you have the money to pay off your past due debt in full, think of a strategy to get the best settlement possible.

Let’s say you owe a debt of $5,000. You also know those scoundrels at the credit card companies added $2,000 in interest and late fees. Why allow them to make even more money off of you? You shouldn’t. The truth is when a debt goes into collections; your credit is already damaged. Even if you pay it off in full with all the added fees, your credit report is still going to reflect that black mark that it went into collections in the first place.

You are better putting that extra money into your savings account and striking up a deal with the collection agency to settle the account for less than what you owe. The best time to call the collection agency is at the end of the month when collectors are sweating to surpass their goals and get as much money as possible. Some months I was desperate. I was always afraid if I got even one month where I didn’t hit my goals that I was going to end up getting canned.

Your job as a consumer is to play on that fear. Make your first call to the collection agency on the 25th. Tell them you really want to pay your debts off. You are looking to clean up your credit and you have money in hand. Tell the collector that you only have $1,000, but you are willing to do a check by phone right this instant. The collector is going to tell you that there is no way they are going to settle the account for 20 percent. The collector will probably offer you a counter settlement. Most likely it will be between 60-70 percent. Don’t wait for the collector to speak their offer. Tell the collector, “Fine,” and hang up.

Less than a minute later your phone will ring. Don’t answer it. Let the collector leave a message. Don’t call back just yet. Chances are after not hearing from you back from you, the collector will call you on the 26th. Don’t pick up. Listen their message and their offer, and don’t believe a word of it. On the 27th, call the agency back and make a firm offer of $1500. They will most likely say no to a 30 percent settlement, but now they know you want to pay. They know you may have a little more money, too. Again, when the collector declines your offer say, “Fine,” and hang up again.

Don’t call the agency back. I am certain by the 29th you will receive a call. Once the 29th approaches answer the collector’s call. Hold firm on your offer of 1500, and at this point the collector will be desperate. The collector will still probably reject it, but will come back with a counter offer. This time listen to the counter offer. Negotiate and get it down to at least 40-50 percent of the balance owed. I can almost guarantee this is possible. I was able to accept settlements as low as 40 percent but only at the end of the month.

At the agency I worked for all the settlements I made were at my own discretion. I didn’t have to ask a manager ever; I just had simple guidelines to follow. From the beginning of the month until around the 23rd, I was only allowed to offer anywhere between 60-90 percent settlements. Honestly, I settled most around 60-70 percent, but some collectors are as flexible. Perhaps that is what made me successful, I don’t know, but I do know that consumers have more leeway with collectors than they may know.

www.debthelper.com is a non profit organization that helps people with debt and bankruptcy.

Jennifer Lane is a certified credit counselor and is taking questions I can answer in upcoming articles. Please feel free to e-mail your questions to me at jlane@debthelper.com.