Prevent Debt Collectors From Destroying Your Credit
Written by: Kristy Welsh
Last Updated: July 14, 2017
If you are behind on paying your bills, chances are a debt collector may be calling you soon. Though debt collectors would prefer you to think otherwise, having a debt in collections is not the end of the world. Certainly, your credit will take a hit, but there are steps you can take to minimize damage.
Challenge the Validity of the Debt
This is a particularly effective tactic for old credit card debt. The more times it has been sold, from one debt collector to the next, the less likely they have on file an adequate paper trail proving the debt belongs to you.
If the debt collector cannot provide such proof, they cannot collect on the debt and the collection listing must be removed from your credit reports. Click here to learn more about debt validation.
Consider Settling the Debt
If the debt collector manages to provide proof that you do, indeed, owe the debt to them, consider debt settlement.
Just be sure to:
- Play it cool. Don’t let on how anxious you are to get this thing resolved. That’s a sure way to prolong it even further, as they know you’ll break before they do.
- Do not accept the first offer, or even the second. Decide on what you are willing to pay to resolve the debt and keep rejecting their offers until they get there (or very close).
- Before agreeing to a settlement, insist on complete removal of the collection listing. And make sure to get this stipulation in writing.
If You Are Being Sued, Make Sure to Respond
The vast majority of people sued by a debt collector simply ignore it. Unfortunately, this results in a default judgment against you, requiring you to not only pay the debt but also the debt collector’s legal fees. Of course, debt collectors know this all too well, which is why they are increasingly filing so many lawsuits. Don’t let them get away with it!
Check the statute of limitations.
Could it be the debt collector is not even allowed to collect on this debt? It could be, as many debt collectors are "robo-signing" lawsuits these days, meaning they’re not taking the time to be sure they have the legal right to proceed as such.
Challenge the debt.
If the debt collector cannot prove that you owe the debt or that they have the legal right to collect on it, the court will throw out the case.
The truth is, debt collectors don’t want to spend the time and money taking you to court. Filing the lawsuit is simply used as a scare tactic that works more often than not. So don’t be surprised if, after responding to the lawsuit, the debt collector offers you a deal.
For specific questions not answered here, try asking in our free and very active forum.