Avoiding Debt Collectors
How to Prevent a Credit Card Account from Being Sent to Collections
Jan 23, 2008
Late payments and sleepless nights usually go hand in hand. Burying your head under the pillow won’t help. What will is an action plan you can start right now.
Negotiate with the Credit Card Company
Even if you’re only 30 days behind, call the 800 number on the back of your card immediately. The sooner you can work out a payment plan the better. Your credit score has probably already gone down because you’re a month behind. Don’t make the situation any worse by avoiding the problem. If you do nothing, the company will most likely raise your interest rate. They see you as a credit risk and won’t stop raising your rate until you call them or pay off the balance.
Ways to Handle Phone Calls to the Credit Card Company
First, identify yourself and state the problem clearly and concisely. Let’s say you’ve just lost your job. Explain to the representative what happened (without too many personal details) and how you plan to rectify the situation. Ask politely but firmly for a lower interest rate. Remind the person on the other end about your history with the company. Usually the card issuer is happy to work with you. They want to keep customers and avoid dealing with collections agencies themselves. But if the representative you’re speaking with seems uncooperative or won’t budge, get a manager on the phone right away. A supervisor can usually make immediate decisions and likely has experience dealing with these issues.
Transfer Your Balance
If you find after negotiations that your interest rate is still too high, consider a low interest bank loan. It might be difficult to get if you are already behind on your payments. But if this is a one-time occurrence and not a pattern, your local bank may be your best bet. If you have a long history with them, make an appointment with the manager and apply for a loan. If you own property, consider a home equity loan or line-of-credit. Just make sure you have enough equity in your house.
When to Seek Outside Help
If your debt seems insurmountable, or you simply don’t have the income to pay off all your debts, it may be time to contact a credit counseling service. Even if you don’t enter a debt management plan, which costs a fee, the counselor may be able to help you set up a budget and come up with a payment schedule.
Remember, getting out of debt should be your number one priority. As soon as you pay off your bills, you can start saving for the future.
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