Credit 911: Secrets and Strategies to Saving Your Financial Life

CHAPTER 5

Collections: Deal with It

It’s the reverse 911 call that can change your life, but it’s also one of the hardest calls people answer. People may avoid picking up the phone when they know who’s on the other end—the bill collector looking for money owed. It causes problems at work and at home, and it makes life a living hell. The devil you made won’t go away and must be dealt with now. You have to pick up the phone; a solution is probably a lot closer than you think.

In the credit world, once a company has exhausted its attempts to get timely payment, they turn to collections, the process of trying to settle debts through direct appeal, garnishment, or legal action. Don’t fall for the myth of believing that credit card companies “enjoy” turning an account over for collection. Once that step is taken, they get only a fraction—pennies on the dollar—if anything. It is a last resort.

It’s ironic that many people are so resentful of their lenders (mortgage lenders, credit card companies, finance companies) that they become self-destructive. A dispute over whether or not you owe the debt itself should not be resolved by cutting off communication or by automatically allowing the account to go to collection. Once that happens, your credit rating will fall precipitously, and it will take years to recover. Meanwhile, you might not get that mortgage loan you need. Poor credit may even affect your ability to get a better job.

Stop Being Right

I want to share a personal story that ...