Dealing with Collections

(Note: this advice is for accounts the user is currently using OR for debt that is <4-5 years old. For debt that is >4-5 years old that is still being collected on, read this article)

Nobody looks forward to a call from collections. Collections, like telemarketers, are calling you explicitly for money. Collections, unlike telemarketers, claim to haveĀ a legal claim to some of your money (not always! sometimes collections agencies have incorrect information on the borrower OR are contacting excessively/inappropriately; see your local laws). Collections refers to the time and tactics used while a loan is delinquent but has not charged off yet. I have found, outside of the hyper-aggressive bad actors in the space, it is usually best to work with the collections agents than to avoid the calls. Allowing a delinquent account to continue to age often limits the options collections agents have to "cure" your account (although sometimes it works opposite: the farther it is delinquent, the more options they have).

Dealing With the Devil

It may feel like you're making a deal with the devil, but usually they are only looking for "intent and promise to pay". If you don't have cash today, they may ask you when you are able to. They are very often open to one that is far in the future or past the next due date. For thanks for your agreement, they often have the ability to waive certain fees or interest. Sometimes, they are willing to even accept a payment less than the current minimum. Companies have found that simply accepting ANY payment is enough to show that they have a high likelihood to eventually cure that they are willing to accept fractions of the payment.

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Important Caveats

Very, very rarely will companies offer reduced interest on their loans. For loan extension terms, where the agent extends the loan's term so that it lowers the payment, it often actually leads to higher interest payments in the future. It is more likely that companies will waive things like NSF fees or late fees. They are also usually incentivizes on how much they are able to collect from their customers. That means if you are able to pay $100, they will be attempting to get you to pay $200. It is the hard nature of their business that they need to extract as much money as possible out of you as possible.


I have written an entirely different article on dealing with recoveries, because the tactics and legal requirements are different. The time of chargeoff is very different by state, type of loan, company, etc. so it is impossible to say exactly when this is but the OCC maintains guidelines and governance over the financial institutions in order to ensure that they are not hiding losses (perpetuating fraud on the shareholders by misrepresenting their profits).

If you are having difficulty making some of your minimum payments, consider earning money using your spare time!