How to Talk to Debt Collectors

How to Talk to Debt Collectors

Are you thinking about talking to your debt collectors? I highly recommend it. However, before you talk to them you need to formulate a plan…

It is extremely important to prepare a strategy before talking to debt collectors. A debt collector’s job is to collect as much of the balance as they can from you as quickly as possible. Their method to do this is to inquire about your assets and financial resources in an effort to discover your ability to pay so that you can resolve your account with them.

Unfortunately, this is generally done with no regard for your ability to pay your other delinquent creditors.

If you have multiple collection accounts, it is critical that you assess your ability to pay or settle ALL of your delinquent debts via your assets or other financial resources before engaging your debt collector with this information.

This way, you don’t run the risk of squandering your resources by paying just some of your delinquent creditors when you may have been able to settle all of your delinquent accounts and solve your entire problem.

In this article I discuss how to plan for communicating with debt collectors by aligning your potential repayment options with your financial ability.

make a plan to resolve debt

Understanding your situation

There is generally a reason why you fell behind on your debts. What is it? What was your situation like leading up to the point that you couldn’t pay? Did you suffer a loss of income or an increase in expenses? Was it both?

What is your budget like right now? Do you earn less than what your monthly living expenses are? How much less? If you earn more than your monthly living expenses, do you earn less than your monthly living expenses when combined with your credit card payments?

How much do you owe in unsecured debt? What is your asset situation? What other possible financial resources do you have access to? What will your financial situation be like, after the fact, if you use these resources to resolve your debts? Will the end result be comfortable and sustainable? Will it eliminate your emergency fund? What is your goal?

The reason I pose these questions is because by answering them you will be able to formulate a plan to effectively communicate with debt collectors and be in a better position to achieve your goals.

make a plan to resolve debt

How to talk to debt collectors

The first item on the agenda is to create a story of what happened to you. You want to detail any life events that made an impact on your finances. It’s best if you explain these events in the order in which they happened so the debt collector will better understand your situation.

If you’re in a situation where you’re earning less than what your monthly expenses are, point that out to them. Be specific with this information, so they can grasp just how underwater you are. If you have other delinquent accounts, point that out as well.

What information is safe to share?

In respect to your assets and other financial resources, you’ll want to keep that information to yourself.

In regard to sharing your employment information: don’t! Debt collectors have some pretty slick ways of getting this tidbit of information from you.

If they ask for your work number: reply that the best number to reach you at is the number that they have. If they repeat the question in a different way, reply with the same response and change the subject.

If they ask for the name of the place where you work: reply that you can’t give that information out because it would jeopardize your income. If they ask again, repeat with the same response and change the subject.

The reason why you don’t want to share your work information is that it may enable the creditor or debt buyer to garnish your wages if they successfully obtain a judgment. So providing this information to a debt collector puts them in a position of strength.

And while we’re on the subject: if you have accounts that are in collections, you should make your social network properties private. Social networks are a treasure trove for debt collectors when it comes to locating your place of employment. Just make sure that your settings are set to friends only and to be suspicious of any future friend requests from strangers.

In regard to your assets: debt collectors are generally not familiar with your non-public assets. Meaning they are generally not familiar with your savings accounts, money market accounts, brokerage accounts, stocks, bonds, mutual funds, cash-value life insurance policies, annuities, IRA’s, 401k’s, certificates of deposit, or your inheritance.

There are only two possible ways that your debt collectors would be familiar with this information. The first way is if you provided it on your original application when you acquired the account. The second way is if you tell your debt collectors about them.

The public assets that debt collectors may be familiar with are: vehicles, real estate, and any affiliations with corporations, LLCs, or sole proprietorships.

They also may be familiar with your checking account. If you have paid them by check in the past, you have supplied them with this information. It is wise for someone who has fallen behind on their debts to open a new checking account with a new bank or credit union.

make a plan to resolve debt

Once you have formulated your story, your next item on the agenda is to assess your discretionary income, assets, and financial resource situation so you can determine your options.

What is the combined amount of your delinquent, unsecured debt? Do you have an asset or financial resource that would allow you to generate roughly half of what you owe at one time? Does it make sense to use the resource to settle your debts right away in a simultaneous way?

If you can and it does: you may want to learn about my simultaneous debt settlement service.

make payment plan with debt collector

Be careful when evaluating your less reliable options…

If you lack access to an asset or financial resource and can’t afford the payments that you are being offered through a re-age or hardship program, you’ll probably want to research your long-term debt settlement options. I don’t recommend long-term debt settlement programs (programs that are projected to take longer than 24 months).

Debt settlement is only viable when you can settle fairly quickly. I only recommend debt settlement if you can settle your debts in 24 months or less. Ideally, 12 months or less. And if you can’t generate the funds to settle simultaneously, I recommend settling them yourself.

Please refer to my 4-part series on how debt settlement works to gain a better understanding as to why.

make payment plan with debt collector

If you’re not in a position to settle quickly: how much can you afford to pay your creditors monthly?

If your accounts are not charged off:

It is important that you know that if you file a Chapter 7 bankruptcy, you will generally begin to reestablish new, unsecured credit within 2 years of filing.

If you would prefer to avoid bankruptcy, ask about hardship programs and re-ages. Your creditors generally won’t make these programs available to you until you are 30 – 90 days behind. So if they explain they can’t offer those programs to you, ask them how many days you’re behind and call back after the account cycles again. Accounts generally cycle a day after your due date: 31 days, 61 days, 91 days, etc.

When your accounts aren’t charged off, you will have the opportunity to bring them current. Which means you will have the ability to resolve your delinquent situation quickly, even if you lack access to an asset or other financial resource that would permit you to settle quickly. Most credit cards charge off at 180 days of delinquency.

A hardship program generally comes with a lower monthly payment and interest rate. They also generally close the account. It’s like a DIY debt management plan. The hardship program may be made available to you for 6-12 months. So it’s important to learn about what changes may take place when your hardship program expires: such as your minimum payment, interest rate, and the projected time to pay off the account after those potential changes go into effect.

However, a lot of creditors offer hardship plans that are set up for 5 years. Meaning that if you pay according to the agreed-upon payment terms, you will actually pay off the debts in 5 years. So if your creditor offers a more short-term hardship plan, and it’s not to your satisfaction, make sure to inquire if they can extend it.

If you decide to inquire about hardship programs, make sure to ask about how they will report the plan to your credit. A lot of times they will report that you’re “participating in a special payment plan” to your credit report. If they do, inquire for how long and what your future options may be in respect to getting the remark removed. Ask if the account will be reported as current with a R1 status. If they report it that way, ask them how long it will take for them to do so.

Also, be sure that the cumulative result of all of your hardship plans is comfortably affordable before entering into them. Your best approach is to make these inquiries with all of your delinquent creditors previous to entering into any agreements. This way you can be 100% sure it’s affordable previous to making any commitments. If the cumulative end result is tight, you run the risk of defaulting and impacting your credit all over again.

Also be sure to weigh the sustainability. 5 years is a long time and lot can happen in life. It’s important to consider future curveballs that life may toss your way. Will they easily derail your efforts to adhere to the arrangements that you make?

Once all of your accounts have been in a current, R1 status for 24 months, you will generally begin to reestablish new, unsecured credit if the special remark pertaining to the special payment plan no longer exists on your credit report.

A re-age program works a little differently. They generally don’t close your account if it hasn’t been closed already. They also don’t report a special remark to your credit report. But, they also don’t lower your payments.

A re-age is a great option for someone who either hit a temporary speed bump in life and is now able to resume normal payments, or for those that possessed the ability to settle some of their debt right away, and have subsequently lowered their monthly expenses enough to now be able to afford the monthly payments on their remaining accounts.

When agreeing to a re-age, expect it to take 3 months for your accounts to be brought back to a current, R1 status. The other benefit to re-aging is they won’t require the past due amount to be paid. Just 3 consecutive on-time, minimum monthly payments and you have cured your delinquency and will begin to recover.

Like your other options, it will generally take 2 years to reestablish new, unsecured credit after you re-age all of your delinquent accounts.

If your accounts are charged off:

It is important that you know that if you file a Chapter 7 bankruptcy, you will generally begin to reestablish new, unsecured credit within 2 years of filing.

I mention this because if you choose to make monthly payments on your charge-offs, you generally will not be able to reestablish new, unsecured credit until 2 years after they are all paid off. So it is very important to consider the amount of time it will take you to pay off the charge-offs via monthly payments and then to add 2 years to that length of time to create a reasonable expectation for your recovery.

If you have read or heard somewhere that you will extend the 7-year credit reporting period by making payments on collections and charge-offs, you have been misinformed.

Please see this opinion letter that is provided by the FTC for clarification. Specifically, question 2.

It is important to note, however, that you will more than likely extend the statute of limitations (the length of time your creditor can successfully litigate) when making payments on collections and charge-offs. I say more than likely because it varies by state.

If your accounts are a couple years away from falling off of your credit report, it is important to carefully consider how you intend to deal with them. For example, if your accounts haven’t been paid on in 5 years, there is little benefit to financially addressing them at this point. At least outside of your moral and ethical obligation.

Remember, it generally takes 2 years to reestablish new, unsecured credit after resolving all of your delinquencies. So if the accounts are scheduled to fall off of your credit report in 2 years or less, the end result of resolving those accounts or letting them fall off (in respect to your recovery) would be similar.

The only time this would differ is if you’re in a situation to where you are trying to purchase a home and the lender is requiring the accounts to be resolved in order to qualify. If you’re in this situation, you should ask yourself if waiting to purchase a home until your accounts fall off of your credit report would be more logical for your situation.

It is also important to note that it is possible that your creditors may become more aggressive when your account nears its expiration of statute of limitations. The reason: if they are able to secure a judgment against you, they will renew the statute of limitations of your debt when the judgment is entered.

Statute of limitations on judgments can last for much longer than a non-judgment account. They also may potentially be able to renew it for even longer. In some states we’re talking a cumulative total of DECADES.

I know that last sentence sounds a bit scary. I don’t mean for it to be, but it’s an important risk to take into consideration.

make payment plan with debt collector

If you can’t pay anything:

It is best for you to communicate your lack of ability to do so and to emphasize your focus on survival. Explain that paying for your housing, food, utilities, etc. has to be your first priority. A lot of debt collectors will understand this. Four out of five accounts that go into collections never pay. They’re used to encountering this type of situation.

Please keep in mind that I’m not trying to say that they will just give up. Once you explain to a debt a collector that you lack any ability to pay, they will continue to call you, but generally only to a point. Collection agencies earn their revenue by collecting from you, so it doesn’t make fiscal sense for them to continue to call you after they have had numerous conversations with you and failed to collect anything.

After they have made several attempts and failed to collect from you, they will, a lot of times, mark your account as uncollectable and discontinue the phone calls. Not forever, but probably until the account goes to a different collection agency or collection attorney (generally after 6 months).

make payment plan with debt collector

If you can’t resolve your situation, you should meet with a bankruptcy attorney…

Your other alternative is to do nothing. However, doing nothing is generally an approach reserved for people that a) don’t have a significant amount time left on their 7-year clock, or b) are and will remain assetless, jobless, and without future need for reestablished credit.

If you are in the early stages of delinquency and you expect your situation to slowly improve over time, you’re generally better off filing Chapter 7 bankruptcy as opposed to doing nothing. Not only will Chapter 7 bankruptcy protect you from wage garnishments, liens, years worth of collection calls, letters, ongoing stress, and the potential exposure to post charge-off interest, it will also enable you to reestablish credit again.

If you do nothing, you can pretty much count on not being able to qualify for new, unsecured credit until all of your delinquencies fall off of your credit report (generally 7 years and 6 months from the original date of delinquency). Whereas, if you filed Chapter 7 bankruptcy, you would generally acquire new, unsecured credit within 2 years of doing so. Please see my article about credit after bankruptcy for more information.

If you have heard that you will renew the statute of limitations just by speaking with debt collectors, you have probably been misinformed. In most states, you must acknowledge the debt in writing and sign the document. See my article about acknowledgement of debt and the statute of limitations for a list of links to the specific state laws regarding this.

If you have a financial resource that will permit you to settle ALL of your delinquent debts at the same time and you would like expert help with negotiating with your debt collectors, please feel free to contact me. I’m a small one-person company, so you will be working directly with me. I charge no upfront fees and my fee is based on a small percentage of the money that I save you.

However, before deciding to settle your debts, please refer to my 4-part series about how debt settlement really works so I can teach you about why it’s important to settle your debts simultaneously.

I hope this article about how to talk to debt collectors helped you. Please feel free to comment below with any questions or comments.

Written by Jared Strauss

Jared Strauss

I help people settle ALL of their delinquent debts at the same time. I charge 10-15% of what I save you.

I don’t offer a long-term program. I limit my service because debt settlement isn’t successfully reliable if you can’t settle your delinquent debts quickly.

I was formerly one of the most successful debt collectors in the country. And don’t worry, I wasn’t one of those huffy-puffy types. I also held positions of Collection Manager, Corporate Trainer, and Director of Collection Operations. I’ve worked for large third-party collection agencies, collection attorneys and large debt buyers. (full bio)

I’ve dedicated my website towards truly explaining how debt settlement really works and to dispel the myths revolving around credit and debt.


  1. Ed Sarno July 22, 2014


    Tonight I had my first ever phone call with someone who wanted me to hire them to assist with debt settlement. I was hoping for debt consolidation but they said settlement was the only option they could do. I listened and told them I’d think about it and get back to them. I’m glad I came across your web site tonight. Very informative.

    I’m thinking of going the 401k route to pay off my debt. I realize the risk of being out of the market and the repercussions of potential job loss. Here’s my question….I have an outstanding 401k loan that will take a month or so to pay off. Once paid off, I have to wait 30 calendar days to take another one. Is it okay to tell a credit card collector that I can’t pay them now but will be able to pay in full once I can access my 401k loan? Currently I don’t have any debts greater than a couple of days. Unfortunately, the 401k process could put me out to 90 days, etc before I can fully pay.


    • Jared Strauss August 14, 2014

      Hi Ed,

      I apologize for the delayed response, I’ve been swamped.

      So if you’re only a few days behind, your credit hasn’t been negatively impacted yet. Your credit will generally not be impaired until you fall more than 30 days behind.

      I would think very seriously about the 401k loan. Will your employer require you to pay the loan back after job separation? If so, a 401k loan is dangerous. If they don’t require the loan to be paid back in full if you quit or lose your job, it’s a much safer approach. However, I encourage you to reach out to a credit counselor to inquire about a debt management plan first.

      A debt management plan is what you were originally interested in pursuing. Additionally, the risks posed with a debt management plan are far less than with a 401k loan.

      By meeting with a credit counselor and learning more about how a debt management plan would work for you, you will put yourself in the position of making a better decision on how to proceed with your situation.

      In the interim, I encourage you to read my article about how to avoid debt relief programs. It will teach you about deferments. Deferments may buy you the time that you’re looking for.

      Please feel free to reply with any questions. Good luck to you.


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