You have options, don’t let debt collectors scare you
We know how disruptive and frustrating calls from collection agencies can be. If you’ve had debt in collections for a long time, chances are debt collectors are calling often. You might even be receiving calls at work. The worst part is that some collectors will threaten and attempt to scare you into finding money you don’t have to pay them off. It’s one thing to settle a debt in collections because you can manage to do so – it’s something else entirely if you borrow money to do it and end up worse off than you were.
Fear is a strong motivator and we don’t know the things we don’t know! If you’ve never been in debt before you might not know how the collections process works. You definitely won’t know all of your options and likely the word bankruptcy will intimidate you. You might worry about your assets – can a collector take your house away for non-payment? Some collectors rely on your lack of knowledge. If they can leave you scared enough to find money at any cost to stop their calls, they’ve done their job. Remember, collection agencies are paid when they collect – they’re motivated to get you to pay up fast.
Running Scared is No Solution
If you’ve got debt in collections, it’s important to stay focused on a debt relief solution and remember – it’s just business. Debt collectors have a job to do, it’s not personal so don’t take it that way. Your best tactic to handling calls with collection agencies is to be polite and firm. What can a collection agent do or not do? You might not know your rights and the rules collection agents must adhere to. If the conversation is going nowhere, politely announce that you will end the call now and hang up. As soon as you’ve decided what to do about your debt problem, you can share this information with collection agents when they call again.
Collection agents may be the ones who are scared if you decide to file a bankruptcy or consumer proposal. Be prepared for a debt collector to try and talk you out of filing. It is not uncommon for agents to try and persuade people into cancelling a bankruptcy appointment. Some agents will tell you that you’ll “ruin your credit forever” or “destroy your credit score.” The truth is that debt restructuring will take you back to square one with creditors and it will be more challenging to get your credit score back up. However, even though it will take a little work, your credit is definitely not ruined forever.
In fact, you’ll be back on your feet much sooner than you think. First, you’ll pay off debt much faster than you would by making regular minimum payments (check your credit card statement for the staggering amount of time and cost in interest it would take). Second, once you’ve eliminated your interest payments and start paying down the balance, you’ll begin the rebuilding process. As you rebuild your credit score much sooner, you’ll be back up where you need to be in the shortest time frame possible.
Should You Take a Collector’s Settlement Offer?
If your debt is very old, you might receive an offer to settle for a lower amount. A debt collector can offer settlements and accept a percentage of what you owe in order to close the file sooner. If you’ve received an offer like this you might not be sure if you should accept it. Before you decide to take a collector’s settlement offer, there are a couple of things you should know that will help you avoid any unwanted problems.
First of all, forget about any scary stories you’ve heard about or from collection agencies. Approach the offer with confidence. Work with the agent to achieve his/her goals while also making sure that you’re not missing anything. It’s important to get the offer straight – by all means, try negotiating before you accept. If your offer is dependent on one single lump sum payment but you can only pay in three installments – there is no harm in asking. If you’re able to work with a collection agent, you should find them to be as flexible as they can be – provided they have a clear (and quick) deadline in sight for settling your account.
Remember to get any collector’s settlement in writing before you send money. If you don’t have your new payment schedule/terms in writing, the debt settlement offer you received may as well have not happened. In the collections industry turnover can be high. You may be working with one collections agent and suddenly be switched to another. If your agreement to settle is not clearly documented, a new agent may begin at square one with you when you have already been working towards clearing up your account.
Protection is Possible
At some point in the collections process a debt collector must review his/her options. One of these options could be to pursue legal action against you to service your debt – in which case you will need protection. A creditor can always elect to stop using a collections agent and ask the small claims court to grant them with a judgement. Should a creditor obtain a judgment against you, they can pursue your paycheques and assets – including your home.
The threat of a garnishment to your paycheque is a very real consequence if you’re unable to pay off debt. If your debt is in collections you may have a little time to pull together a plan to free yourself from debt and avoid an embarrassing conversation with your payroll department. If a collections agent reports back to your original creditor that they have had no luck in arranging a settlement or payment arrangement with you – that creditor may choose to take you to court and a garnishment order may be granted.
Fortunately, protection from a garnishment order and/or a creditor lien on your home is possible. At Spergel, we help people in debt who wish to protect themselves from legal action. We do so by affording them a legal stay of proceedings which stops all legal action against them. When it comes to obtaining a stay of proceedings, we have two personal debt solutions that will work, bankruptcy or consumer proposal.
How Does A Debt Collector’s Settlement Measure Up?
A debt collector’s settlement will likely cost more than a consumer proposal or bankruptcy. Paying off debt fast might mean taking on higher interest or costs/risks somewhere else (high interest consolidation loans, promises to friends/family). A consumer proposal takes a longer approach, stretching payment out over 5 years and a bankruptcy can free you from debt in as few as 9 months. A bankruptcy can cost as little as $1800 and a proposal is a personalized solution that takes your assets, debts, and income into consideration to offer a fair, interest-free deal.
A collector’s settlement can change. If anything goes wrong during your short-term arrangement, the offer can be rescinded and the collection agency can resume negotiations or choose not to negotiate at all. If you miss a payment or two you could find that the attractive offer you agreed to that would reduce your debt if you worked harder to pay it off fast could be a thing of the past. Unfortunately, there is no legal requirement for an agency to honour a settlement if they feel that you haven’t honoured it by missing a payment. A proposal or bankruptcy will guarantee that creditors follow the rules.
A debt collector’s settlement might not solve your problem in the end. If you’ve got a lot of debt, settling likely means finding a new place to borrow from because if you had the money to begin with – you wouldn’t have the debt. Borrowing from another source to service a debt is one of the warning signs of financial difficulty that we teach in our financial counselling sessions. We caution people to watch out for this type of activity because it means that more financial trouble is sure to follow. It’s hard to solve a debt problem by taking on more debt – even if you’re saving a little with a settlement. A consumer proposal or bankruptcy solves your debt problem without taking on more loans.
The Scary Stories We Tell Ourselves
Sometimes we make things worse than they actually are. Debt collectors are not monsters. Agents are just doing a job that isn’t very pleasant for everyone involved. It’s important to remember that a collection agent isn’t attacking you personally –An agent is using tactics that sometimes work for them to meet the specific objective of settling your account. Getting angry won’t help so it’s important to remain calm and level-headed when speaking with agents.
Debt collections is no exception. If a collection agent tells you that you’ll be arrested if you try to travel outside of Canada and you don’t know if this is true – this might frighten you into finding money no matter what it takes. When you don’t know something, seek out the answers before you jump. Creditors may say boo – but don’t automatically jump. Take the time you need to be sure about your next step, you owe it to yourself.
At the end of the day, scary stories are just that – stories. Some day you will see your experience with collection If you can remember this and seek out help to reduce the debt and stress that’s plaguing you – it can change your life. Debt freedom feels great and you can achieve it. No one wants to live worrying about the next call coming in to their cell phone or office line. We can help you change the narrative, flip the switch, and reclaim your cell phone.
You Can Pay Debt Off and Get Them Off Your Back Fast
Typically with a consumer proposal you get to pay debt off at a fraction of the balance owed. Your assets and income will be reviewed. Your total debt load will be considered as well. A Licensed Insolvency Trustee can guide you with a recommendation on an offer. The offer you make is very likely to be much lower than what you owe. Your interest will stop and you’ll have up to 5 years to complete the program. Collection calls will stop immediately.
Bankruptcy also has its share of scary stories. Many people believe that a bankruptcy will destroy your credit rating forever. A bankruptcy might also ruin your chances of ever owning a home. Neither is true. Many people who once believed in these fallacies are people who have filed bankruptcy and now own a home. We empower and encourage you to take steps after bankruptcy that will prepare you for a future with manageable credit use. Bankruptcy doesn’t have to be scary, if it’s your best option it can be a lifesaver.
If you’re unable to pay debt off by yourself, it will be hard to get creditors off of your back and stop collection calls. With the help of a Trustee, it becomes much easier. We handle all collection calls for you after you sign your bankruptcy or consumer proposal paperwork. When you receive that next call, have the satisfaction of passing them on to us.
Don’t Let Fear Rule Your Decision
A collection agent may use your fear against you. Don’t let their input impact your decision to file a bankruptcy or consumer proposal. If you need formal debt relief, you should pursue it. You know best what will give you back your peace of mind. If creditor calls are relentless and driving you crazy, doing something about it is the only way to make your unwanted calls stop.
If you’re afraid that you cannot pay debt off on your own, get help as soon as possible. Getting help is a smart idea – even if you’re just testing the water. Advice on your options is key to making the right decision. By taking charge and facing what scares you about getting help for your debt, you’ll be getting the upper hand in the debt collections process.
Fear may be a good motivator – but only if you use it to your advantage. Instead of worrying about the consequences of a bankruptcy (of which there are very few by the way), concern yourself with the consequences of not getting help and what will happen if you do nothing. Picture what your life will be like in 6 months, 12 months, 5 years – will your debt problem get better on its own? Use that image to motivate you to take the next step towards debt freedom.
Erase Afraid from Your Vocabulary
If you can defy your fear, you can erase the word afraid from your vocabulary. Finding the strength to stand up to what scares you is an important feat no matter what challenge you’re facing. When it comes to finance, that could mean liberating yourself into a debt free life. Imagine the stress your debt has created is no longer there – you can feel like this every day, we can show you how.
When you take steps to obtain protection, you take steps towards the life you really want. If you’re in debt, it’s very important to get the right type of help so that you truly are protected from legal action while servicing your debt with terms you can manage. A consumer proposal is tailored to your circumstances to make it feasible. A consumer proposal includes a stay of proceedings where other debt management plans may not. To be sure your program includes a legal stay of proceedings, ask a Licensed Insolvency Trustee for help.
If you’re ready to erase the word afraid from your lexicon, we’ll be here to help you do it. We offer customized solutions to every debt problem. You can expect to feel safe while telling us your story – we won’t judge and we keep everything you tell us confidential. We’ll look for the best possible solution for you and put you at ease in under an hour– we encourage you to book a free consultation with us to see for yourself.
Pay Off Debt with Confidence
We want to help you pay off debt. We want to see you confident in confronting debt collectors and moving forward with a better financial future. Rest assured that we believe in second chances and fresh starts. We’ve helped more than 60,000 Canadians to become debt free over the past 3 decades. Think of us as the «ghostbusters» you’re “gonna call” to help you get rid of the debt that’s been haunting you.
So if you’re scared and have been putting off getting the help you need, it’s time for change. You can show others that dealing with debt is not so frightening after all. If you demonstrate that creditors are nothing to be afraid of, maybe others will be inspired too. You could be a pioneer, spreading the antidote to scary stories about bankruptcy – positive stories about meaningful change.
Should you settle a debt in collections? Is this your best option to pay off debt? We won’t know until we sit down to review your situation, but we can promise to provide our honest assessment. We can also promise to protect you legally from debt. Whichever solution your choose, together we can take the spooky factor out of the debt consolidation side of money management. Happy Halloween from the Spergel Team!