One of the worst things about being in debt is having to deal with harassment — and embarrassment — from creditors and the bill collectors who work for them. From threatening letters to nasty phone calls, this harassment can be very stressful, especially when you may already be going through a difficult time.
Some consumers wonder what they can do to avoid or stop the intrusive, rude interactions with collection agents that never seem to end.
It depends on who the creditor is
Some debts are much more important than others. Your mortgage lender or servicer (which may or may not be the same company) will be trying to collect mortgage payments; if you get too far behind on payments, you could lose your home, so you need to be serious about that debt. Same thing with tax authorities like the IRS — you can only blow them off for so long before bad things happen.
However, collectors for unsecured creditors, such as credit card companies or hospital corporations, are different. Though they may come across aggressively, those collectors often have more bark than bite.
Motivation and compensation
Not all collectors are motivated by the same things. Some collection agents are actually paid a commission on what they collect, or they may receive bonuses for reaching certain monetary goals. Other collectors are simply running through a database.
Some collection companies are shady business ventures that purchase “books” of debt and try to make as much as they can from the debtors they are harassing. Some private collection companies hire agents who can be unprofessional, cold-hearted and evil. Many payday loan collectors have been known to make false threats of imprisonment and otherwise break the law.
Bankruptcy may be your best option for stopping the harassment
It helps to know how collectors operate and to understand what the law allows them to do. You can employ certain techniques — hint: don’t pick up the phone — to keep some collectors off your back, but others may contact your family members, attempt to reach you at your job or try to garnish your wages. It is important to have a long-term strategy to actually deal with the debt.
Every case is different. Chapter 7 bankruptcy will not only stop creditor harassment; it can actually eradicate (discharge) many forms of debt, like credit card debt and unpaid medical bills. Chapter 13 bankruptcy can help you stop home foreclosure or the loss of another important asset. If you are struggling with significant financial problems, you may want to talk to an experienced attorney about these and other debt relief options.