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The Dos and Don’ts for Handling Debt Collection Calls

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Having a debt in collections is a story many Americans know well. Roughly one-third of U.S. consumers were contacted by a debt collector or creditor in the 12 months leading up to January 2017, according to a Consumer Financial Protection Bureau (CFPB) report.

When an account is sent to collections, that means that the account has fallen behind on payments and has been turned over to a third-party debt collection company tasked with recovering the owed debt. It goes without saying that delinquent accounts can seriously drag down your credit score.

There isn’t an exact formula for how much a delinquent debt dampens your score. Martin Lynch, a certified credit counselor and director of education at Cambridge Credit Counseling, said that it’s all relative to whatever else is on your credit report. Either way, you can expect an account in collections to stay on your credit report for seven years.

But if you have an account in collections, there is light at the end of the tunnel. We tapped credit experts to shed light on the best ways to tackle your situation and get your credit back to where it should be. And it all starts with picking up the phone when debt collectors call.

What not to do when debt collectors call

Avoid communication

Your intuition may tell you to duck and cover, but avoiding a debt collector could put you in financial and legal hot water. Debt collectors are nothing if not persistent. More than likely, they’ll continue reaching out to you. And those who feel ignored may escalate their efforts and file a lawsuit against you.

“Don’t put off the discussion you need to have with your creditor,” said Bruce McClary, a spokesperson for the National Foundation for Credit Counseling. “If they need to reach you about a payment you’ve missed, answer the call, open the letter, open the email, read the text — and reach back to them if you don’t connect on their first attempt.”

In other words, lead with an honest and open conversation and take it from there. The best time to set things right and preserve your credit rating, according to McClary, is during the earliest stages of debt collection, when your account may still be open.

“At that point, you want to be limiting the possibility of further damage to your credit rating by letting the account continue to slide off the cliff,” he said. “The instinct to run and hide, while it may feel natural, is absolutely against your best interests.”

Don’t blindly agree to pay the balance

“You shouldn’t agree to make any kind of payment or even acknowledge the debt until you’ve confirmed that it’s yours and you know the date in which you made the last payment if you made any,” Lynch said.

There are statutes of limitations on debt that vary based on your state and the type of debt you have. All this means is that debt collectors only have a certain amount of time to file a lawsuit to recover payment. Three to six years is the norm. The problem is that making a payment revives the statute of limitations, Lynch said.

“That’s particularly dangerous if the debt is approaching or has already passed the statute of limitation,” he added.

First things first: Confirm the debt is actually yours. The CFPB recommends finding out who the original creditor is, what the debt is for when it was incurred and how much is owed (including interest and fees). You’ll also want to confirm the debt collector’s name, address, and phone number.

To protect yourself from scam artists, request that debt collectors contact you in writing. Until then, don’t dole out any financial or personal information. It may turn out that the collector doesn’t own that debt, or they’re looking for somebody else. (If it’s the latter, and that information has found its way onto your credit report, read this guide to learn how to dispute the error.)

The takeaway here is always to request validation of the debt from the get-go. Consulting an attorney is another easy way to clarify a particular debt’s statute of limitations.

Don’t record phone calls without the debt collector’s consent

There are laws in place to protect consumers from being harassed by debt collectors (more on this in a bit), so it may be tempting to record your conversations. There’s an app for everything these days, making it pretty easy to tap a button and have immediate proof of what was said — but tread carefully.

According to Lynch, you need to prove that you had their consent to do so. If it’s a phone call, it means getting their verbal consent while the tape is rolling. Otherwise, you could inadvertently find yourself guilty of wiretapping. In general, Lynch recommends keeping a record of all interactions. If, for instance, you want to request that a debt collector stop contacting you at work, put it in writing and send them a certified letter.

Thanks to the Fair Debt Collection Practices Act (FDCPA), they’re legally obligated to back off. The gist of the law is that it keeps debt collection agencies from using “abusive, unfair or deceptive practices to collect debts from you,” according to the CFPB.

Don’t be afraid to ask for help

If debt collectors are stressing you out, take heart in knowing that you don’t have to go it alone. A credit counselor can help you understand your rights and work with creditors to repay the debt as affordably as possible.

“Nonprofit credit counseling can help you create a roadmap where you can get back on track with your budget and your payments to your creditors so you can pay off the debt in a way that’s far more affordable and gets you to a point where you are debt-free much faster,” said McClary.

Check out MagnifyMoney’s guide to finding the best credit counseling options for you.

What to do when debt collectors call

Be proactive

Even better than being responsive to debt collectors is being proactive.

“Reach out and be the first one to call,” McClary said. “Don’t let it get to the point where somebody has to call you. Make the first move, tell them what’s going on with your situation and that you might be missing a payment.”

A creditor’s internal billing department will always try to collect payment from you before assigning it out to a third-party debt collection company. If you’ve stumbled on hard times and anticipate having trouble making your regular payment, give them a heads up to see if they’re willing to work with you. The more proactive you are, according to McClary, the more likely they’ll accommodate your situation. For instance, they may be able to give you the option to miss a payment or to make an interest-only payment.

The idea is to stay on good terms with them and make a good-faith effort of transparency.

“Your negotiating position is far better when you’ve been a good customer up until this point,” he said. “If you have a payment history that’s on time and historically maintained as agreed, you’re in a better position to negotiate a way to avoid any further debt collection issues and come up with an amicable solution.”

Negotiate the terms of your debt

There’s almost always room for negotiation when dealing with debt collectors. According to Lynch, some debt collectors are paid on commission, so it’s in their best interest to get you to settle the account here and now. That’s not to say that establishing a payment plan is out of the question, just that you may be able to come out paying much less than you actually owe.

It’s all relative to the amount owed, Lynch said. If you owe $3,000 and they’re willing to settle it today for $1,000 — and your budget can swing it — that’s not a bad deal. If you simply don’t have it, see if they’ll meet you in the middle with a monthly payment plan.

“Don’t be afraid to say no if you’re negotiating a payment amount,” said Lynch. “If you can really only afford $75 a month, don’t agree to anything higher than that. If they’re threatening legal action, they may be just bluffing because what they really want is to get every dollar they can as quickly as they can, so stick to your budget.”

Know your rights

Again, consumers are protected by the FDCPA, which safeguards them against shady debt collectors. These laws apply to the collection of mortgages, credit cards, and medical debts, among others.

“If you’re being contacted by debt collectors, know what your rights are and what debt collectors are required to do by law,” said McClary.

For starters, they’re restricted in how they’re allowed to make contact. They cannot reach out to you prior to 8:00 a.m. or after 9:00 p.m., and they have to stop contacting you at work if you request it. The laws are designed in a way that prevents harassment.

Be that as it may, one CFPB study found that 27% of consumers who were approached about debt felt threatened. What’s more, almost 40% said that debt collectors were attempting contact at least four times per week.

“They also are required to honor any request to be contacted at all, but I’d caution people because for your own benefit, you don’t want to cut off all communication with the creditor if it’s truly a debt that you owe,” added McClary.

Take control of your debt

It’s never too late to get your finances back on the right track, even if you’re at a point where you’re getting calls from debt collectors. The good news is that once you face the music and begin making good on your old debts, your credit could improve. When you strike a deal to pay off a collection account in full, Lynch said it has a positive effect on your FICO 9 credit score since it will no longer factor that account into your rating.

“There’s no set amount of points gained or lost for any of this,” he added. “It’s all relative to whatever else is in your report that month How much good information do you also have in that report?”

Far and away, the most important thing you can do for your credit health is to make on-time payments from here on out. Your payment history makes up a whopping 35% of your FICO score.

“The main thing to do is focus on keeping all your other financial obligations paid as agreed,” said McClary. “In order to rebuild your credit rating, it’s important to focus on the things that are going to get you the most traction. Making your payments on time is absolutely priority No. 1.”

In extreme situations where your credit score has been severely damaged by collection accounts, you might have to open new accounts to establish a healthy credit history. Your options may be limited as a lower credit score generally translates to higher interest rates and fees, but paying off your balances in full each month reduces the likelihood of getting in over your head. If you want to begin rebuilding your credit, a secured card may help, assuming you can handle it responsibly.

Having debts in collections isn’t the end of the road, so long as you know your rights and establish a financial plan for getting back on the right path. Put it another way: Rehabbing your finances (and credit score) is more than possible.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Marianne Hayes
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Marianne Hayes is a writer at MagnifyMoney. You can email Marianne here

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The Fastest Way to Pay Off $10,000 in Credit Card Debt

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Before you read on, click here to download our FREE guide to become debt free forever!

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Updated – January 10, 2019

Digging out of credit card debt can feel frustrating, intimidating and ultimately impossible. Fortunately, it doesn’t have to be any of those things if you learn how to take control.

Paying down debt is not only about finding the right financial tools, but also the right psychological ones. You need to understand why you racked up credit card debt in the first place. Perhaps it was a medical emergency or a home repair that needed to be taken care of immediately. Maybe you’d already drained your emergency fund on one piece of bad luck when misfortune struck again. Or maybe you’re struggling with a compulsive shopping problem, so paying down debt will likely result in you accumulating more until the addiction is addressed.

You also need to understand what motivates you to succeed. Do you want to pay down your credit card debt in the absolute fastest amount of time possible that will save more money or do you want to take some little wins along the way to keep yourself motivated?

Here’s a couple strategies consider as you learn the best way to handle credit card debt — and pay it off quickly.

2 common credit card debt repayment strategies

These repayment strategies can help you pay off credit card debt quickly. Keep in mind, you can use these strategies even for non-credit-card debt:

  • Debt avalanche: Focus on paying off the credit card with the highest interest rate first. Then, work your way down. This strategy can save you money on interest and get you out of debt sooner.
  • Debt snowball: Pay off your smallest debts first. Doing so can motivate you to continue making payments as you climb out of debt.

You don’t necessarily need to pick the repayment strategy that gets you out of debt the fastest. After all, if your repayment strategy doesn’t keep you motivated, you may not stick to it.

Using a personal loan or balance transfer credit card

As you seek to repay your debt, you could consider a personal loan or balance transfer credit card with a lower interest rate than on your existing debt. Transferring your debt to one of these financial products could help you reduce long-term interest costs.

But you’ll first need to learn whether or not you’re eligible. Your credit score will play a big role in determining your eligibility for a personal loan or balance transfer card. Use our widget below to figure out if a personal loan or a balance transfer is the best option for you!

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Please enter information below and we’ll provide the best option to consolidate your credit card debt!

If you have a credit score above 640, you have a good chance of qualifying for a personal loan at a much lower interest rate than your credit card debt. With new internet-only personal loan companies, you can shop for loans without hurting your score. In just a few minutes, with a simple online form, you can get matched with multiple lenders. People with excellent credit can see APRs below 10%. But even if your credit isn’t perfect, you might be able to find a good loan to fit your needs.

Not sure what your credit score is? Click here to learn how and where to find out. If you know your credit score needs some work but not sure of what can be done, click here.

If you have a score above 700, you could also qualify for 0% balance transfer offers. We will talk more about balance transfers below but this option is the best way to pay off credit card debt if you’re able to qualify for a 0% APR balance transfer credit card.

A credit score of less than 600 will make it difficult for you to qualify for either option. If you have a credit score less than 640, struggling to make monthly debt payments and would like to explore your options to reduce your debt by up to 50%, then please click our option below to customize a personal debt relief plan.

Custom Debt Relief Plan

Now let’s talk about the financial tools to add to your debt repayment strategy in order to dig out of the hole.

Let’s say you have $10,000 in credit card debt, and are stuck paying 18% interest on it.

You already know that putting as much spare cash as you can toward paying down your debt is the most important thing to do. But once you’ve done that, so what’s next?

Use your good credit to make banks compete and cut your rates

You could save $1,800 a year in interest and lower your monthly payments based on several of the rates available today. That means you could pay it off almost 20% faster.

Here’s how it works.

Option One: Use a Balance Transfer (or Multiple Balance Transfers)


If you trust yourself to open a new credit card but not spend on it, consider a balance transfer. You may be able to cut your rate with a long 0% intro APR. You need to have a good credit score, and you might not get approved for the full amount that you want to transfer.

Your own bank might not give you a lower rate (or only drop it by a few percent), but there are lots of competing banks that may want to steal the business and give you a better rate.

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promo-balancetransfer-halfIt also has tips to make sure you do a balance transfer safely. If you follow them you’ll save thousands on your debt by remaining disciplined.

You might be scared of a balance transfer, but there is no faster way to cut your interest payments than taking advantage of the best 0% or low interest deals banks are offering.

Thanks to recent laws, balance transfers aren’t as sneaky as they used to be, and friendlier for helping you cut your debt.

Sometimes the first bank you deal with won’t give you a big enough credit line to handle all your credit card debt. Maybe you’ll get a $5,000 credit line for a 0% deal, but have $10,000 in debt. That’s okay. In that case, apply for the next best balance transfer deal you see. MagnifyMoney’s list of deals makes it easy to sort them.

Banks are okay with you shopping around for more than one deal.

Option Two: Personal Loan

If you never want to see another credit card again, you should consider a personal loan. You can get prequalified at multiple lenders without hurting your credit score, and find the best deal to pay off your debt faster.

Personal loan interest rates are often about 10-20%, but can sometimes be as low as 5-6% if you have very good credit.

Moving from 18% interest on a credit card to 10% on a personal loan is a good deal for you. You’ll also get one set monthly payment, and pay off the whole thing in 3 to 5 years.

Sometimes this may mean a higher monthly payment than you’re used to, but you’re better off putting your cash toward a higher payment with a lower rate.

And you’ll get out of debt months or years faster by leaving more money to pay down the debt itself. If you want to shop for a personal loan, we recommend starting at LendingTree. With a single online form, dozens of lenders will compete for your business. Only a soft credit pull is completed, so your credit score will not be harmed. People with excellent scores can see low APRs (sometimes below 6%). And people with less than perfect scores still have a good chance of finding a lender to approve them.

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If you don’t want to shop at LendingTree, you can see our list of the best personal loans here.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brian Karimzad
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Brian Karimzad is a writer at MagnifyMoney. You can email Brian at brian@magnifymoney.com

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How to Manage Debt as a Single Parent in 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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When student loan deferment ended for Samantha Gregory, a single mom and founder of site Rich Single Momma, she had one reaction to her payments: sticker shock. “The amount they were asking for was so astronomical, it was bananas,” she said.

As a single mom in debt, these high payments were added to the already steep financial demands of covering household expenses and supporting her children, including one with special needs — all on one income.

Adding debt to the significant challenges of single parenting “puts a strain on not just your finances, but your emotions, your mental health,” she said. “It’s like, ‘I have this burden over my head so how am I going to take care of it and take care of my family?’”

It’s a question any single parent in debt may find themselves asking. There’s no one right answer, but the good news is that there are smart steps a single mom or dad can use to tackle debt. Here are some tested and certified strategies for how to manage debt as a single parent.

8 strategies for a single parent in debt

1. Keep debt on your radar

A key to managing money as a single parent in debt is to keep an eye on what you owe. Gregory warned against letting debt slip in your money management juggling act. “I know for me in the past, I’ve tried to ignore it and hope it would go away,” she said. “But it doesn’t go away. It’s still there, lingering.”

Keep your debts on your radar, so you’re not losing track of them, falling behind on payments or damaging your credit. If you don’t know what you owe, pull your free credit report and look up each outstanding debt you have and record the balance, interest rate, monthly payment and due date. Start a habit of reviewing these accounts regularly.

2. Work with your lender

Once you know what you owe, see if your lender offers any help or accommodations that can make this debt easier to manage.

You’ll have the most options for dealing with federal student loans, as servicers must provide you with options to forbear or defer payments, or switch to a different repayment plan.

Even for other types of debt, it can’t hurt to ask your lender if they’re willing to work with you. They might be open to giving you an extension on your payment, and some lenders will let you skip a payment now and tack it onto the end of your repayment period instead.

3. Claim benefits and support

Help isn’t always easy to come by as a single parent, so make sure you’re claiming the benefits and child support to which you’re entitled.

Federal assistance programs such as Women, Infants and Children (WIC), Supplemental Nutrition Assistance Program (SNAP) and school lunch programs can ease pressure on your budget while keeping everyone fed, for example. Other programs can assist with fixed monthly costs such as housing, child care or health insurance. Many state and local programs can offer additional help.

Single parents should also consider filing for child support. If you’re already entitled to such payments but the other parent isn’t paying, or you feel it’s not enough, consider pursuing legal steps to get adequate support for your family.

4. Revisit your budget

As a single parent with debt, living within your means is the foundation of your financial security. Review your budget to see if there are areas you’re wasting money on things you don’t need or use, whether it’s a neglected gym membership or a house you’re realizing is roomier than necessary. Consider lifestyle changes and sacrifices — big or small — that you could make to lower your monthly costs.

Look for ways to free up some of the mental space you’re using for your money, too, Gregory suggested. She likes to automate payments, for example, to ensure they’re going out on time with less effort on her part.

5. Sell your extra time and stuff

To the single mom in debt, Gregory suggested looking for ways to generate some extra cash. “I’m a firm believer in side hustles,” she said. “There are so many options out there available to create a side hustle, start a business or just get another part-time job or work-from-home job.”

Then, “look around your house and if you have something valuable you can sell, sell it,” she said. Doing so can bring a fast cash infusion that can help you stay current on debt payments, or even make an extra payment.

It can be a tough and even emotional to sell some belongings, Gregory acknowledged. But, “It’s just things and they’re replaceable, whereas your peace of mind, your family and kids, and your health are not replaceable,” she said.

6. Make extra debt payments

If you can carve out extra savings, that’s money you can use to pay off your debts faster. One method to do so is the debt snowball:

  • Figure out how much more of your monthly income you can afford to devote to making extra debt payments. Include this as a line item in your budget.
  • Put that extra cash toward your debt with the lowest balance, and make the minimum payment on all of your other debts.
  • Watch the balance on your high-priority debt decrease faster.
  • Once your first debt is gone, “roll over” the funds budgeted for your monthly payment and the extra payment and apply them to the next low-balance debt.

Making extra debt payments will lower your principal faster which will, in turn, lower your interest costs. As a result, this strategy could avoid hundreds of dollars in interest and shave months or even years off your debt repayment.

7. Consider debt consolidation

For a single parent, debt consolidation can be another way to get ahead. Consolidating debt makes the most sense when doing so will lower the interest rates you’re paying.

A credit card balance transfer is one way to accomplish this. You can open a credit card with a 0% introductory rate. Then, transfer existing balances to this new credit card (note that this will often incur a balance transfer fee) and you can repay this debt interest-free.

If you have higher debt balances or prefer a fixed repayment plan, a personal loan could be the way to consolidate debt. To do so, you can take out a new personal loan with the rates, term or payments you would prefer and use the loan funds to pay off and replace existing debts. You can compare various lenders with our debt consolidation comparison page to get an idea of the terms and rates for which you could qualify.

8. Tap your community for support

Managing debt as a single parent can be hard on you because, at the end of the day, paying them comes down to you alone. “In the back of your mind, you’re thinking ‘There’s no one who can help me with this,’” Gregory said.

However, you don’t have to go it alone — there are often people who are ready and willing to help as close as your own backyard. So let them! Family and friends can help you out in a variety of ways, from spotting you cash in a tight month to helping with child care. You can also get assistance from your church, community and local nonprofits or programs.

Even if you don’t always find the help you need right away, asking around can start you on the track to getting the recommendation or referral that leads you there. Gregory also suggested online communities, such as local or single-parent Facebook groups, as a way to crowdsource solutions and get connected with helpful resources.

Pass your debt and money lessons on to your kids

Debt can be a big regret for many single parents. “If I had more information when I was going to college, I wouldn’t have taken out so many loans,” Gregory said.

But these ideas for how to manage debt as a single parent can help you push past regret into action. In doing so, you’ll be creating the financial security that your kids need, all while modeling what good money and debt management look like in action.

Gregory, for example, used her experience with student debt to warn her daughter away from borrowing to pay for college. As a result, “She’s really blessed that she doesn’t have to take out student loans, so she won’t be saddled with that big debt when she graduates from college,” she said.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Elyssa Kirkham
Elyssa Kirkham |

Elyssa Kirkham is a writer at MagnifyMoney. You can email Elyssa here

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