Dealing with Debt Collectors


It’s not uncommon to fall behind on debt payments, particularly in a troubled economy. If you have missed payments on your mortgage, credit card or other outstanding debt, you may hear from a debt collector at some point, if you haven’t already. The New Jersey Society of Certified Public Accountants (NJSCPA) provides some advice on how to deal with collection agencies if you find yourself in this situation:

Contact Your Creditor

If you do owe money and have missed payments, it’s best to face up to the fact and deal realistically with your creditors. You may be able to avoid hearing from a collection agency if you contact your creditor, explain your situation and try to work out an alternative plan. Banks and other lenders may be willing to allow you to stretch out your payments by paying a little less each month, or grant you a brief moratorium on your loan in which you don’t have to make payments. You’ll never know until you ask. And in the current economy, creditors are more willing to accept compromises if they believe you sincerely intend to pay the debt.

Know Your Rights

If you do hear from a collection agency, there are laws that govern how they can treat you. Under the federal Fair Debt Collection Practices Act, collection agencies are not allowed to use abusive or harassing language in their dealings with you, threaten you or add arbitrary fees to your outstanding debt. They also are not allowed to call you before 8 a.m. or after 9 p.m., and you have the right to ask in writing that the agency stop contacting you. The act does not apply to all debt collection efforts, but state or local laws may offer added protection. Contact your state consumer protection agency for more details.

Be Honest

If you lie to a creditor or debt collector, it will only make the situation worse. That means you should not say that you have sent a payment if you have not or mail a check if you don’t have enough in your account to cover it.

Don’t Be Intimidated

Don’t let the collection agency representative scare or bully you into making payments you don’t owe. If you believe the agency is wrong about what your balance is, send them a claim disputing their information. Keep a copy of all your correspondence in case your dispute continues.

Get It in Writing

If you negotiate an agreement that allows you to pay only a percentage of your outstanding amount or establishes some other accommodation, ask the agency representative to send you a letter documenting that agreement. If you pay off your debt, ask the collection agency or creditor for a letter confirming that your account is paid in full. After you’ve received the letter, check your credit report to see that the outstanding amount has been removed from your report. A large unpaid debt can lower your credit rating, which likely means you’ll pay higher interest on new loans or have trouble borrowing at all.

Consult Your CPA

During a recession, it can be difficult to decide how to manage your finances and deal with the problems associated with owing money. Your local CPA can help. Be sure to contact him or her for advice on all the financial issues facing you and your family. If you don’t have a CPA, you can easily locate one online using the NJSCPA’s free, online Find-A-CPA service. Just go to, and in a few clicks you can locate a highly qualified professional who can assist you.

For more information on various personal financial matters, visit the NJSCPA’s public service website at While visiting, you can subscribe to Your Money Matters, the NJSCPA’s free, monthly email newsletter to receive valuable personal financial planning advice throughout the year.

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