thanks to creditwrench

1. The More You Pay, the More They Earn
Collectors get commissions -- usually 30 to 50% -- on money they bring in, which often double or triple their salaries. This means they have a strong incentive to press for a big "down payment" from you, even if this deepens the cycle of debt.
Collectors hoping for a big commission may claim that the boss insists on a big down payment. In fact, blaming it on a mythical manager is designed to deflect your anger away from the collector.

2. Payment Deadlines Are Phony
Payment deadlines set by collectors are meaningless. Collectors simply want to create a sense of urgency, because the longer it takes to get you to pay, the less chance there is of collecting the debt.
3. They Don't Need a 'Financial Statement'
Collectors often claim they need a "financial statement" from you, so they can work out a realistic repayment plan. You'll notice, though, that the information they ask for -- bank account numbers, references, place of employment -- is far more than they need for that purpose. They're fishing for information that will help them find you if you move or sue you if you don't repay the debt.

4. The Threats Are Inflated
Collectors always graphically detail the disastrous consequences of failing to pay a debt. "Your credit rating will be ruined," they warn. (Not mentioning that it's probably already not so good, since a collection company is after you.) "Your personal possessions, including your car, could be seized and sold at a public auction!" (Never mind that this virtually never happens; it's illegal in some states and impractical because of the expense.) Probably 95% of the time, collectors go after only bank accounts and wages.

5. You Can Stop Their Calls
You have the right, under federal law, to tell a collection agency to stop contacting you. Just do it in writing, and contacts must stop, unless they're to tell you that collection efforts have ended or the agency is going to take a specific action (like filing a lawsuit) against you.
6. They Can Find Out How Much You Have in the Bank
A collector who has your bank account and social security numbers can probably easily find out the balance of the account. Because big banks now have automated account inquiry systems, the collector doesn't even have to speak to a human being; all it takes is a phone call to the automated voice-mail service. When the account number and social security numbers are punched in, the computer promptly supplies an up-to-the-minute account balance.

7. If You're Out of State, They're Out of Luck
Collection agencies routinely call out-of-state debtors to demand payment. But if a creditor has sued you and won, you are probably safe from enforcement action if you bank and work outside the state where the lawsuit was filed. That's because to collect, the collection agency must transfer the judgment to your state, which is prohibitively time-consuming and expensive.

8. They Can't Take It All
Certain income, such as social security, pensions and 75% of your take-home pay, is exempt from enforcement action. You can file a claim of exemption from a garnishment of the other 25% of your wages if it would cause you or your family severe hardship.

9. They May Not Know a Thing
Sometimes a collection agency lawyer, trying to collect a judgment debt, sends questions on a court form asking about your income and assets. (These are called "post-judgment interrogatories" or "information subpoenas.") This is good news for you -- it means that the agency has no information and is hoping you will be intimidated enough by this legal questionnaire to complete it. Many people do, because the forms list sanctions, such as fines, for not doing so. But normally, it is too expensive and time-consuming for an agency to go to court and force compliance.

10. You Can Pay Student Loans in Installments
If you are behind on student loans, you can apply for what every collection agency hates: "reasonable and affordable payments" under the 1992 Higher Education Act. If you can document financial hardship, a collection agency must accept as little as $10 per month for at least six months. As long as you make the payments, you are eligible for Title IV Student Aid, and you can continue the payments unless your circumstances change.

Many of you know I have a HUGE pet peeve about doctors and hospitals not processing insurance claims correctly, and then billing me for the outstanding balance.

In retaliation (of sorts) until thier mess is straigntened out (usually by me) I will not pay the bill.

Therefore, I sometimes have creditors calling. At first I tell them the situation ("so and so didnt have the right ID number", "I was billed twice")

I NEVER pay them. I always pay the dr. or hospital directly(if needed). (once the mess is settled) I just think it is a bad idea to pay X when you owe the money to Y

BTW, when you hear of hopsitals going bankrupt, it isnt because they aren't making money, it is because they aren't COLLECTING the money from insurance companys.

My friend, who owns a mortgage company, says that doctors bills are the very last thing on your credit report (if it even shows up at all)

Very nice article Jerry.

I just noticed today that my DW dr has been billing her old insurance policy (we switched jan 1, 04) and she is 9 months pregnant. a ton of denied claims I hadnt really noticed b/c her dr has written most of it off (she used to work for the dr) but its till a rediculous error consdiering we give them our insurance card everytime we go

Thanks for the tips, jerry. They're very timely.

This was a interesting thread.. I had a creditor calling me about a doctor bill. I had insurance through the state at the time.. I kept telling them and telling them this and they ignored me. They ALSO didnt give me much information as to what I could do to correct the issue except pay the creditors. One day I got a letter in the mail from a law firm that said they would send a sherif to my home if I didnt pay it. I admit I was scared shootless.. I contacted an attorney's office for advise and BOY am I glad I did!!!! They directed me to a consumer lawyer, who took the law firm to court! Of course I won it, because NO creditor can make a threat saying a police officer will come to your door, PLUS I didnt own it in the first place. my lawyer was dealing with one other client at the time who had the same thing happen. The creditor called him gay on the phone and the guy took home a nice chunk of change! DONT let them intimidate you! It's wrong, but must people dont know how WRONG it is for them to do it! Contact a consumer lawyer if you are ever in doubt!!!!

Also, note, that collections for things like Columbia House or any other simular service will NEVER show up on your credit report. Why? Because the way you get the "credit" does not prove you applied. Anyone can send in the postcard to have tapes, CD's, DVD's etc sent to ANYONE else. There is NEVER any attempt at verifying identity. They may call and bug you and send letters, but that's as far as it goes. Also word of advice, expecially with CH, is do NOT give them a valid phone number. They have this nasty automated system that will call you EVERY day till you pay up. When you answer you're thrown into phone tree which does not identify itself till you get to a live agent.

Word of advice on Student Loans though, pay them...work it out...don't ignore it..it WON'T go away..and they WILL garnish your wages, take any income tax refunds, etc till it's paid.

I can't say that I really agree with #4 with regards to cars. It's not at all uncommon for the repo man to visit your house after reasonable efforts to collect. My brother knows this all too well, multiple times. The funny part is when they try to collect the diff between what was owed and what they sold the car for. That never happens with him.

I believe that is only in the instance where the vehicle was used as collateral on the loan. In those instances, it is not at all uncommon for them to repo it. However, if it is an unsecured loan/debt, or the vehicle is in no way tied to the debt, I don't believe that they can do anything like that without following procedures - like securing a court judgement against you, etc.

Thanks Jerry, I am a social worker who works with the elderly and this is going to be REALLY helpful! Some of these folks get about $600/month and heaven help them if they have to go to the hospital. The collection letters come in masses for some. And the collection agents are RUTHLESS in trying to collect on these. You can't imagine how many I have had to tell that they won't take their monthly check or they won't go to jail. I have one lady right now who made the mistake of obtaining credit cards so she could buy her meds (which cost over double her income, but I digress). The majority of these folks are very proud and want to pay their debt, but it is disgusting what these companies will do!

Thanks again!