So you got a message from a debt collector. What now?

By on November 18th, 2013 in Industry Insights
TrueAccord Blog


This is an attempt to collect a debt. Any information obtained will be used for that purpose.

I can’t think of anyone who’d enjoy getting a message that includes this disclaimer. Especially if they have a problem repaying their debts. The mini-miranda, as it’s called in the collection industry, is a mandatory notice letting you know that the debt collection process has started. What happens now? Is it too late to back up? Is your credit ruined?

So you got a notice from a collector

First, this is not the end of the world. There are ways to deal with collectors and the law provides you with reasonable protection, as long as you follow certain processes. We know you are probably stressed – whether you think you owe money or not. Take a deep breath, and let’s go through it…

Should I speak to the collector?

You don’t really have to speak to them – when we contact you, emails are good enough. But you should definitely communicate with a debt collector. Communicating doesn’t necessarily mean that you’re going to pay or that you’re admitting to anything, but it will help you get a better grasp of the situation, and what’s demanded of you. Furthermore, many collectors opt to just sue debtors in court and get a default judgement without negotiating, because they’re used to debtors refusing to talk. If you communicate, you will probably completely avoid any legal issues – and there’s literally no downside other than some time spent.

Do I really owe this?

First you may feel like you don’t really owe what you’re told you’re owed. Have you read the contract you signed with this creditor? Have you read all the fine print? Many contracts stipulate late fees, early termination fees and other liabilities that you may not be aware of. If you are a merchant using a payment gateway, for example, you probably don’t know that you’re liable for your customers perpetrating fraud; but indeed you are. Be aware of the facts, because lack of knowledge works against you and will get you a worse settlement.

If you’re not sure whether you really owe anything, a good first step would be to ask for debt verification. You won’t get your debt cancelled so easily but the process grants you a few days of quiet when the collector gathers this information, and it will get you more information about the debt if you don’t remember it. The only catch? Debt collectors require that you send a written letter to initiate the process, and may aggressively call you in the meantime. You also have only 30 days from the day of the first notice to mail that request for additional information. When you work with our Loss Management process, a simple online form will do; but be careful when dealing with debt collectors that prey on that time gap.

Negotiating with a collector

First point about negotiation: unless you were utterly wronged, you should pay your debt. If you were wronged and can prove so in court, this guide may not be for you – you could have a legal case. If you don’t, however, whomever you are, you’re not a deadbeat and you’re willing to work out your issues – you just need some time. Don’t mislead yourself: not paying hurts other people. It hurts the stability of the business they work at, it forces the business to make up for the loss someplace else, and it is generally the wrong thing to do in a civilized society. There’s a reason why the law allows one to sue if a contract isn’t honored – we expect people to be true to what they agreed to do (provide a service, pay a bill) because otherwise, we won’t be able to trust one another. You’re not exempt from that.

Not paying can hurt your financial prospects as well. You may think that having negative marks on your credit report is unavoidable. Maybe you’re close to giving up. Don’t let yourself lose hope and become oblivious. With the right type of help, you’ll be able to get back to financial safe ground – it will just take time.

So, when do you negotiate? Negotiating with a collector is aimed at balancing the potential negative effects of non payment (ruined credit if you get reported, hurt reputation, and potential legal action) with your own solvency. Inefficient collectors profit from interest and fees on payment plans; when you work with TrueAccord, we never add any interest or fees to get profitable at your expense. In addition, as long as your debt hasn’t been sold, creditors will limit the size of settlement discount that you can get, even if you pay the whole amount in one shot. Between potential add-on costs and the limitation on collectors’ ability to discount the debt, what should you aim for?

The best option is to try and get a 10% discount for a single payment for the whole discounted amount, if you can get that. Try to get a better deal for a direct debit; you’ll have a harder time getting a good deal with a check or card payment. Some collectors are able to take online payments; try to work with those, and follow their charges to not get overcharged.

The second best option is a flexible payment plan for the whole amount. As noted before, most collectors will tack on interest and fees to the plan, so you’re better off with a short term plan. If you’re paying the whole amount in large chunks (bigger than 20% of the total for each payment), you may be able to scrape a small discount off the top. Make sure that you get the payment plan’s details in writing, and follow up on its progression with every payment. Also, it’s most important that you make sure your actual debt is paid first. If payments go to fund interest and fees, you’ll be digging yourself further into a hole instead of solving your debt problem. A good collector will help you do that, instead of milking you as much as they can.


Being in debt isn’t fun, but is a manageable situation when you work with the right type of partner. If you find yourself in debt, do your best to choose the right collection partner for you; one that cares about your long term prosperity. Deal with debt early, keep all documentation and make sure that you’re informed regarding the contract you signed and your right. And, most importantly, never take credit obligations you don’t think you can meet; the results can be devastating!