Treat ‘em Mean, Keep ‘em Keen: Making Your Creditors Work for You

This is a guest post from Jonathan Leane from Master Your Card. Jonathan is a poor college student fighting to stay one step ahead of his loan repayments. Be sure to check out the site or subscribe to the RSS feed so you can learn to master your card.

It was but several years ago when I realized I’d hit financial rock bottom. I was drowning in debt, with no job and no career prospects on the horizon. But it didn’t take me long to realize the silver lining in my situation.

I was reminded of the end of the film Rocky V when a smug corporate jerk steps up to the infamous boxer and says, “C’mon, pug. Touch me, I’ll sue.” Rocky levels him with an uppercut, wipes his lip and cracks, “Sue me for what?”

Sure, I’d hit rock bottom but that made it all the easier for me to hold my ground while a rabid pack of creditors threatened to strong arm and sue me at every turn. After all, I had nothing for them to take.

If you find yourself in debt with no hope of escape and countless creditors hassling you every waking hour, know this: the only way to fight creditors is to get down in the trenches with them and fight dirty. Here are ten things you should know about how to make the creditors work for you:

1. Above all else, remember this one, absolute truth: You, not the creditors, hold all the cards. You have the upper hand. You have the money; they want it.

2. In my experience, I’ve found that most creditors will not pursue legal action against you to collect a debt. Regardless of what they tell you or how many lawyers they threaten to sick on you. The costs are oftentimes too prohibitive, especially if you have no real assets. They simply can’t get blood from a stone.

3. Skip the “debt consolidation loan” agencies. Many are frauds purely out to make a quick buck off of your desperate situation. And the honest ones provide very little in the way of services that you couldn’t otherwise handle yourself for free with a bit of research.

4. Devise a plan. Prioritize your most important debts, keeping tax, student loans and any other government debts on the very top of that list. Find any way you can to pay them.

5. Every debt is negotiable. Whatever they tell you they’re willing to settle for, cut that figure in half. This works especially well in cases where an older debt has been resold multiple times. Oftentimes, creditors will accept pennies on the dollar.

6. Never speak with creditors over the phone. Ever. Verbal promises aren’t worth the paper they’re (not) written on and they mean nothing in a court of law. Both sides will admit nothing and deny everything.

7. Send every correspondence to them via certified mail and save your postal receipts.

8. Save every correspondence they send to you. If possible, make digital backups in addition to hard, paper copies.

9. Every correspondence (and unanswered voicemail message) from creditors will be borderline hostile or aggressive. “Send us X dollars immediately or we’re confiscating your house, your stamp collection and your favorite goldfish, Bubbles.” Stand your ground and don’t be intimidated by such threats. Remember: you hold all the cards.

10. Know the Fair Credit Reporting Act (FCRA) inside and out. Sure, it reads like stereo instructions: dry and oftentimes confusing. But it is the consumer’s bible when dealing with creditors. It outlines everything they can legally do and say. And, in my experience, creditors very frequently violate the rules outlined in the FCRA. Use any such violations to your advantage.

And finally, stay strong. Creditors can smell weakness a mile away. Don’t be afraid to stick to your guns!

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