Negotiate with credit collectors (know your rights - and your options - and clear your debt forever
Karen had eight credit cards and a combined debt of over 600,000 PhP. Somehow, she managed - until the recession hit, and her husband lost his job. She barely had enough for the bills and her kids' tuition, and as she fell behind on monthly card payments, the creditors started calling. She ignored them. Then, they sent demand letters, from legal firms whose letterheads alone sent her into a panic. "I thought they'd throw me into jail or break into my house and seize my things," she said, especially when one notice ominously declared that they "knew she had enough assets to cover the amount." What assests, she thought, and how did they know? Feeling cornered and defensive, she yelled at the creditors or completely ignored their calls.
End the bullying
Credit collectors can feed on panic and intimidation. Arnold, who used to work for a collection agency, said it was "part of the job" to sound mataray. It became such second-nature that one of his coworkers would even apply nail polish while shouting invectives at some poor cardholder.
However, the law is on your side. If the credit collector goes beyond being mataray and actually harasses or humiliates you, you can actually sue or threaten to call the police or barangay.
Thanks to your account privacy agreement, collectors cannot discuss details of your credit card or debt to anyone else - office mates, superiors, neighbors, family members.
They can't call you at wee hours of the morning. It's harassment. Calls must take place within 9 a.m. to 6 p.m.
They can't go inside your home without your permission, and you're well within your rights to demand to see an I. D. or insist on meeting somewhere else.
They can't seize properties without a court order, or file a case in court without serving you proper legal summons.
They can't corner you into a meeting by pretending to be somebody else (that's fraud), cause a scandal in your office or home (oral defamation), force themselves into your home (tresspass to dwelling), or insist demand payment on the spot (extortion).
Make the collector your ally
The worst thing, though, is to pick a fight with the collector. That's one battle you can't win, and is actually quite pointless - it won't scare him off, but it will label you as a "difficult case" which will be sent to a more "experienced" (i.e., meaner) agent.
You break past the bullying when you appear cooperative. They don't need to be mataray if they're working with someone who's obviously eager to pay, but doesn't know how. That's when you both can move on from terror tactics to more productive negotiations. "Of course we want to find a way to help you pay - or we won't get our commissions!" says Arnold. View the credit collector as an ally, with the shared goal of settling the debt once and for all.
Negotiate
You wouldn't be in credit card debt if you actually had the money to pay it. So tell your collectors what your financial obstacle is. "My husband lost his job." Or "My dad was hospitalized." So it doesn't sound like just a sob story - and they've heard them all - add what you can pay, and be sincere about it.
Joanne had 130,000 in credit card debt, but she told the collector that the best she could come up with was 35,000. Since she was immediately cooperative, and even apologized profusely for not being able to make the payments, he was very helpful. For the next two weeks, he mediated between her and the credit card company, and initially offered a staggered payment system, with 35,000 now and monthly payments of 5,000. Again, Joanne was honest. "I don't have 5,000 extra; that's why I couldn't make minimal payments. Please, can we find another way? If we close it now then at least it's settled."
Eventually they closed a deal where Joanne paid a settlement of 50,000. Arnold, upon hearing about the case, says it's a win-win situation. "You clear your debt, the collector gets commission, and the credit card company recovers at least some of the money - which is much better than situations where the client totally runs away from debt."
What if we can't settle?
Never, ever agree to an amount you know that you can't afford to pay. It's pointless - you'll just renege on the agreement and get yourself into deeper trouble.
If you can't reach an agreement, Arnold says your option is to tell the collector that you're willing to bring the case to court. Why is that not so scary?
You can't actually be imprisoned for credit card debt. The court is usually compassionate. According to "insiders", in most cases they will reduce interest to as low as 1% per annum, and lower penalty from 60% per annum to 12%. You will rarely beasked to pay your total obligation, especially if you clearly have no means to do it.
Most of the time, collectors try to avoid going to court - it's simply too expensive and time consuming, and you're just one among the hundreds of thousands of people they have to go after.
Even if they do take you to court, what's the worst thing that can happen? According to Section 13 of Rule 49 of the Rules of Court, companies cannot get your family home, salary or pension or furniture. So it's not like you can get thrown out on the street, or be forced to go hungry. That's why the collector - or even a mediating agency like the courts - will still look for an agreement that works with your existing financial situation. Everybody is trying to help you pay that debt.
Protect yourself
Yay, you've settled on an amount that's everyone's happy with. But wait - you need documents. This is your only way of protecting yourself.
Ask for a written agreement. So what if the credit collector says you can only pay "x" amount - he can suddenly turn back on the agreement, or resign, or be assigned to another client and never be heard from again. You need a faxed or mailed conforme, with the letterhead of the collection agency.
Deposit the money to the credit card account. It's dangerous to issue money to some unknown bank account - you could be the victim of a swindler, or the collection agency may fail to properly document or forward your payment. Pay directly to the credit card company (in most cases, it's the same transaction as making any credit card payment).
Ask for proof of settlement of account. Once you've paid, you need a document from the credit card stating that you have settled the amount and are cleared of all financial obligations to the company.
Always ask for an official statement of account of your total debt. Don't accept a simple billing statement, which does not have a breakdown of the charges and interest. If they drag their feet, it's their fault. "No Statement of Account, no negotiation, no collection."
Taken from Working Mom magazine, February 2010 issue. Article written by Joy Perez.
Wednesday, February 17, 2010
Know your rights and how to get a great deal
Negotiate with credit collectors (know your rights - and your options - and clear your debt forever
Karen had eight credit cards and a combined debt of over 600,000 PhP. Somehow, she managed - until the recession hit, and her husband lost his job. She barely had enough for the bills and her kids' tuition, and as she fell behind on monthly card payments, the creditors started calling. She ignored them. Then, they sent demand letters, from legal firms whose letterheads alone sent her into a panic. "I thought they'd throw me into jail or break into my house and seize my things," she said, especially when one notice ominously declared that they "knew she had enough assets to cover the amount." What assests, she thought, and how did they know? Feeling cornered and defensive, she yelled at the creditors or completely ignored their calls.
End the bullying
Credit collectors can feed on panic and intimidation. Arnold, who used to work for a collection agency, said it was "part of the job" to sound mataray. It became such second-nature that one of his coworkers would even apply nail polish while shouting invectives at some poor cardholder.
However, the law is on your side. If the credit collector goes beyond being mataray and actually harasses or humiliates you, you can actually sue or threaten to call the police or barangay.
Thanks to your account privacy agreement, collectors cannot discuss details of your credit card or debt to anyone else - office mates, superiors, neighbors, family members.
They can't call you at wee hours of the morning. It's harassment. Calls must take place within 9 a.m. to 6 p.m.
They can't go inside your home without your permission, and you're well within your rights to demand to see an I. D. or insist on meeting somewhere else.
They can't seize properties without a court order, or file a case in court without serving you proper legal summons.
They can't corner you into a meeting by pretending to be somebody else (that's fraud), cause a scandal in your office or home (oral defamation), force themselves into your home (tresspass to dwelling), or insist demand payment on the spot (extortion).
Make the collector your ally
The worst thing, though, is to pick a fight with the collector. That's one battle you can't win, and is actually quite pointless - it won't scare him off, but it will label you as a "difficult case" which will be sent to a more "experienced" (i.e., meaner) agent.
You break past the bullying when you appear cooperative. They don't need to be mataray if they're working with someone who's obviously eager to pay, but doesn't know how. That's when you both can move on from terror tactics to more productive negotiations. "Of course we want to find a way to help you pay - or we won't get our commissions!" says Arnold. View the credit collector as an ally, with the shared goal of settling the debt once and for all.
Negotiate
You wouldn't be in credit card debt if you actually had the money to pay it. So tell your collectors what your financial obstacle is. "My husband lost his job." Or "My dad was hospitalized." So it doesn't sound like just a sob story - and they've heard them all - add what you can pay, and be sincere about it.
Joanne had 130,000 in credit card debt, but she told the collector that the best she could come up with was 35,000. Since she was immediately cooperative, and even apologized profusely for not being able to make the payments, he was very helpful. For the next two weeks, he mediated between her and the credit card company, and initially offered a staggered payment system, with 35,000 now and monthly payments of 5,000. Again, Joanne was honest. "I don't have 5,000 extra; that's why I couldn't make minimal payments. Please, can we find another way? If we close it now then at least it's settled."
Eventually they closed a deal where Joanne paid a settlement of 50,000. Arnold, upon hearing about the case, says it's a win-win situation. "You clear your debt, the collector gets commission, and the credit card company recovers at least some of the money - which is much better than situations where the client totally runs away from debt."
What if we can't settle?
Never, ever agree to an amount you know that you can't afford to pay. It's pointless - you'll just renege on the agreement and get yourself into deeper trouble.
If you can't reach an agreement, Arnold says your option is to tell the collector that you're willing to bring the case to court. Why is that not so scary?
You can't actually be imprisoned for credit card debt. The court is usually compassionate. According to "insiders", in most cases they will reduce interest to as low as 1% per annum, and lower penalty from 60% per annum to 12%. You will rarely beasked to pay your total obligation, especially if you clearly have no means to do it.
Most of the time, collectors try to avoid going to court - it's simply too expensive and time consuming, and you're just one among the hundreds of thousands of people they have to go after.
Even if they do take you to court, what's the worst thing that can happen? According to Section 13 of Rule 49 of the Rules of Court, companies cannot get your family home, salary or pension or furniture. So it's not like you can get thrown out on the street, or be forced to go hungry. That's why the collector - or even a mediating agency like the courts - will still look for an agreement that works with your existing financial situation. Everybody is trying to help you pay that debt.
Protect yourself
Yay, you've settled on an amount that's everyone's happy with. But wait - you need documents. This is your only way of protecting yourself.
Ask for a written agreement. So what if the credit collector says you can only pay "x" amount - he can suddenly turn back on the agreement, or resign, or be assigned to another client and never be heard from again. You need a faxed or mailed conforme, with the letterhead of the collection agency.
Deposit the money to the credit card account. It's dangerous to issue money to some unknown bank account - you could be the victim of a swindler, or the collection agency may fail to properly document or forward your payment. Pay directly to the credit card company (in most cases, it's the same transaction as making any credit card payment).
Ask for proof of settlement of account. Once you've paid, you need a document from the credit card stating that you have settled the amount and are cleared of all financial obligations to the company.
Always ask for an official statement of account of your total debt. Don't accept a simple billing statement, which does not have a breakdown of the charges and interest. If they drag their feet, it's their fault. "No Statement of Account, no negotiation, no collection."
Taken from Working Mom magazine, February 2010 issue. Article written by Joy Perez.
Karen had eight credit cards and a combined debt of over 600,000 PhP. Somehow, she managed - until the recession hit, and her husband lost his job. She barely had enough for the bills and her kids' tuition, and as she fell behind on monthly card payments, the creditors started calling. She ignored them. Then, they sent demand letters, from legal firms whose letterheads alone sent her into a panic. "I thought they'd throw me into jail or break into my house and seize my things," she said, especially when one notice ominously declared that they "knew she had enough assets to cover the amount." What assests, she thought, and how did they know? Feeling cornered and defensive, she yelled at the creditors or completely ignored their calls.
End the bullying
Credit collectors can feed on panic and intimidation. Arnold, who used to work for a collection agency, said it was "part of the job" to sound mataray. It became such second-nature that one of his coworkers would even apply nail polish while shouting invectives at some poor cardholder.
However, the law is on your side. If the credit collector goes beyond being mataray and actually harasses or humiliates you, you can actually sue or threaten to call the police or barangay.
Thanks to your account privacy agreement, collectors cannot discuss details of your credit card or debt to anyone else - office mates, superiors, neighbors, family members.
They can't call you at wee hours of the morning. It's harassment. Calls must take place within 9 a.m. to 6 p.m.
They can't go inside your home without your permission, and you're well within your rights to demand to see an I. D. or insist on meeting somewhere else.
They can't seize properties without a court order, or file a case in court without serving you proper legal summons.
They can't corner you into a meeting by pretending to be somebody else (that's fraud), cause a scandal in your office or home (oral defamation), force themselves into your home (tresspass to dwelling), or insist demand payment on the spot (extortion).
Make the collector your ally
The worst thing, though, is to pick a fight with the collector. That's one battle you can't win, and is actually quite pointless - it won't scare him off, but it will label you as a "difficult case" which will be sent to a more "experienced" (i.e., meaner) agent.
You break past the bullying when you appear cooperative. They don't need to be mataray if they're working with someone who's obviously eager to pay, but doesn't know how. That's when you both can move on from terror tactics to more productive negotiations. "Of course we want to find a way to help you pay - or we won't get our commissions!" says Arnold. View the credit collector as an ally, with the shared goal of settling the debt once and for all.
Negotiate
You wouldn't be in credit card debt if you actually had the money to pay it. So tell your collectors what your financial obstacle is. "My husband lost his job." Or "My dad was hospitalized." So it doesn't sound like just a sob story - and they've heard them all - add what you can pay, and be sincere about it.
Joanne had 130,000 in credit card debt, but she told the collector that the best she could come up with was 35,000. Since she was immediately cooperative, and even apologized profusely for not being able to make the payments, he was very helpful. For the next two weeks, he mediated between her and the credit card company, and initially offered a staggered payment system, with 35,000 now and monthly payments of 5,000. Again, Joanne was honest. "I don't have 5,000 extra; that's why I couldn't make minimal payments. Please, can we find another way? If we close it now then at least it's settled."
Eventually they closed a deal where Joanne paid a settlement of 50,000. Arnold, upon hearing about the case, says it's a win-win situation. "You clear your debt, the collector gets commission, and the credit card company recovers at least some of the money - which is much better than situations where the client totally runs away from debt."
What if we can't settle?
Never, ever agree to an amount you know that you can't afford to pay. It's pointless - you'll just renege on the agreement and get yourself into deeper trouble.
If you can't reach an agreement, Arnold says your option is to tell the collector that you're willing to bring the case to court. Why is that not so scary?
You can't actually be imprisoned for credit card debt. The court is usually compassionate. According to "insiders", in most cases they will reduce interest to as low as 1% per annum, and lower penalty from 60% per annum to 12%. You will rarely beasked to pay your total obligation, especially if you clearly have no means to do it.
Most of the time, collectors try to avoid going to court - it's simply too expensive and time consuming, and you're just one among the hundreds of thousands of people they have to go after.
Even if they do take you to court, what's the worst thing that can happen? According to Section 13 of Rule 49 of the Rules of Court, companies cannot get your family home, salary or pension or furniture. So it's not like you can get thrown out on the street, or be forced to go hungry. That's why the collector - or even a mediating agency like the courts - will still look for an agreement that works with your existing financial situation. Everybody is trying to help you pay that debt.
Protect yourself
Yay, you've settled on an amount that's everyone's happy with. But wait - you need documents. This is your only way of protecting yourself.
Ask for a written agreement. So what if the credit collector says you can only pay "x" amount - he can suddenly turn back on the agreement, or resign, or be assigned to another client and never be heard from again. You need a faxed or mailed conforme, with the letterhead of the collection agency.
Deposit the money to the credit card account. It's dangerous to issue money to some unknown bank account - you could be the victim of a swindler, or the collection agency may fail to properly document or forward your payment. Pay directly to the credit card company (in most cases, it's the same transaction as making any credit card payment).
Ask for proof of settlement of account. Once you've paid, you need a document from the credit card stating that you have settled the amount and are cleared of all financial obligations to the company.
Always ask for an official statement of account of your total debt. Don't accept a simple billing statement, which does not have a breakdown of the charges and interest. If they drag their feet, it's their fault. "No Statement of Account, no negotiation, no collection."
Taken from Working Mom magazine, February 2010 issue. Article written by Joy Perez.
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