1) Get organized
Start a file cabinet where you begin to collect all of your financial papers. Need help? Read one of David Bach's Finish Rich books. He's one of my favorite financial authors and in his books he details exactly how to set up your financial file cabinet.
2) Have a plan from the start
Before you borrow or buy anything, figure out the best strategy on how to do so. This doesn't have to be complicated. A plan can be a quick five-minute checklist in your head or a written document that a little takes longer.
The more expensive the financial choice, the more extensive the plan should be. For example, when I approached lenders for a loan to buy my condo, I had an extremely detailed budget. I was able to tell them what I could afford, not the other way around. One lender tried to convince me that I could handle a bigger mortgage, but I showed her my detailed budget on a spreadsheet and declined. No one should be able to tell you what you can or cannot do financially. You should be telling them!
3) Talk to debt collectors on your own terms
Remember that you are not obligated to talk to debt collectors when they what. You do have a choice. So wait until...
- you're at home
- you're in a comfortable and quiet environment
- you feel calm
- you have a pen and pad (you must take notes: day, time, who you spoke to and about what)
- you have a script ready, because you're being recorded. (What do you want to say? What don't you want to say? What information do you need from them?)
4) Do your research
- The Fair Debt Collections Act: 15 laws that protect consumers from unfair debt collection practices.
- Student Loan deferments: You should never default on a student loan. It's one of the worst financial mistakes you can make and it's also so avoidable. Most lenders are more than willing to help when it comes to student loans and you can often defer your loans easily right online!
5) Be prepared
Have script ready, example: "Before I say anything, I first want you to prove that you are entitled to have this conversation with me. I'm requesting that you send me a Debt Verification Letter; so that I know that you are legally allowed to inquire about this debt."
Have your financial papers organized so you can answer questions quickly and easily.
6) Remain Calm
- Cooler heads prevail.
7) Do Not Admit to Anything (at first)!
The creditor is going to try and get you to concede that you owe them, by getting you to agree to a payment plan, no matter how small. Some other things to watch out for:
- Acknowledging or saying yes, when they ask you questions about the debt.
Your first words to an unfamiliar creditor that calls you should be: I'm requesting that you send me a debt verification letter; so that I know that you are legally allowed to inquire about this debt. If you receive a debt verification letter from them, then and only then should you talk about the debt you owe.
8) Ask for everything in writing
Should you ever go to court, it will be up to you to produce evidence in your favor. It will help you keep track of what was said, discussed and agreed upon, and will help you prove the statute of limitations.
9) Never forget who you're talking to...
- The creditor calling is always looking out for the company's best interest, not yours.
Final Things to Remember:
You're being taped, use it to your advantage and state your grievances again the company. For example you may say something like, "You have tried to threaten me by using illegal means of collecting the debt; You have hired a locksmith to illegally lock my home by wrongfully telling a locksmith that the property was vacant when I told you that it is still my primary place of residence." This happened to me when I was in danger of losing my home during the recession. I used the fact that my bank was taping our conversation to get them to admit and answer for their wrongdoings.
- Anything you say can and will be used against you.
Tiff "The Budgetnista" (sharer of all things, frugal, fun and fabulous)
This post originally appeared on thebudgetnista.com.