Dear ESME Sisters,
Recently, I read a government-published report that was shocking to me. It dealt with debt—more specifically, debt collection—in the United States. Now I would venture to say that most of us have experienced a debt collector calling us or contacting us some other way. Maybe you have one hounding you now. When it happens, it’s uncomfortable, scary, and stressful, right? Well, you are not alone in feeling that way. Here are a few interesting facts in the report:
- One in three of us has been contacted by a creditor regarding at least one debt (but more like two or more debts) in the last year.
- Past-due medical bills, credit-card debt, and student loans are the most common types of debt we get behind on.
- For more than half of us, the debts we are hounded about are not ours but belong to a family member or are recorded in the wrong amount.
Does any of that sound familiar? If so, here’s some advice to help relieve the stress and discomfort of being contacted by debt collectors.
1. Talk to them, make a plan, and ask them to stop contacting you. When a debt collector calls, we often refuse the call, let the creditor leave a message, and don’t return the call. Ignoring our debts will not make them go away. So, take the call, get the information, see if you can negotiate the terms, and come up with a plan with the creditor for how and when you reasonably can satisfy the debt. Once you have a plan in place, you’ll feel better, and you can ask the collector to stop calling you—unless you violate the new agreed-upon terms.
2. Build an emergency fund. Unexpected things happen that can quickly add to our expenses—that’s life. To prevent ever getting in a situation of owing money that you can’t pay back and putting yourself at the mercy of debt collectors, start building an emergency fund of about three months’ worth of expenses now. Then when you have an unexpected medical bill or the car breaks down, you can pay for it without the stress or worry of another bill or another debt collector calling.
3. Have a plan to stay current on your bills. The best way to avoid being at the mercy of debt collectors is to make changes in your spending behavior that will keep you in a good financial position. For example, don’t spend more than you can pay back, and keep your credit-card balances below 20% of the credit limit. When you take out student loans, have a plan in place for paying them back. Live each month within a budget so you know where your money is going and exactly what you can afford.
Being hounded by debt collectors is unsettling and stressful, so please take my advice: make some behavioral changes regarding your spending, and always pay your bills in full and on time—then enjoy the pleasure of never again having to hear from a debt collector.