18 steps seniors can take when the debt collector comes knocking

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Debt Collector knocking on doorYou’ve worked hard most of your life, saved enough money, or so you thought, to retirecomfortably. Those so-called “Golden Years” are just around the corner, but then you get hit with massive healthcare bills after you,or your spouse, land in the hospital for an extended period of time. Even your healthcare insurance or Medicare benefits aren’t enough.

Other bills – utilities, car payments, the mortgage – then start to pile up as you try to cope with mounting hospital debt.

Soon, you’re receiving calls and letters from debt collectors.

Before hitting the panic button, stop, take a deep breath and know that you are not alone.

Did you know that in 2015 the average household had $130,000 in debt, $15,762 of it in credit cards! And, if that’s not bad enough, many are spending more than $2,500 a year on credit card interest alone.

However, by following these eighteen simple steps you can obtain the information and insight you need to take control of your personal debt situation today. And, even more importantly, not have to pay one more cent than you have to.

Get your act together before it’s too late

With a debt collection agency hot on your heels, now is the time to tally up all of your debts and get a grip on your true financial situation. First things first pull out all of your financial records, sit down and start to take an accounting of all of your assets and debts. You can be so detailed as to create an excel spread sheet, or simply go the old-fashioned route and use pen and paper.


Ask yourself the following questions:

  • What have you managed to save?
  • Do you have a pension? A retirement account?
  • Are you on a fixed income?
  • How much is in your savings account? What’s liquid and what is not?
  • Do you still work and have an income?If so, where is that money going?
  • Write down everything – from your car and mortgage payments down to your monthly grocery bill.

An ounce of prevention will save you headaches down the road

While you may feel like you will never dig out from under the debt, it’s important that you start shoveling now. Just like when you were a young adult it is time to look at your budget! Review your existing bills and find places to cut. This can be especially difficult if you are on a fixed income as there often isn’t much fat in your budget now. Many seniors find that they spend money going out to eat instead of preparing food at home.

Look for pre-made dinner options at the grocery store or low-cost senior specials at restaurants. Many community organizations offer senior luncheon events, which are social, fun and free! Your children may have good ideas as well – such as reducing the payment on a cell phone by joining a family plan, reducing your TV and cable bill or even changing lightbulbs and appliances to reduce your utilities.

While these few simple steps may not sound like they can save you a bundle, every little bit will begin to add up. Chip away at the little things and then create a new budget and stick to it.

You’ve got a budget, now what?

You’ve looked at your income and expenses and now need to start living by your new rules. The best way to do this is to keep a diary of what you are spending. Write down everything you spend in a week. Keep the paper with you so that you don’t forget to write record every expense, regardless of whether you pay by cash, check or credit card.


Nothing is too small – from a pack of gum to a $100 withdrawal from the ATM, write it down.

Review your expenses at the end of the week and then start again. Keep these records and do this for a couple of months to see where all of your money is going. This will help you to figure out where else you can cut.

Tell your story

Most debt collection agencies don’t want to hear every last detail about how you ended up owing money and being a senior citizen doesn’t buy you any additional leeway. Once contacted, explain briefly how you came to find yourself in this situation. For example, you can tell them you or someone in your family became ill and the medical bills became too much to handle.


Or, perhaps you lost your spouse and don’t have survivor benefits for his or her pension. Whatever you do, keep your cool, explain your situation calmly and succinctly, without giving too much detail. It’s important to note here that you are under no obligation to speak to a debt collector. In fact, in accordance with the Fair Debt Collections Protection Act you can send them a cease-and-desist letter by certified mail that says you no longer want to be contacted by them.

If they continue to try to contact you after that, then they are in violation of the Fair Debt Collections Protection Act.

Don’t say that! What not to say

Some debt collection agencies might tell you that they need certain information so that they can work with you to lower your payments or so you can start paying off your debt.


Here are some things you should NEVER give them:

  • Bank account numbers
  • Your social security number
  • The value of your current assets

Some collection agencies might suggest that you give them this information so they can make automatic withdrawals from your account. Bottom line: Keep the conversation short and sweet.

Do not lose your temper, this can work against you.

And never provide a debt collection agency with information that you would not give to anyone else over the phone.

Document, document, document

When a debt collection agency calls be ready with pen and notebook and keep a record of any communication you might have with a debt collector. Remember that you have rights under the Telephone Consumer Protection Act (TCPA)

Note the date they called and the time of day as well as the name of the person you spoke with. Note how you were contacted, was it by phone, letter, email?


What information was discussed or relayed to you during that contact?

If you send information to a debt collector via mail, send it return receipt requested to ensure that it was received. If you have a conversation by phone, repeat to the caller what you think they are saying and reconfirm with them the details of that conversation.

Remember, there may come a time when you have to go to court, so the more information you have, the better.

Gather documents and be prepared

Don’t throw out anything related to your debt. So you are prepared to deal with the collection agency or be able to quickly provide the information to an attorney should you need to hire one pull together any correspondence you have received regarding what you owe:

  • Letters from creditors
  • Bills that have been paid and those that have not
  • Cancelled checks
  • Any other documents related to your case

It is easy to avoid opening mail, but you must open and review everything. Put everything in an envelope should you need it in the future.

Verify that you owe money

Believe it or not, there are instances when people receive calls and letters from debt collection agencies for money they don’t owe. Before you start providing any information,ask the collection agency to verify your debt.


Under the Fair Debt Collection Practices Act, if you send a bill collector a letter disputing the debt, or asking for verification of the debt within 30 days of receiving the initial written notice of the debt, then that bill collector must immediately stop its collection activity and send you the information that you requested.

Although the debt collector can take as long as they like to respond, during that time they may not demand payment until verification is received.

Knowledge is king, know your rights under the Fair Debt Collection Practices Act

While it’s easy to be intimidated by these collection agencies, it’s important to know that under The Fair Debt Collection Practices Act (FDCPA), debt collectors are prohibited from engaging in unfair, deceptive, or abusive practices in the collection of consumer debts. That means they can’t call and harass you, threaten you or misrepresent themselves in any way.


For example, they may not contact you at an unusual or inconvenient time or place. For most people that means no calls before 8 a.m. or after 9 p.m. If you are being represented by an attorney, then the collector must not contact you directly.

The collector may not engage in harassment or abuse or provide you with false or misleading information. The collector can not engage in unfair or outrageous conduct designed to collect a debt such as adding fees/charges to the original agreement.A full accounting of your rights can be found on the Federal Trade Commission’s website.

Fight back

If you believe a collections agency is breaking the lawdocument the illegal behavior. You can file a complaint against the agency with the Federal Trade Commission (FTC) as well as the state agency that regulates collection agencies.

Don’t forget to send copies of your complaint to the collection agency as well as the original creditor.

There have been cases where collection agencies have been sued for harassment and lost. But before you consider this option it is best to contact a debt law attorney.

Educate yourself and know the difference between a creditor and debt collector

There is a distinction between the two. A creditor is defined as a person or entity that originally extends you credit such as a credit card company, a bank or any other original lender from whom you borrowed money. Even your uncle Sam who loaned you $1,500 for a car is considered a creditor.


On the other hand, a debt collector is generally a third party whose business is to collect, or attempt to collect, a debt owed to the original creditor.

This distinction is important to know to know because the Fair Debt Collection Practices Act is designed to protect consumers from conduct committed by debt collectors.However, and here is the important distinction, it does not apply to creditors.

Lying to debt collection agencies will get you nowhere

You might be inclined to want to hide by providing debt collectors with the wrong phone number or address.

Beware, they have ways of tracking you down through family, friends or even past or current employees.

Do you really want everyone knowing that you are being hunted down by a collection agency?


If the collector has your current contact information, then contacting others to find you is illegal. They can, however, contact your spouse, your parents (only if you are a minor), and your co-debtors. However, they are not allowed tocontact these people if you send them a letter asking them to stop contacting you.

Tighten up your social sharing

In today’s social media world people often engage in providing TMI. (Too Much Information). If you become the target of a collection agency, now more than ever, you should be conscious of what you share on Facebook, Twitter, Instagram or any of the other social media sites.


Not only should you set your social media networks to private, but be careful of who might ask to follow you or be your friend. There have been instances where debt collectors have been known to gather personal information about those who owe via these channels.

In other instances, they have (albeit unscrupulous), post messages about a debtor’s financial situation in an effort to embarrass or humiliate.

Explore your payment options

There are a number of different options to consider when deciding how to handle your debt.

Before you make any decisions you should do your homework.

Options include: debt settlement companies, debt consolidation, credit counseling services, or even bankruptcy.

Using CC for online payment

Debt settlement companies, for example, often claim they can negotiate with your creditors to reduce the amount you owe. However, some also charge large fees to do so. Many also will encourage you to stop paying your credit card bills, which can result in even more penalties against you. Their use also can have an impact on your credit score. If you choose this option, make certain that the company is reputable. There are many companies out there today that are little more than scams looking to take your money and in the end you may find yourself owing even more money than before you started.

You might consider consolidating debt, which means you take out one loan to pay off all of your creditors. Companies that help you consolidate your debt can help to negotiate a lower monthly interest rate. Again, these companies will look to be paid. Usually they will require a percentage of the amount they save you. There also can be tax consequences. For example, any money you save through consolidation might be considered as income by the IRS, which means you will end up paying taxes on it.

Credit counseling services can help you to review all of your options. While some are nonprofit and operate at no cost to you, others do require fees. Ask upfront what you can expect from them, the kinds of services they offer, if they charge and how much, and how they will go about helping you to develop a plan that is right for you.

Bankruptcy is another option. The most common kinds are Chapter 7 bankruptcy, which essentially wipes out your debt, and Chapter 13 bankruptcy, which will allow you to set up a repayment plan. While both are designed to help you start over, there are pros and cons to each. These filings are public record and anyone can find them if they look. While family and friends likely won’t be trying to dig up this kind of information, employers or potential employers might. A qualified debt law attorney can help you to decide what option is right for you.

Let’s make a deal

If your debt is too high consider trying to negotiate. Tell the debt collection agency what you can afford to pay and ask if they are willing to settle. In some instances, offering a one-time lump sum can result in a significant reduction to what you owe.

Most debt collectors work off of a commission on what they collect so it may be in their best interest to get something today rather than wait and get nothing tomorrow in the event you decide to file for bankruptcy.

If you can’t afford a lump sum, try to work out a payment plan that you can stick to.

Also, once you do come to an agreement, make sure you get everything in writing.This should include how much you agreed to pay, when payments are due, how the payments will be made, and what should happen if you breach the agreement. Negotiating a settlement shows that you took responsibility for paying as much as you could and your credit report will show that the debt has been paid.


If skyrocketing medical bills are the problem, contact the healthcare provider’s office and see if they are willing to negotiate. If you don’t have healthcare insurance and you are paying out of pocket, some providers will allow you to pay the same rate it negotiates with insurance companies, which often is significantly less than what those without insurance pay. Some will allow you to pay a small amount per month.

Explore all options. Healthcare providers spend a lot of time and money on collections, so if someone is willing to work with them, they often are open to cutting a deal.

Bite the bullet

If you want to take a shot at paying off credit card debt, sit down with your bills and figure out which ones are charging the highest interest rate and start to pay those off, while continuing to make at least the minimum payment on the rest of your credit cards.

Remember though, paying only the minimum will prolong your situation.

And, whatever you do, don’t make any unnecessary purchases until your cards are paid off.

Consider other payment options

While many are hesitant to ask family or friends for a hand-out, this can be a viable option for some seniors. Just make sure that before you borrow from anyone that you have an agreement in place that details when the money will be paid back and whether there will be interest due.

This can help you to avoid a lot of headaches and heartache down the road. If possible, consider taking on additional part-time employment or volunteering for overtime.

Perhaps you can work a few extra hours a week in the evening or on weekends. If you do, make sure you set aside that extra income to pay off your debt. Don’t go spending it on anything else.

Check your credit regularly

Even after you are out of the woods you should keep tabs of your credit score. You’ve probably spent your whole adult life building up strong credit, so don’t ignore it now.There are a number of ways you can do this. You can ask for a free copy of your credit report from each of the three major credit reporting agencies – Equifax, Experian and TransUnion – and then compare them. This is important because they should all contain information that is consistent. If you find misinformation, request a dispute form from the agency where you found a problem. In some instances, once you have resolved your credit problems, creditors will agree to remove any negative information from your record. But even if they don’t you can still begin to build your credit back and take control of your financial situation once again.


Falling into debt is never easy and the consequences can wreak havoc on your life.It can be terrifying, especially if you are a senior on a fixed income.

However, there many steps you can take to make the situation more bearable. Review the list above and determine which ones will work best for your situation.

With a little time and effort, you will find that you will be better educated and better prepared to deal with your debt and even more important you will be armed with the knowledge and information to help you stay out of debt in the future.

Jordan Shaw18 steps seniors can take when the debt collector comes knocking

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