Welcome back to the core debt settlement section of the debt relief program. In this section I will get back into the details of setting the stage for negotiating credit card debt with your bank, and how after 60 to 90 days of nonpayment, your bank starts to resemble a bill collector.
I took the quick detour in the prior section to outline things debt settlement companies do not talk about, because that information is important for you to know when you are out on the internet looking for help, especially when there is an opportunity for you to settle one or more of your credit card debts directly with your bank. I will also refer back to some of what I covered in what debt settlement companies don’t tell, throughout the rest of the settling debt sections.
If you have found your way to this part of the settling credit card debt section, and you have, or will have, money ready to settle some/all of your accounts, but have not read about debt settlement and timing, or do not yet understand what it means when your bank charges off a credit card debt you owe, you may want to click back to the debt settlement section intro page here: Introduction to Debt Settlement. You will get the most from the negotiating and settling debt portion of the debt relief program by reviewing it in the order we set it up for you.
Best way to handle your banks internal bill collectors when you are settling credit card debt.
Before I stepped on to my debt settlement company soap box, I left off with the fact that you will get a ton of collection calls from your credit card bank once you miss a payment. Your credit card lenders collection calls begin with a customer service tone. If you pick up those early calls, more often they are reminders about missing a payment, or fist level account turnaround efforts from internal bill collectors at the bank.
Credit card bill collector calls are just part of the process. You know collection calls are going to occur, so you roll with it. There are technology tools to manage collection calls. You can read about some of them right now, before continuing with the rest of this page: tools for debt collector calls.
In the above linked report and several other places throughout the debt settlement program section, I have highlighted the importance of being in contact with your creditors, even when the bill collector for the bank, or you, are not ready to settle yet. I have recommended for more than a decade now, that you be the one to instigate calls, rather than pick up one of the many bill collector calls you receive. Your calling the bank, if nothing else, helps your mindset.
There is a short list of things you want to cover with bill collectors for the bank, and several things you want to avoid when speaking with them. Let’s hit the DO NOT list first.
Don’t ignore your creditor’s attempts to communicate with you.
Falling off the planet, or being completely unreachable when your creditors are trying to talk to you, can lead a bank to treat your account differently. Early placement with a collection agency, or bundling up your account with others and selling the collection rights off to a debt buyer, are couple of ways your bank may react when they have nothing else to go on.
Banks change up their recovery policies and goals from time to time – some more frequently than others. Not every credit card lender is going to have a trigger, or way to segregate your file as having potentially better recovery odds (some indication your are more collectible than someone else). Someone who is showing up in their system as being proactive in communicating a financial hardship is less likely to be viewed as a complete account loss. Good communication with your bank will also help you to stay in the loop with any payment reduction plans that your bank may offer that could fit your budget and overall debt reduction plan. Depending on the creditor, you may also get some early and attractive offers to settle your account by staying in touch.
There is a tendency to ignore bill collector calls and leave mail from creditors unopened when you have not been making payments. But that is a behavior more attributed to someone without a plan. If you are serious about resolving your credit card bills, and are reading through all of the debt settlement sections of the debt relief program, than you have a plan. A settle your debts as soon as possible and move on with your life plan. You understand how settling debt works. You have access to professional feedback along the way. You can even have a pro step in at anytime if you want to, but only when timed correctly.
Do not pick up every call collection call from your bank.
The calls will come with the type of frequency you may not be prepared for initially. The more creditors you have in your plan, the more calls you will receive. You may have spoken with a creditor in the morning only to see calls continue the next day. This is part of the process.
Remember that bill collectors have research and data showing them that they have better recovery rates the more often they call you. The more calls, the more stress you feel, and the more statistically likely it is you will make any payment in order to just stop the calls.
Making payments, even partial ones, that are not part of your plan, can delay your success. There are reasons to make some form of payment, even when you are trying to settle. But that payment would be made for a strategic purpose, not made because of bill collector calls and pressure tactics.
Picking up calls from a credit card bill collector is not even necessary. You need to feel as though you are (and in fact should be) in control of the calls when speaking to creditors, but we will get to the do’s in a moment.
Do not share too much with a bill collector.
There is sometimes a tendency to want to share too much with customer service reps who initially call you, and later the collection and recovery agents from banks. A good example would be taking a call in the second month of delinquency and initiating some type of settlement dialogue. You are wasting your time by doing this. The person at the bank you are connected to at 60 days late is not typically authorized to have any type of settlement discussion with you as you are not late enough at this point for many banks to consider settlement as an option to resolve the account. Even if a serious settlement discussion can be had, the offers are not as good as they will get later when you are closer to charge-off – where the bank will have to recognize the loss on the full balance of your account.
Commercial break: As a CRN member you’re assigned specialist will be identifying the strategy and priority of your creditors with you. This will help you target the maximum savings with each of your creditors using “right now” trends with your banks in order to settle as many of your credit cards in first stage collection as possible. You of course can get completely free insight by participating in the comments section of this and other pages of the CRN site.
2 important considerations when settling credit cards and speaking with internal bill collectors.
We have long recommended that you speak with your creditor once every month after you have fallen behind with payments by 30 days. I am not talking about a regimented schedule here, but many of our members have designated a certain day to make all of their calls.
Depending on how many accounts you have in this first stage of collection that you are targeting settlement with, you could get through your monthly “check in” calls in less than 15 minutes. The more accounts you are dealing with, the more time you will need to schedule. You may even want to make a few calls one evening after work, followed by the remainder the following day.
Repeat these monthly calls to your creditors at least once a month when your accounts have not yet charged off (180 to 210 days delinquent).
Why you should make the phone calls to a bill collector.
It is important that you feel in control of the calls when speaking to a bill collector. A good way to develop the correct mindset is by you doing the dialing. When you call, you are in control. You have a message to relay and when done, you politely end the call.
Bill collectors, whether working at the bank or with an outside collection agency, are very good at building your stress level. They know your level of stress often increases the odds they will get a payment from you. Staying on the phone and answering their questions is ill advised unless you are at the point where you are negotiating your settlement.
There are creditors you will be negotiating a settlement with, when the timing is appropriate, who will have a litany of questions for you, and that you will want to answer in order to get a deal locked in to place. But that is going to be during one of; if not the last phone call you have about that debt. I cover this in detail in the next section.
What you say to your credit card lender is short and sweet.
When speaking with creditors (and later with debt collectors), you only want to relay the information that helps you, and avoid giving information that helps them. Details to share that help you should be limited to what has caused you to fall behind with your payments.
What created the hardship? What hardships remain? This is your story. You are living it. Was there job loss or some other type of income loss? Was there, or is there currently a health issue with you or a loved one? Did your mortgage payment reset? Was there a pile on of unexpected expenses that caused your budget to be derailed?
These are the types of things you would describe briefly. What you say in these calls will often become part of your file notes. The next person you speak to at the same bank can see prior account notes. What you said prior, and what you are saying to them now, should be consistent.
You should keep your script to a minimum.
You could simply say: “I am calling to let you know I have not forgotten about this bill. I am having major difficulty right now because my job has mandated I take 3 unpaid furlough days a month. I am exploring options to supplement my income, and as soon as something comes through, I will be catching up with my payments. I have no available funds other than what I need to cover necessities at this time.”
In this example you have given all the information that you need to, and none of what you don’t. You established a hardship – your hours have been cut. You established that you want to be able to pay something – but right now you cannot. This will be your litany until the timing to offer settlement arrives.
What if you pick up a random call from a bill collector?
Because of how many calls the bill collectors make, and the fact that the calls will come from all manner of random toll free numbers, even numbers from within your area code (this is often spoofing), accidentally picking up a call can happen.
Settling debt, from start to finish, should be treated as a business transaction. You are involved in an effort to save your finances and avoid bankruptcy. Settling your credit card debt represents thousands of dollars in savings. For some, settling your debt is going to mean tens of thousands in savings. You do not show up for a job, where you earn thousands of dollars, unprepared and with a bad attitude. You show up prepared.
If you pick up a phone call from a bill collector and you are not prepared (making dinner, social setting, kids just got home etc.), be polite and quickly end the call. Here are some examples of what you can say:
- “I cannot talk right now, I have my hands full. I can call you back.”
- “I have a visitor and am not able to talk right now. I can call back tomorrow.”
- “This isn’t a good time for me to talk right now. I will call later this week.”
The point is to be professional, and brief, while ending the call quickly.
I should also point out that when you sit down to make your outgoing calls to your original creditors, the same business mindset applies. Be courteous and to the point. Sit down to make the calls when you are prepared, and there are no distractions going on around you.
The general recommendation is to stay in touch once a month with your credit card lender until you enter the final month (cross over 150 days of consecutive nonpayment), which is where most settlements with your original credit card bank are going to happen – if you are prepared financially to lock in the deals.
There are some exceptions to targeting settlements after the 150 day mark. Settling a credit card debt with Chase earlier than this is a good example at the present time.
There are also exceptions to when a credit card issuer sends your past due account out to a collection agency. American Express is a good current example of a bank that sends unpaid credit card accounts out to an external bill collector after only a couple of months of missed payments.
If you have questions about making calls to bill collectors, or are concerned about something you should, or should not say, post them in the comments below for feedback.
The next section of the debt settlement section of the debt relief program will cover how to negotiate and get the deal with your original credit card bank. The next section will include insights into:
- Establishing the amount of needed for a single lump sum settlement.
- Settling with your bank using the allowable 90 day term payments with confidence.
- Have you prioritized the right credit cards and balance for the earliest settlements?
- How to prepare for a litany of questions that some banks have as a policy before approving a settlement with you.