Money Rehab with Nicole Lapin - Don’t Let Debt Collectors Bully You

Episode Date: January 28, 2022

If you have debt in collections, you are not powerless. You have rights that need to be observed and respected—and in today’s episode, Nicole tells you what they are. Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

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Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. Today we're talking about a four-letter word.

Yep, just a teeny four-letter word, and yet it packs a big punch. If you know me, you know that it is the only four-letter word I don't like. It's D-E-B-T. Debt. And if you're new to the Lapinverse, let me clue you in on something. I know what it's like to be in debt. Once upon a time, I was $5,000 in credit card debt and put myself on a brown rice and beans diet because it felt fancier than ramen. And that was my life until I paid off my debt. $7 a day for two years. Slow and steady, but I did win the debt race. But it wasn't my only time dealing with debt. In yesterday's episode, I told you the story of

getting hit with a $2,000 medical bill that was not covered by my insurance? Definitely not funsies. So I'm not speaking from some ivory tower here. I know what it's like to have that debt monkey on my back. And what's worse, I know what it's like to have creditors on my back. And so does Caroline, who's calling in with this question. Hey, Nicole, what is your advice for dealing with debt that is now in collections? When I was in college, I had a credit card that I maxed out and it just got way over my head. I opened up a new credit card and I've just been ignoring that one that is in debt. I've been getting calls from a collector and I'm scared and honestly embarrassed. I don't want my kids to know that there are debt collectors calling the house.

And I also just don't have the money right now to pay off the card. What should I do? First, I totally hear you, Caroline, on the shame piece. I felt shame. But here's the thing. You're not alone. You're not the first person to have debt in collections. And you are certainly

not going to be the last. In fact, one out of four Americans have at least one debt in collections. And I also totally get the scariness factor of debt collectors. Those collections, folks, can be intimidating AF. But I have found that the best way to get over that fear is to take a hard look at what is actually scaring you. Something that's really helped my mindset around scary financial things, and there are a lot of them, is the idea that we suffer more in imagination than in reality. In other words, sometimes our beautiful and cruel brains deliver us a worst case scenario that is way worse than what will actually unfold. So let's nip some of those worst case scenarios in the bud. So here's what debt collectors are not going to do. They're not going to put you in jail.

They're not going to beat you up. They're not going to set your stuff on fire. It's also against the law for debt collectors to reach out to you in a way or time that's inconvenient for you. So if you're imagining any of those things, I'm here to tell you that's never going to happen. But here's what they can do. They can mess up your credit. They can garnish some of your wages in some cases. And if they're feeling

really desperate, they can sue you. But again, do not let your imagination get ahead of itself. Let's take another hard look at this worst case scenario. If a debt collector exercises one of those last ditch options, here's what you're going to do. You're going to fix your credit. If you haven't fucked up your credit at some point, either you're a better person than I am, or maybe you've just never checked closely enough to see. If they take your stuff or your wages,

what's the worst thing that's going to happen? Maybe you'll live with family or friends for a while. That's okay. You are going to be okay. But to get your debt under control, you have to talk to the collectors. And you can settle debt for pennies on the dollar, but only if you confront it. A debt collector's goal is to do their job and get some money back from you. Your goal is to get them off your back. There's a place where you can meet in the middle. Here are three things you should know before talking to the collectors. Number one, make sure you're prepped.

Before you hit accept on the call, make sure you have something to take notes with and ample time to talk. Make sure you have something to take notes with and ample time to talk. Rushing to end the call so that you can get back to your lunch break or whatever else you're doing will only add more stress. Number two. When you're first talking to the debt collector, don't assume the debt collector has the right information. Debt collectors may try to get you to pay fraudulent or outdated debt or might even try to scam you. So before you admit to any debt, tell the debt collector this. Under the Fair Debt Collection Practices Act, it is my right to get debt validation.

Write that down. And then the debt collector will need to send you proof of this alleged outstanding debt. If you pull this move, you're gonna have to keep the momentum going because now you have a deadline. You need to send a written request for debt validation to the collector within 30 days from the date they contacted you. I'll link more information about requesting debt validation in the show notes. Number three, if you need the debt collector to reach out to you in another way, you can let them know that. The Consumer Finance Protection Bureau has sample letters you can send to debt collectors if you get writer's block. But the Consumer Finance Protection Bureau also warns against overdoing it. If you want to work something out, you don't want to make it too hard for the debt collector to reach you.

I'm not saying you have to be best friends with debt collectors, and I get why it can feel intimidating. But the unknown and anticipation will give you more anxiety in the long run than the actual calls themselves. So take a deep breath, face your fear. I know you can do it. For today's tip, you can take straight to the bank. If you haven't listened to yesterday's episode on negotiating debt, take some time now to check it out. Once you're talking to a debt collector, you can and should negotiate that debt. They will settle with you. And in fact, sometimes you can straight up say what's the amount you're authorized settle with you. And in fact, sometimes you can straight up say what's the amount you're authorized to settle for. And in yesterday's episode, I shared more tips

that I personally use to talk a debt collector down from $2,000 to $600. So if I can do it, you can too. Money Rehab is a production of iHeartRadio. I'm your host, Nicole Lappin. We spend our money, money, money. Michelle Lanz for her development work, Catherine Law for her production and writing magic, and Brandon Dickert for his editing, engineering, and sound design. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.