Starting My Financial Recovery

Posted on: August 28, 2008 by Matt

My struggle to get my finances back in line began with a scary phone call from a debt collector. I was verbally attacked and bullied by the agent (I was not aware of it at the time but he was clearly in violation of the Fair Debt Collection Practices Act) and he ended the conversation stating that I had to pay $20,000 now or the company was going to take me to court. I panicked. I did not have $1,000 to my name much less the other $19,000 and told them there was no way I could pay that. They suggested that I call friends and family and ask them for the money. My family did not have the money and I was not comfortable asking. At the end of the conversation the collector offered to pay 10% down and then arrange monthly payments. I told him that I would see what I could do and would call him back the next day.

That night I decided to try to get my student loans back in order. I began the daunting task of opening statements and letters from all my creditors and sorted them by institution and date received. I had either defaulted on or been sent to collections on all of my student loans which totaled near $60,000 from four years of school. I made a list of the loans that I had current contact information for and planned to call the current loan holder. I also balanced my checkbook for the first time in nearly a year. I managed to come up with $500 to offer the collection agency up front with the promise of monthly payments.

The next day at lunch I called back the collection agency and arranged to make a $500 down payment followed by monthly payments. They opted to use another scare tactic to see if the amount was “acceptable to their client; so that they would not take me to court”. I nervously waited as they put me on hold as I did not know they probably would have taken anything offered. When the agent picked backup up I was told the $500 plus recurring payments set up to auto-draft from my bank account would be accepted. I grudgingly gave them access to six months of $150 auto-drafts. I have read horror stories since of the same collection agency cashing post dated checks and over drawing bank accounts of others; I was lucky enough and the drafts were drawn as planned.

Future reading and advice did all point out that giving collection agencies access to your account and / or post dated checks is a really bad idea and should not be done in any situation. The collection agents may be nasty and try to force you into giving them access but they will still cash any check you send normally. For me sending monthly payments by check keeps the agency from calling at this point in time.

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