Learn what to do when you receive a sudden dreaded call from a debt collector. Preparation can help avoid mistakes, handle the call better, and keep anxiety away.

What is a Debt Collection Agency?

Creditors (for example, banks) appoint debt collection agencies to chase after debtors for payment of debts. Losing money from a non-paying client is part of the risk of doing business. To mitigate the losses, banks and other creditors will try whatever means to get back the money owed them. Debt collectors are paid a fee or a percentage of the total amount collected for their services.

 

How do you Deal with a Debt Collector Calling?

To illustrate, let’s look at a conversation between a debt collector and debtor.

(Note: This is an example to illustrate salient points. Not all debt collector exhibit this behaviour. Any resemblance to actual persons, living or dead, or actual events is purely coincidental.)

You: “Hello, Doe speaking.”

Collector: “I’m from Tough Collections. You have an overdue balance on your MadamCard. This is urgent. We need to discuss the payment.”

Firstly, answer the call

Don’t panic. Keep calm. Never ignore a call from your creditor or debt collector. Never hang up abruptly upon identifying themselves. Being evasive will make you look bad and anyway they will keep trying to get in touch with you. You can run but you cannot hide. It’s better to find out why they are calling you.

Do you have the time to talk?

If you’re too busy at work or at a time or place inconvenient to take the call, request a call back at an agreed upon date and time convenient to you. Furthermore, this gives you time to prepare for the next call (get ready with a pen or recorder to record what transpires during the conversation).

Collector: “We have to solve this today. Otherwise, I have no alternative but to forward your file to a higher level!”

Sounds like a threat? Remain calm. Stay in control and don’t lose your temper or composure. You can complain to the creditor and authority if the debt collector is harassing you and being intimidating.

Ask how much is debt is due. Do not admit that you owe anything.

You: “How much is owed on this card?”

Collector: “RM2,247. Can you tell me why this balance is overdue? I can help you with a payment scheme that would fit your budget?”

Give no excuse or reason to the collector why this debt is overdue. If you do give a reason, you are admitting you owe the debt. Admit nothing. Furthermore, even if you owe a sum, it’s none of their business why you didn’t pay it. Politely decline the offer of help.

You: “Thank you but no thanks. I don’t know any balance,”

Collector: “I have records showing you owe RM2,247. Can you at least give me a cheque for maybe RM100 over the phone today so I can mark this account as current?”

Say no! Any payment now will restart the statute of limitations (there is time limitation if you want to take legal action i.e. 6 years from the date of default or breached). Ask the collector to mail you verification of the debt. If you demand proof of the debt, the debt collector must provide this verification.

 

Never give your checking account or any other personal information to a debt collector.

You: “I’m sorry. I can’t give you that information. Would you kindly send me verification of this debt and also for my records would you send me your name and the name of your agency?”

Nicely done. Write this information down.

Collector: “You’re refusing to pay me? I’d hope to resolve this a little nicer but I see I will need to turn it over to our lawyers. This is your last chance.”

Ask what is meant by that. Get he/she to state the threat that is being made for not playing ball.

You: “What do you mean by that? I don’t want to go to court.”

Collector: “It’s exactly what will happen. We will sue you and deduct money from your salary.”

Jot down what was said and hang up the phone. You were threatened with money being deducted from your salary (aka garnishment). This is an action that cannot be taken without a judgment against you.

You: “Goodbye.” (then hang up the phone)

 

In Summary (TLDR)

Stay calm and collected. Remember the key points highlighted to deal with a call from a debt collector:-

1. Answer the call

Dismissing calls from collection agencies will only worsen the situation and can encourage court action. Jot down their name and address so you can send a written cease and desist letter if you want them to stop contacting you

2. Make time to talk

It’s better for you to concentrate on the call rather than talking with them while busy at the same time. Set a date and time to talk.

3. Record the conversation

If you ever face a collector in court, your handwritten notes or recording will prove useful. Keep a communication log.

4. Is the debt collector threatening you?

The law does not permit debt collectors in their collection activities and practices, to use any threatening or intimidating language and behaviour.

5. Do not admit you owe anything

You do not need to make any admissions as it is not to your benefit.

6. Ask the collector to mail you verification of the debt

Confirm the debt is yours before payment. This letter detailed out the debt, amount owed as at a certain date, and other information. You don’t want to pay a sum you don’t owe, pay an old debt that past the limitation statutes, or be a victim of a collection scam.

7. Don’t give out personal information

If asked for personal information, politely bur firmly decline. Get information instead of giving information.

8. End the call

If you have said what you need to and requested information required, then proceed to end the call. If the debt collector continues to cajole or threaten you with further consequences of non-payment or tries to gather further information, you can end the call. The debt collector can use anything you say against you. Keep the conversation brief.

 

What to do After the Call

Here are actions to consider after a call from a debt collector:-

  • Pay the debt in full
  • Ignore it if the debt is still within the statute of limitations
  • Dispute the debt upon receiving the debt verification letter from the debt collector
  • Complain to Bank Negara Malaysia if you feel that you have been unprofessionally treated
  • Send a “cease and desist” letter (which is an official request to stop and discontinue the behaviour of the debt collector)
  • Propose a settlement
  • Talk to AKPK.

 

Conclusion

Nobody likes to be in debt and being pursued by a debt collector. But if you have borrowed money, you will be expected to repay. If you cannot repay the loan, seek help. The lender may be willing to help if your reasons are valid. A much better approach is not to ignore a reminder letter from the actual creditor (the banks) in the first place.

There is no necessity to avoid debt collectors. Follow the above and you will be in good shape coming out of this. If you owe money to a bank, a debt collector can even assist you as an intermediary to negotiate for a settlement.

 

Have you (or your friend) experienced receiving any calls from the debt collector? Share the experience.