Handling Loan Debt Collection Like A Pro

Struggling with loan debt is nobody’s favorite pastime, right? Suddenly, you’re overwhelmed, wondering how you landed here in the first place. I hear you! I’m Lawscape, at Lawscape, and it’s one of the many challenges we help folks like you navigate.

The Unforgiving Cycle of Loan Debt

Picture this—you miss a payment, then two, then three, and before you know it, fees are piling up, and you’re sinking deeper. The worst happens, and you default. Suddenly, there’s a collection agency knocking on your door (figuratively, of course). If you’re not up to speed, being blindsided by these folks can feel like your worst nightmare come true. But here’s the catch—it doesn’t have to be! What if I told you there’s a way to handle this situation strategically?

Collection Agencies: Beggars Can’t Be Choosers

So how do you end up with a collection agency? Well, the bank or creditor you owe can either retain ownership of the debt or sell it to a collection agency. In both cases, calls, emails, and letters from the agency have probably become your new normal.

Their determination to recover the debt isn’t just annoying—it can be downright bullying. And no, ghosting them won’t solve anything. Instead, it’s time to pull up your socks and negotiate.

First Comes the First Call

Understandably, when we humans are faced with an intimidating or uncomfortable situation, we tend to avoid it (admit it—you’ve done it too!). However, hiding from debt collectors will only lurk disaster. Instead, follow these steps to manage the situation on your terms:

1. Ask Them To Validate Your Debt

When you receive your first call, don’t panic. Ask the agency to validate your debt. But why, you ask? Well, many states have a statute of limitations on debt. Funny how debt collectors occasionally “forget” about this little fact, isn’t it?

Once the debt has been validated, the outcome could go either way. The debt may be invalid, which doesn’t mean you’re off the hook entirely. It just takes the heat off as collectors can’t sue you over it—though some might still try. Do remember, if you’ve been sued for repayment in a state different from your residence, and the company won, they can’t force you to pay.

2. Plan Your Payment Strategy

Of course, the most favorable way to handle loan debt is to clear the balance. If you’re able to pay quickly, you’ll save your credit reports from being marred by these debacles. If this isn’t possible (which, let’s face it, is often the case), negotiate a payment arrangement. You might even caution the collector that you’re “judgment-proof” if you’re currently unemployed or lack significant assets. This discourages them from suing you due to the lack of wages to garnish or assets to seize.

3. Negotiate Like a Pro

Speaking of negotiation, handling it directly with the agency can be challenging, but remember—you’re in control! Monthly targets put pressure on agents to coax the largest possible down payments or strict payment schedules from you—don’t fall for it.

Structure your payment schedule to suit your circumstances, not theirs. There isn’t a rigid deadline for collection payments, despite collectors’ typical urgency to recover their money pronto.

4. Know Your Rights… And Exercise Them

Now that you’ve validated your debt, determined how much, and planned your repayment, it’s time to set some boundaries. How? Not by shrinking from their calls, but by taking control. Send them a written request to cease contact. And if their calls persist, don’t hesitate to inform them that you’ve involved your lawyer—that’s where I can help.

It might come as a surprise, but you’re not legally required to pick up the phone every time they call. If the calls are coming in outside the hours of 8 AM to 9 PM, don’t stay silent—report it.

Your Way Out of Debt

So, take a deep breath! Loan debt, especially when escalated to collections, can feel like you’re stuck in quicksand. However, millions of people find their way out of the financial maze every year, and so can you. If you’re a small business owner and you’re dealing with this, don’t hesitate to schedule a case evaluation.

At Lawscape, we’ve achieved successful resolutions in numerous debt problems, defending against Treasury debts and resolving millions of dollars in SBA debts via methods like Offer in Compromise and negotiated repayment agreements to avoid bankruptcy or home foreclosure. We’ve even taken it to the highest level, by representing federal debtors nationwide. That’s what makes us your most reliable legal companion. Trust us to turn the tables around in these complex situations!