I have received a few emails from people that want to develop passive income streams NOW because their home is being foreclosed, or they have accounts in debt collections. Of course, passive income is not an answer to these problems because it takes to long to develop. However because of the number of emails I received on the subject, I thought I would reprint one of my eHow articles.

 

You cannot pay all your bills… and now the incessant calls from the debt collector start. You do not want to answer the phone, but the calls keep coming. It is not the end of the world. Many debt collectors can actually help you, if you give them a chance.

 

1

Answer the phone, or better yet call the debt collections company. Keep calm, collectors have personalities, some can come off as ruthless , while others come off as sweet. If you honestly owe the bill to the collector, try to pay it.

    2

Understand that everything you do and say will be documented. THIS is the time to try to save your credit rating. Your credit rating, of course, will be used to give you more credit in the future. Also your credit rating can be used to decide if you can rent an apartment, rent a car…It can even be used to decide if you get the job you want!! And do not make a promise to pay that you do not keep, this is also documented… It will make it more difficult to deal with the next debt collector you talk to

3

When you are in debt collections it is always best to make a payment of the Balance in Full. This will be credit reported as exactly that, Paid Balance in Full. To a future creditor this looks like you forgot, or you had a temporary problem, and resolved it immediately

4

If you cannot pay the Balance to the debt collector, ask for the Now Due amount. If the account is still active, this amount will ring the account current and stop all the late fees, and the collection activities. In most cases you can then go back to paying the minimum payment until it is paid off.

5

Next, think about a settlement in full. This may or may not be possible. If it is, It will pay the account off completely. However, it will be credit reported as a settlement, not a balance in full.

6

As a last resort, pay the debt collector a minimum payment. This will stop the account from going another month delinquent (and being reported as such) and will temporarily stop the phone calls in most cases. It will also buy you some time to gather the money to pay the balance.

7

DON’TS:

1) Swear and curse. Remember it is most likely that in your contract, you agreed to pay the entire balance immediately if you fell behind in payments. So any other option is being offered to you to try to help both you and the creditor. Swearing will likely make the debt collector less helpful.

2) Become emotional, this is business.

3) Say ….Stop calling me!!!….. In 90% of the cases, collections companies can ring your phone as often as they like.

4) Over-explain why you are delinquent. Give a quick reason and make a payment. Unless it is an extraordinary circumstance, it will not make any difference.

5) Use a Credit Consolidation Company (CCC). In many cases a CCC will not even make the minimum payment for you and your account will go further delinquent. True, you might save some money, but you will destroy your credit rating, and may STILL owe some money