You'll be in a better position to resist collectors' pressures and negotiate a sensible repayment plan if you were prepared for the tactics they're likely to use. Here, then, are secrets that bill collectors don’t want you to know.

Collectors get commissions -- usually 30 to 50% -- on money they bring in, which often doubles or triples their salaries. This means they have a strong incentive to press for a big "down payment" from you, even if this deepens the cycle of debt. Collectors hoping for a big commission may claim that the boss insists on a big down payment. In fact, blaming it on a mythical manager is designed to deflect your anger away from the collector.

Payment deadlines set by collectors are meaningless. Collectors simply want to create a sense of urgency, because the longer it takes to get you to pay, the less chance there is of collecting the debt.

They Don't Need a 'Financial Statement'

Collectors often claim they need a "financial statement" from you, so they can work out a realistic repayment plan. You'll notice, though, that the information they ask for -- bank account numbers, references, place of employment -- is far more than they need for that purpose. They're fishing for information that will help them find you if you move or sue you if you don't repay the debt.

Collectors always graphically detail the disastrous consequences of failing to pay a debt. "Your credit rating will be ruined," they warn. (Not mentioning that it's probably already not so good, since a collection company is after you.) "Your personal possessions, including your car, could be seized and sold at a public auction!" (Never mind that this virtually never happens; it's illegal in some states and impractical because of the expense.) Probably 95% of the time, collectors go after only bank accounts and wages.

You have the right, under federal law, to tell a collection agency to stop contacting you. Just do it in writing and contacts must stop unless they're to tell you that collection efforts have ended or the agency is going to take a specific action (like filing a lawsuit) against you.

A collector who has your bank account and social security numbers can probably easily find out the balance of the account. Because big banks now have automated account inquiry systems, the collector doesn't even have to speak to a human being; all it takes is a phone call to the automated voice-mail service. When the account number and social security numbers are punched in, the computer promptly supplies an up-to-the-minute account balance.

Collection agencies routinely call out-of-state debtors to demand payment. But if a creditor has sued you and won, you are probably safe from enforcement action if you bank and work outside the state where the lawsuit was filed. That's because to collect, the collection agency must transfer the judgment to your state, which is prohibitively time-consuming and expensive.

Certain income, such as social security, pensions and 75% of your take-home pay, is exempt from enforcement action. You can file a claim of exemption from a garnishment of the other 25% of your wages if it would cause you or your family severe hardship.

Sometimes a collection agency lawyer, trying to collect a judgment debt, sends questions on a court form asking about your income and assets. (These are called "post-judgment interrogatories" or "information subpoenas.") This is good news for you -- it means that the agency has no information and is hoping you will be intimidated enough by this legal questionnaire to complete it. Many people do because the forms list sanctions, such as fines, for not doing so. But normally it is too expensive and time-consuming for an agency to go to court and force compliance.

Remember that continuing to pay when it is inevitable that you will not be able to continue paying in the amounts demanded by the creditors is just wasting money. You will not protect your credit and you will lose your cash and buying power. And remember that we don’t have debtor’s prison anymore.