Understand the Psychology of Debt Collection Tactics and Avoid Being Manipulated
My colleague, Boston bankruptcy attorney Nick Ortiz, has written a helpful post on his Massachusetts Bankruptcy and Consumer Protection blog summarizing your right to refuse to speak with a debt collector under the Fair Debt Collection Practices Act.
If you have ever been the target of aggressive collection efforts, you know that bill collectors use applied psychology to intimidate the debtor. If you did not yet know this, bill collectors follow a script that was developed by psychologists to trigger certain emotional responses in you. For example the word "promise" is much more emotionally charged than words like "debt," "outstanding balance" or "financial obligation."
Debt collection scripts are also designed to suggest that your failure to pay a debt will result in a form of "punishment," which could lead a stressed out debtor that he could end up in jail (despite the fact that there have never been debtor's prisons in the United States not been federal debtor's prisons in the United States since 1833 or state debtor's prisons shortly thereafter).
In my bankruptcy practice, I encourage my clients to make thoughtful, informed decisions about whether to file a Chapter 7 or Chapter 13. Recognizing the tactics used by bill collectors can help a debtor avoid emotional decisions, or, worse, bad decisions. I cannot tell you how many times I have met with clients who partially or totally cashed out a 401(k) to pay a credit card or other unsecured debt. In Georgia, 401(k) accounts are 100% sheltered from creditors, so any encroachment one of these protected accounts is usually a bad idea.
If you want to learn more about the psychology of influence, I can recommend the work of noted psychologist Robert Cialdini. I saw Dr. Cialdini speak a few years ago at a tax problem seminar and his work is truly groundbreaking. His book, entitled "Influence: Science & Practice" is available at Amazon and I recommend it highly no matter what you do for a living. You can read more about Dr. Cialdini at his InsideInfluence.com web site.
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Jonathan Ginsberg
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Comments on Understand the Psychology of Debt Collection Tactics and Avoid Being Manipulated
Uhhmm.. the US did have debtor's prisons, and there were a few notable historical figures who spent time in debtor's prison – Charles Goodyear and Robert Morris (signer of the Declaration of Independence). Thankfully they were abolished at the federal level in 1833 and most states followed suit.
Some now characterize Ch 13 under the 2005 bankruptcy law as the new 'debtor's prison' !
Well, Diane, I stand corrected. Here is an article that references the people you speak about: http://www.myvesta.org/history/history_debtorprison.htm.
I should know better than to guess – I was a history major after all!
Thanks for correcting my mistake. I think that Chapter 13 may be a new debtor's prison, especially for debtors in the $65,000 to $100,000 income range.
Jonathan
Very true indeed. These people know how to get the info out of a debtor that they need, to then use it against them later in an attempt to collect the debt. An alternative to bankruptcy is debt settlement and by using a law firm to handle the settlement for you, they can stop collection calls. According to the FDCPA when you have attorney representation the collectors must deal with your attorney and not you.
Wow if you owe money and you cant pay why answer the phone…think about it can it really get any worse if dont answer…. that will preven any info from ever being used againist you…try just paying the bill it works instead of making a philosphy of how the debt collector trys to collect…only a true debtor would worry more about how the debt collector is emotionally impacting you then just getting the money you know you owe paid off…huh ever thought of that PAY YOUR BILLS and you wont be a DEBTOR….sounds like a good idea to me…
@Vince Brown: Only a debt collector takes the perspective of a debt collector.