So times are tuff. Which means a few of you out there (Me included) have had a run in lately with a debt collector. So I am writing this hub to support the Answer for the Hub "How to Deal with Bill Collectors when You have No Means to Pay."

The debt collection process is very similar to an extortion racquet. Basically, some bully type tries to scare the hell out of you until you pay up. Unlike, extortionist they don't usually use violence, but like extortionist they very much use blackmail.

First, they use the guilt trip, they make you feel like you are irresponsible or inadequate for not being able to pay your bill. Then they switch it up like they are helping you with your options. When in reality they only want money, however small or large the amount.

Second, they threaten the dire consequence of lowering your credit score. Let me tell you, the credit score company could blow up tomorrow and it won't change anything, the banks will keep loaning until the cows come home, because that is the only way to make their scam work. But, hey it sounds scary though. Not really, so the best thing for you is to get off credit and fast and a bump in your credit score might be the push you need.

Lastly, they threaten legal action. A little on this, yes technically they can sue you. But you have to remember this is a business. A business has an obligation to make a profit. Legal battles cost lots of money!!! Only if you owe a significant amount of money will it be worth it for them to sue you. In which case as soon as they get a judgement you simply file bankruptcy and they get put in the same pile as all the other creditors meaning they won't get squat. So this pretty much makes it to costly to pursue legal action therefore, for 95% of the population this is a hollow threat. (For the other 5 percent they have lawyers to hide and shield their assets so really make that 100%)

So, here is the process, the bank makes a loan. The loan goes bad. The bank spends 180 days trying to collect and adding late fees and interest. After six months they have to write it off.

At this point it goes to a collection agency who buys the debt (Just like the Mob) and tries to collect on it. But, here is what makes their business so great to be in. They buy most of their debts on consignment or contingency meaning they lay out no up front capital. They call you up and get you to pay 10 dollars a month until you die. They give 5 to the bank and keep 5 for themselves until you die. They do this over and over. Debt collection profit margin is Huge!!!!

So ignore them, don't talk to them. Don't settle on their terms do things on your terms. Put back 10% of your money until you have a full six month of living expenses. Then save up about half of the debt you owe. Then on your terms write them a letter offering 25% of the debt. Negotiate on a final number, but always ensure it is half or less of the debt amount. Pay it, and be done with debt forever.

Never ever use an agency or company to do this for you. They will take 60 to 80 percent of the debt from you and settle it for 30% and keep the difference. A very Bad deal for you. Notice only in the extreme case of a Judgement do I recommend Bankruptcy. The lawyers and scammers will try to get you to do it, but why would they pester you for your business if there wasn't a buck to be Made? Don't fall for it!!!!