Know Before You Owe

Billionaire Bill Bartmann grew up in poverty. In his latest book about debt-collection abuses, Out of Control, he wrote, "I first saw the debt-collection industry long before I became a debt collector ... I witnessed my parents being hounded by debt collectors until they eventually declared bankruptcy, and even then the browbeating did not stop."

"Later in life," he wrote, "I became the direct target of bill collectors on the other end of the phone when I was late on my payments. I experienced up close what it was like to be mentally raped by someone who was so practiced that there was no hint of hesitation in his voice."

He said his company, CFS II, does debt-collection right, treating customers with dignity and respect. He offered three insider tips on how to deal when creditors come calling.

Communicate!

"Communication is absolutely the most important thing," Bartmann said. "Rather than waiting for the bill collector or the doctor's office to call you, call them ... By the time they get around to calling you, they're already upset and disappointed, and think you've broken your promise."

"If you know you're not going to be able to pay it ... call them, say, 'I'm sorry, the dog died, the car broke down.' Whatever it is, tell them the truth. Ask, 'Can we wait another month before I send you something?' And nine out of 10 times," Bartmann said, "If the customer had done that, the creditor would've said yes.

"Most creditors want to work with the people who owe them money, but most people are too afraid to call them."

Verification of Debt

When a creditor calls you, Bartmann said, "Make the bill collector prove that you owe the money.

Say someone calls who wants to collect money on an overdue Mastercard bill. You should say, "Thanks for calling, but who are you? Where are you calling from? And which Mastercard? And how do I know you're authorized to call me? And how do I know you really have my bill in front of you? Send me something to prove all of that," Bartmann explained.

"That will stop eight out of 10 bill collectors, just because they don't have the data.

"It's a federal law, and if you ask, they have to give it to you. And they can't call you again until they do that," Bartmann said.

Record the conversation.

That way, if they are inappropriate, if they threaten or yell at you, you'll have proof. "They have a right to call you," Bartmann said, "They can have that normal, civil conversation. But they can only call you so many times of day" and only between certain hours.

So if a creditor is misbehaving, "You can be on the delivering end," Bartmann said. "You can sue them. Now think about how nice that would be.

"And that should be done," Bartmann said. "If a bill collector is being abusive, you should turn it around on them."