Dave Ramsey tells Washington State man negotiating with a repo man he should be at the bottom of to-do list

Jordan from Spokane, Washington, has collection agencies coming after him, so he called into The Ramsey Show for help negotiating with debt collectors.

Contents

Don’t miss Ramsey’s rules for getting out of debt Dealing with debt collectors Know your rights What to read next

In particular, a repo agent — also known as a repossession agent, who is employed by a collection agency to repossess property over a failure to make contractual payments — has been “coming at me hard.” Jordan said he has also gone into collections with some household bills.

The repo man wants either $5,000 down with smaller monthly payments or a monthly payment of about $800 a month for a year and a half.

“I’m the sole provider of a family of four and so that kind of makes it difficult,” Jordan told Dave Ramsey during the episode.

Jordan makes about $92,000 a year working in construction. He got behind with his payments when he switched jobs, but ultimately said, “I can make excuses all day but really just being irresponsible with my money.”

Don’t miss

I’m 49 years old and have nothing saved for retirement — what should I do? Don’t panic. Here are 6 of the easiest ways you can catch up (and fast)
Robert Kiyosaki warns of a ‘Greater Depression’ coming to the US — with millions of Americans going poor. But he says these 2 ‘easy-money’ assets will bring in ‘great wealth’. How to get in now
Gain potential quarterly income through this $1B private real estate fund — even if you’re not a millionaire. Here’s how to get started with as little as $10

When you’re overdue with a bill — anything from a phone bill to a car loan to a medical bill — your account could be sent to collection after about three months. Companies may sell your debt to a collection agency and they employ agents who may use fear-based tactics to get you to pay up.

But, what happens if you don’t have the money to pay up?

Ramsey’s rules for getting out of debt

Negotiating with debt collectors is way down on Ramsey’s list of priorities for Jordan. Instead, he advises him to start by making a list of everything in his budget. “We’re going to get extremely detailed, extremely organized,” Ramsey said.

From there, he recommends Jordan follow what Ramsey calls the Four Walls: food, utilities, shelter and transportation.

“Food is first before you buy anything else,” Ramsey said. That means buying food so your family can eat — before dealing with the repo agent. “He’s way down on my list of things to worry about for you.”

Buying food means buying groceries, not eating out. “No food at restaurants when you’re in collections,” he said. “You’re broke, you don’t get to go to a restaurant — a restaurant is a luxury.”

Second is taking care of utilities, such as water and electricity. That’s second only to food. Since Jordan is behind on some payments, Ramsey says he should “catch it up in the next check before you do anything else other than food.”

Third is covering your rent or mortgage. Jordan’s mortgage is $1,655 a month and is currently in a trial repayment plan, which means he has three months to get caught up. “Until you do that, I don’t care if repo man ever gets another dime,” Ramsey said.

Fourth is ensuring you have transportation to get to and from work so you can continue to make a living. Whatever is left over can be used to pay down the debt.

This “emotionally sets the table for you to fight these goobers,” Ramsey said.

Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

Dealing with debt collectors

Jordan’s first job, Ramsay said, is to take care of his own household because “you’re not going to make it emotionally if you keep putting these idiots at the front of the line because they threaten you.”

Ramsey says the repo agent’s job is to make you afraid because “that moves him to the front of the line.”

“I want you angry — and afraid of nothing,” he said. ”Once you’ve got your family covered, then you can fight like a man.”

If a repo agent is threatening to sue, Jordan can tell him he’ll have to file Chapter 7 bankruptcy, in which case the repo agent will get nothing — though Ramsey isn’t necessarily recommending that.

Only once Jordan feels financially and emotionally stable, “then and only then do we negotiate with other collectors.” At that point, he can negotiate an offer. Ramsey says debt collectors will typically settle for a quarter on the dollar for a cash offer.

“What you’re doing is you’re resetting the emotional table here to where we now know who’s in charge of your money and it’s you, not him,” he said, adding “these guys are specialists at emotional terrorism.”

Know your rights

Even if you owe money, you still have rights. The Federal Trade Commission’s Fair Debt Collection Practices Act (FDCPA) provides protections to consumers against unfair, deceptive or abusive debt collection practices.

Understanding your rights — and what debt collectors are and aren’t allowed to do — can help you gain some control over the debt collection process.

For example, debt collectors are allowed to contact you between the hours of 8 a.m. and 9 p.m. via text or email, even a direct message on social media. They can sue you for payment, try to charge you for old debts and charge interest.

But debt collectors aren’t allowed to lie about how much you owe or try to deceive you about who they are. If they’re harassing you, you could get a lawyer to send a certified letter asking them to stop contacting you and report them to the Federal Trade Commission.

If you owe money, you still have to pay back that money — but you should not be harassed or threatened during this process. And, you can refuse any offer a debt collector makes you. Once you negotiate a settlement that works for you, don’t hand over any money until you get the settlement offer in writing.