4 Facts Creditors Don’t Want You to Know

There is nothing worse than the feeling of being trapped in debt and constantly being harassed by creditors urging you to pay. However, it is important to understand that you have rights, and there are laws in place to protect your financial well-being.

When it comes to debt collection, there are certain limitations creditors have that they must follow, and there may be certain actions you can take to eliminate your debt in a timely manner.

The following four facts are pieces of information you are likely to never hear from a creditor, but understanding these facts can help bring you peace of mind when it comes to forming a plan to get out of debt.

1. Debt Collectors Must Follow Rules

According to the Fair Debt Collections Practices Act, there are certain things a creditor cannot do when it comes to debt collection, that include:

  • contact you at unreasonable hours,
  • harass or threaten you,
  • make false statements,
  • misrepresent themselves,
  • threaten to seize your property or wages if you do not pay.

Any creditor who utilizes unfair collection tactics such as the ones mentioned above is at risk of severe legal penalties, and by understanding exactly what creditors cannot do, you can ensure they do not bother or harass you in a way that makes you uncomfortable.

If a debt collector does begin to harass you (which may be in the form of calling constantly while you are at your place of work, threatening to garnish your wages, or refusing to give out vital information pertaining to your debt) then you may be able to take legal action against them. At the least, you will be able to let the collector know that you are well informed about the FDCPA and recognize they are breaking laws in order to collect payments, which in many cases is enough to get them to quit calling as frequently.

Therefore, say no more to the days of constantly being harassed at unusual hours of the day, and be able to defend yourself against constant harassment from creditors.

2. You May Be Able to Settle Your Debt

Many creditors may play tough and insist on collecting their money, which leads many to fear even attempting to negotiate with them, but it is actually much easier to settle your debt than one may anticipate.

Creditors understand that debt is an issue that many people struggle with, and they understand that receiving full payments on every debt they are owed is simply unrealistic. Subsequently, many creditors are willing to negotiate with the one who owes the debt in order to at least get what they can.

By negotiating with creditors, you may be able to settle your debt at a much lower rate than you actually owe. Creditors do not like the actual process of collecting debt more than anyone else, and they simply want the process to be over just as much as the one who owes the debt does. Therefore, use the opportunity to your advantage and try and lower your interest rate, reduce your payments, or even settle the debt for far less than what is owed.

Many times it can seem as if creditors have every bit of the power when it comes to debt collection, and the one who owes the debt is utterly trapped with no way out. However, the one who owes the debt has rights and leverage as well, such as offering to settle the debt at once at a lower rate. Be sure to take advantage of your right and ability to negotiate, and try and find a best-of-both-worlds solution between you and the creditor.

3. Creditors Cannot Inflate What You Owe

One of the scare tactics of some creditors is to inflate your interest or simply add on to how much is owed. However, creditors cannot just inflate what you owe whenever they want to, especially if you have signed a contract.

In the event you have signed a contract with the creditor, which is almost always the case, they can only charge the interest rate that was established in the contract, and they cannot simply raise the interest rate due to a failure to pay. Of course, this means that it is very important to thoroughly read the contract or have a lawyer read the contract before agreeing. If the creditor tries to raise the interest or amount of debt owed without having the authority to do so, they are subject to serious legal trouble.

Creditors do not want you to know this as oftentimes their goal is to squeeze every penny they possibly can out of you. By understanding your rights, however, you can prevent foul play from entering into the agreement. Be sure to know the contract well and let the creditor know that you are well aware of your rights to prevent any unlawful threats.

4. Your Debt Is Confidential

Some of the more shady creditors may even try to contact those who are close to you to get you to pay, such as a neighbor, friend, or distant family member. However, your debt is confidential between you and the creditor.

In the event that your creditor attempts to contact someone outside of you or your spouse about your debt, let them know that you are well aware of the laws pertaining to debt collection, and you may even have the right to take legal action.

While many creditors are honest and respect the laws, any creditors who try and collect debts by using unfair tactics are subject to serious penalties. According to third-party disclosure laws, debt collectors are only allowed to contact third parties in order to try and locate you, and once they are able to do so their communication with the third party must stop immediately.

Therefore, if someone not involved in the contract is informed of your debt, especially the amount of debt you owe, they have broken laws under the FDCPA, and you now have the leverage in the situation to try and negotiate a better rate between yourself and your creditor.

Other facts that creditors would rather you not know

  • Your Interest Rate is Often Negotiable. Yup, you read that right. Ever felt like you’re being charged an arm and a leg in interest? That’s because you probably are. But here’s the inside scoop: interest rates aren’t set in stone. Lenders determine these rates based on various factors, such as credit scores and market conditions. If you’ve been a reliable customer or if your credit score has improved, why not try haggling for a better rate? The worst they can say is no!
  • Not All Debts Are Created Equal. Think of debt like ice cream flavors. Some are plain vanilla, and some are double fudge caramel deluxe. Secured debts (like mortgages) often have lower interest rates than unsecured ones (like credit cards) because they’re backed by collateral. It’s essential to prioritize paying off high-interest debts first to save on interest in the long run.
  • They Profit from Your Ignorance. Ever felt a sneaky fee pop up on your statement, leaving you thinking, “Wait, what’s this?” Creditors sometimes bank on the fact that most folks won’t read the fine print. So, do yourself a favor: Be that person who reads and questions unexpected fees. Knowledge is your wallet’s best friend.
  • Minimum Payments Can Be Traps. Making just the minimum payment might seem like a short-term win. But in reality, you’re playing the long game, and not in a good way. By only paying the minimum, you’re mainly covering interest and barely denting the principal. This approach can lead to prolonged debt and more money spent over time. Pro tip: Pay more than the minimum whenever you can.
  • They Monitor Your Financial Behavior. You know that feeling when you’re being watched? Well, in the financial world, you kind of are. Credit scores are the peephole creditors use to peep into your financial habits. Late payments, high balances, or opening multiple accounts in a short time can ding your score. So, always be on your best financial behavior!
  • Debt Settlement is an Option. Struggling to meet your payments? Before you throw in the towel, consider debt settlement. It’s a negotiation between you and your creditor to pay off debt at a reduced amount. But tread carefully. While it can be a lifeline, it can also impact your credit score, and not all creditors are open to it.
  • Your Data Might Be Sold. Here’s a creepy fact: some creditors might sell your financial data. It’s a business, and data is the new gold. The silver lining? Regulations often require them to inform you about this and give you an opt-out option. Keep an eye out for those data-sharing clauses and decide if you’re cool with it.
  • Their Customer Service Has Limits. Ever felt like you’re hitting a wall when speaking to customer service? While many reps genuinely want to help, sometimes their hands are tied by company policies. If you’re not getting a solution, consider escalating your concerns. Sometimes, a firm (but polite) approach can do wonders.
  • Not All Creditors Report to Credit Bureaus. Working hard to pay off that loan, hoping it’ll boost your credit score? Hold up! Not all creditors report to bureaus. If building or repairing credit is your goal, ensure you’re dealing with creditors who report your good behavior.
  • Some Charges Can Be Waived. Ever had a late fee or an annual charge pop up? While they may seem set in stone, sometimes these fees can be waived, especially if you have a solid track record. It never hurts to ask. The key? Be polite and highlight your history of being a good customer.



Credit can feel like a maze with creditors as the gatekeepers. But remember, every gate has a key. And sometimes, the key is simply knowing the secrets behind the door. Now that you’re armed with these facts, go out there, stay informed, and handle your financial journey like a boss!

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Founder's Guide
A licensed financial advisor, a former bank manager with more than 10 years of experience in financial & global market. Passionate about fitness, businesses, stock trading and investing, the economy and how it impacts our lives.