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'We're not all the boogeyman': How this debt collector is trying to change his industry's bad rap

If your debt is becoming unmanageable, and you're worried about collections, here's advice from a debt collector who insists that they aren't to be feared.

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Jacob Corlyon of Capital Collection Management
Photo courtesy of Jacob Corlyon

Few things are as nerve-wracking as a call from a debt collector.

There are over 7,000 third-party collection agencies in the U.S., and if you fall 30 to 90 days (or more) behind on your bill payments, you will more than likely hear from one. By 2013, debt collections lawsuits accounted for about 25% of civil cases in state courts, which was up from roughly 11% in 1993, according to a 2020 report from Pew Charitable Trusts.

As of October, a new rule finalized by the Consumer Financial Protection Bureau (CFPB) lets debt collectors contact you not just by phone, but also by email, text message and social media platforms like Facebook, Instagram and Twitter.

That's a little alarming if you're already drowning in debt. But some debt collectors argue that you don't have to be afraid of these calls.

CNBC Select spoke to NY Collectors Association president and Capital Collection Management founder Jacob Corlyon, about how debt collectors can actually be helpful when you're stuck in debt and don't know what to do.

"We're not all the boogeyman," Corlyon says. While he admits his industry gets a bad rap for obvious reasons, he's determined to change the relationship debt collectors have with consumers.

Corlyon argues that he and his fellow debt collectors are here to bridge the gap between creditor and debtor. Ideally, you should feel OK asking collections agents for help in better understanding your balances, interest rates and available payment options when you're in debt.

But can we really move on from our past and see debt collectors as allies? Corlyon says yes, and ahead, he presents three arguments for how he's trying to change the bad perception of debt collectors:

1. Debt collectors aren't always desperate for your money

Lesson number one in reframing your view of debt collectors is understanding how they're paid. Most of the time, they have less skin in the game than your original creditor, Corlyon argues.

"We didn't extend the credit. We're not out of the money," he tells CNBC Select. "The creditor is the one that's waiting for that money to come in. We are brought in as the consumer advocate to work with the consumer and find a solution."

In other words, your debt collector also has to answer to your creditor. Debt collection companies often work on a contract basis for companies, and they want to keep the relationship friendly on all fronts. When you're happy and sticking to a repayment plan that works for you, their clients are also happy because the money they lent is being recovered, says Corlyon.

While debt collectors may not be desperate for your cash, they'll still employ all methods available to contact you. (Corlyon even admits that his company contacts debtors through social media.) As long as your debts are in default, you will likely receive frequent calls from collection agencies. And your credit score will be negatively impacted as well, when your delinquent accounts are reported to the credit bureaus.

So you have real incentive to work with the debt collector and figure out a plan to get your finances back on track.

"We want to come to some sort of solution that works for that person financially, as well as works for our clients," says Corlyon.

2. Everyone deserves empathy

Even if you're struggling with debt, you still deserve dignity and respect, argues Corlyon. He acknowledges that not every debt collector takes this approach, but this belief is the bedrock of his company.

"We're customer-centric," says Corlyon. "We're solutions-oriented. Our belief is that everybody should be treated with empathy and provided the concierge experience so that we can get them back on track and and get them back to our client in good standing."

If you currently have debt in collections, remember that you have rights. Ask questions if you don't understand your debt, speak up if the debt isn't yours and don't be afraid to set boundaries around when you may or may not be contacted. The CFPB provides a lot of resources when you're navigating debt collections, including scripts you can follow for what to say. You do have rights, and it's important to understand them before you agree to any repayment plan. Request your debt collector's help in designing a payment plan that works for your budget.

This educational, consumer-centric approach is both more human and more financially successful, according to Corlyon: "We collect for a very large fintech firm, and the recovery rate we were able to get them is 5.5 times the average recovery rate."

3. Facing debt is hard, but there are options

It's understandable why most people have negative associations with bills, debt and debt collectors — it can have a big impact on your livelihood, whether you're worrying about your credit score or keeping the lights on.

Yet, facing your debt head-on is really the only way to end the cycle. Overdue bills stay on your credit report for up to seven years, which can make it difficult to get a car loan, rent an apartment or even open a new credit card.

Aside from bankruptcy, which is an option for severe cases, the only way to get out of debt is to pay it off step by step.

You don't have to wait for a debt collector to call you up to get started, but if you do get an unwanted phone call from collections there are also a number of free tools available to help you get your money under control.

Corlyon's company provides free resources on its consumer education page, and the CFPB offers this script on what to say to make sure the debt collector who calls you is legit.

If you want to get a better handle on your finances, consider signing up for a budgeting app so you can get a sense of your monthly earning and spending.

The You Need A Budget (YNAB) app can help you get serious about debt payoff by mapping out a plan for every dollar. The popular free app Mint is also a good place to start as it will give you a big-picture overview of how your debt impacts your net worth.

Once you get a sense of where you stand, you'll want to come up with a debt repayment plan — with or without the debt collector's help. There's the avalanche method of debt repayment, or the snowball method, which helped this couple pay off $45,000 of debt in under two years.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.