Stop Debt Collectors RIGHT NOW!
It wasn’t too long ago when debt collectors regularly bullied and intimidated debtors. These debtors were under the false impression that they would go to jail if they did not pay their bills. Their friends and family members were interrogated and threatened for information on the debtors’ whereabouts, and people who didn’t pay their debts were exposed on lists published by debt collectors.
Now, such abusive actions are considered illegal, thanks to the Fair Debt Collection Practices Act (FDCPA). When you’re dealing with a debt collector, you should form a plan and stick with it. There’s a number of options which we’ll review.
Dealing With A Debt Collector
One choice you have–and this is if you have no money, choose not to pay right now, or plan to file for bankruptcy–is to just refuse to talk with the collector. You can simply request that a debt collector stop contacting you. However, many credit counselors will tell you that the best route is to engage the collector.
Ignoring the debt or trying to hide from the collector could make matters worse. Usually, the longer you put off the issue, the greater the repercussions. If you really need more time to pay your debt, you can negotiate a payment schedule with the debt collector; but keep in mind that they are not your friend and only want your money, even if they appear nice.
Creditor Vs. Debt Collector
The first key step to understanding your rights when dealing with a debt collector is to know and remember the difference between the creditor and the debt collector. It’s important to understand this distinction because the federal law regulating debt collectors doesn’t apply to original creditors. The exception is when creditors take steps to act like third-party collectors.
A creditor is a person or company who first loaned you the money or extended you credit. It can also be another company your debt was transferred to. This does not include a company who has taken over debts after they are in default, solely for the collection of the defaulted debts for the creditor.
A debt collector, also known as a third-party collector or collection agency, is someone whose main business is collecting debts for others. Under the FDCPA, this term also includes:
- Any company that purchases defaulted debts for the purpose of collecting them
- A creditor that collects its debts under a different name or by sending letters signed by lawyers
Several states have debt collection laws that apply to BOTH creditors and debt collectors.
There’s a standard pattern in which efforts are made to collect past-due unsecured bills. First, original creditors try to collect their own debts. This starts with a series of letters or phone calls from the original creditor’s customer service or collections department.
When you owe money, most creditors make the first contact about a few weeks after you miss a payment. But some creditors are more aggressive and begin tough collection efforts within 24 to 36 hours after a missed payment. If you don’t respond to calls or letters, or if you have unsuccessful negotiations, usually creditors will hire a debt collector or sell your debt to a collector, and your debt is written off as a bad debt.
What To Expect When Your Debt Is Sent To A Collector
When you understand how debt collectors tend to operate, you’ll know what to do when they contact you. One point to keep in mind is that debt collectors move quickly. Expect to hear from a collection agency as soon as your debt is passed from the original creditor.
Debt collection is a lucrative business, and agents earn commissions for results. This is why they may try to bend the law and put a lot of pressure on you. Collectors are also choosy, evaluating the likelihood of success and prioritizing certain accounts.
How Debt Collectors Find You
Don’t assume that just because a debt collector calls or writes you, they know where you live. This especially applies if you’ve moved since you started dealing with the original creditor. The only thing a debt collector knows is that they left you a phone message or mailed a letter, and received no response.
With that being said, debt collectors often find you by relying on information you have voluntarily given someone. One example is they can get your credit application from the original creditor or just access your credit report. One of the most common tactics they have is buying information from data aggregators.
Under the FDCPA, one of the most powerful tools you have is the requirement of verification. This is where you can require a debt collector to verify the validity of the debt and the amount. This is only useful if you act quickly once the debt collector contacts you.
Usually, when the debt collector makes their first contact with you, they’ll give you the amount of the debt and to whom it is currently owed. You are notified that you have 30 days to dispute the debt. If you don’t respond and dispute the debt’s validity, the collector will assume the debt is valid.
If you do make a written dispute about the debt within 30 days, the agency must send you the requested verification. Within the same time frame, a written request for the name and address of the original creditor must also be fulfilled, if different from the current creditor.
A written request for verification means the collection agency must stop its collection efforts. They cannot be resumed until the debt information is double-checked with the original creditor and you are provided with the requested information.
Asking The Creditor To Take Back The Debt
If you are willing to negotiate on a debt, you’re probably much better off talking to the creditor rather than a collection agency. This is mostly because the creditor has more flexibility and discretion in such negotiations. Plus, they may see you as a former and possibly future customer, thus valuing the relationship.
To begin negotiation, ask the debt collector for the contact information of the collections department of the original creditor. Call and ask if you can negotiate the debt. While it’s rare, it’s ideal for the creditor to immediately try to negotiate with you; but it’s more likely they will ask you to negotiate with the collection agency and set up a repayment plan.
Whatever you do, make sure any agreement you reach is put in writing, preferably in the form of a letter from the creditor to you.
Illegal Debt Collection Practices
The following are prohibited under federal law:
- Communications with third parties: A collection agency cannot contact others about your debt.
- A debt collector cannot contact you at a time or place they know (or should know) that it would be inconvenient for you. This includes while you are at work or before 8 AM and after 9 PM.
- Harassment or abuse: This includes threats of violence or harm as well as the use of abusive language. It also entails listing your debt for sale to the public.
- False or misleading representations
- Unfair practices
If a collection agency violates the law–on a state or federal level–you may be able to sue the agency in small claims or regular court. If the agency sues you over the debt, you can bring up their violation. Another option is to complain to the original creditor, which in turn may lead to an offer to reduce or cancel the debt.
A violation on the part of the collection agency means you can also complain to the FTC, CFPB, and the state agency in charge of regulating debt collection agencies in your state.
Dealing with debt collectors can be a hassle, but if you understand the situation and adopt a plan, you can minimize the problem. There are different steps you can take, but whatever you do, make sure you understand the law, get everything in writing and stick to your plan. Don’t allow debt collectors to mislead, harass or intimidate you.