Dealing with Debt Collectors

First and foremost, if you borrow money you should pay it back. At some point in time most of us will fall into trying times which can make paying bills difficult but everyone deserves to be treated fairly and with dignity.

Ask for verification of the debt. By law, the agency must verify the debt within five days after it initially contacts you. If they don’t, then they can no longer attempt to collect on that debt or report it to the credit report agencies. If they do verify the debt, you can either provide them with evidence that disputes their claim or negotiate to pay the debt. If the debt is being collected by someone other than the original company, you will also want to verify that the company contacting you has the right to collect on it, even if you know you owe the original debt.

Be proactive with your debt to avoid it being sent to a collection agency. If you are having difficulty paying a creditor, work with them directly to negotiate a payment plan before the account is sold off to a third party debt collector.

Don’t hide. Don’t ignore the phone calls and letters from debt collectors. Even If the debt is not yours and you do not notify the debt collector, they can place negative information on your credit report that remains there for 7 years.

Keep Records of all actions. If you send any letters to the debt collectors, do via certified mail with a return receipt. Tape any phone calls between you and the collection agency. Most states allow you to secretly record the conversation. However, some states require you to inform the other party before recording. Keep notes regarding the time and date of calls, the name of the caller and the name of the agency. Get any agreement in writing and review it before you agree or send a payment. Keep copies of your records as long as possible.

Know when they can and cannot call you. A debt collector may not contact you at inconvenient times or places, such as before 8 in the morning or after 9 at night, unless you agree to it. Debt collectors may not contact you at work if they’re told (orally or in writing) that you’re not allowed to get calls there.

Stop the debt collector from calling you. You can, in writing, ask the debt collector to stop contacting you. You will need to write the letter (keep a copy for your records) and send the letter by certified mail and pay for a “return receipt” so you’ll be able to document when the collector received it.  and by law If you want to have a debt collector. Once the collector receives your letter, they may not contact you again, with two exceptions: a collector can contact you to tell you there will be no further contact or to let you know that they or the creditor intend to take a specific action, like filing a lawsuit.

A debt collector cannot garnish your bank account or paycheck, but a judge can. If you don’t pay a debt, a debt collector can sue you to collect. If they win, the court will enter a judgment against you. The judgment states the amount of money you owe and allows the creditor or collector to get a garnishment order against you, directing a third party, like your bank, to turn over funds from your account to pay the debt. Wage garnishment happens when your employer withholds part of your paycheck to pay your debts. Your wages usually can be garnished only as the result of a court order. Don’t ignore a lawsuit summons. If you do, you lose the opportunity to fight a wage garnishment.

A debt collector cannot inform anyone else about your debt unless you give them permission, don’t. This does not include your attorney, the creditor, the creditor’s attorney, credit reporting agencies, your spouse and your parent (if you are a minor).

A debt collector cannot threaten to take action that they cannot or will not take. These included: having you arrested, garnish your wages, Filing a lawsuit against you (if past the statute of limitations), seize your property, putting a lien on your property or get you fire from your job.

The statute of limitations. This is the amount of time that you can be held legally responsible for your debt. This statute of limitation varies from state to state and it can range from three years to 15 years and you can easily find it on-line or contact your Attorney General Office. It is important to understand this because you can restart the statute of limitations on your debt if you: Acknowledge that the debt is yours (in some jurisdictions), promise to make a payment, make a payment on the debt, enter a payment agreement or make a charge on that account or open a new account with that company.

Negotiate with the Debt Collectors if you are sure that the debt is yours, that the agency has the right to collect it and that the amount is accurate. Below are some tips to use when negotiating the deal:

  • Before making any type of payment, make sure you get the agreement in writing.
  • Request that the creditor delete the account from your credit report. However, this will only remove the collection account from your report, not the original credit or account
  • Offer the debt collector less than you can afford
  • If they won’t agree to remove it from your credit, insist that they mark the account “paid in full,” even if you’re paying less
  • Don’t rush this process; make sure you feel 100% comfortable with the outcome.
  • Negotiate at the end of the month, when collectors are more likely to want to make a deal.
  • Never allow a debt collector direct access to your checking account. If you’re sending money, it’s better to do with a money order that a personal check.
  • If you do pay by check, write on it “Cashing this check constitutes payment in full.

If at any time you feel that your legal rights have been violated, you should file a complaint to the Federal Trade Commission. A letter of complaint can be sent to:

The Consumer Response Center at Federal Trade Commission

CRC-240, Washington, D.C. 20580.

You can also call toll-free 1-877-FTC-HELP (1-877-382-4357) or use its online complaint form at www.ftc.gov/ftc/cmplanding.shtm

You should also send a letter to your state attorney general’s office, your local office of consumer protection and the Better Business Bureau.

Thursday, January 7th, 2010 Debt

1 Comment to Dealing with Debt Collectors

  1. […] This post was mentioned on Twitter by MoneyWise. MoneyWise said: Updated an old post: Dealing with Debt Collectors http://ping.fm/0PYVE […]

  2. Tweets that mention Dealing with Debt Collectors | MONEYWISE Lifestyle -- Topsy.com on April 14th, 2010

Leave a comment