With more than one-third of Americans in debt to some degree, interactions between debt collectors and average Joes are on the rise. Each week the news headlines are filled with articles about consumers being tricked into paying more than they owe or generally suffering harassment at the hands of debt collectors. If you are one of the more than 100 million Americans with debt, you need to know how to handle yourself during these interactions so that your rights are protected and your finances aren’t subject to even more strain.
In the following paragraphs you’ll learn about the top 14 ways you can deal with debt collectors, including a few tips that debt collectors don’t want you to know. Education is the first step in successfully handling phone calls and other interaction with collectors.
#1 - Keep Your Cool
It’s never comforting to receive a phone call from someone you don’t know asking for your money. The average debt collection call is an attempt to assess your ability to pay. In many cases, the debt collector will try to throw a lot of information and numbers at you in hopes of confusing you. The goal of this tactic is to get you to agree to things that you shouldn’t, such as payments to a third party to satisfy your debts.
When this first conversation takes place, it is vital that you keep your cool. Take a deep breath and avoid getting flustered, and at the same time avoid getting heated with the debt collector. Adopt a business-like approach to the conversation and keep that first call short. Consumer credit laws in the United States require collection agencies to provide written notice of how much you owe within five days of making that initial contact. So, keep that call short and only engage the collection agency after you’ve had a chance to review that written notice.
#2 - Verify the Debt is Actually Yours
One of the primary reasons for keeping your cool and awaiting that written notice is to ensure that the debt you are being harassed about is actually your debt. In some cases, rather intentionally or accidentally, debt collectors contact the wrong person. The worst thing you can do is allow yourself to be bullied into paying debt that isn’t yours. If the debt you are being asked about by a debt collector doesn’t sound familiar, maintain that business-like composure during the call, and check your credit report after the call ends.
Remember, you are entitled to one free credit report each year from the three major credit bureaus. If you haven’t taken advantage of that, do so, and scan your credit report for incorrect data regarding the accounts mentioned by the debt collector. Even if you’ve already requested a report, it may be worth the cost to ensure that the debt collector is wrong.
#3 - Ask Debt Collectors for Proof
You’ve kept your cool and verified your debt, now it’s time to go on the offensive a bit. If you believe that the debt is incorrect or inaccurate and you wish to dispute the collection attempt, it’s time to send a dispute letter. Your dispute letter needs to spell out clearly that you will not pay the debts and why. Provide all the supporting information you have to back your position. Remember though, never send original documents in support of your case. Send your dispute letter via certified mail, and then notify each of the three major credit bureaus of the error, sending documentation along as well.
However, if you have found that the debt collection calls regard legitimate debt, there are more tips below that will help you in your continued interactions with debt collectors.
#4 - Know Your Rights
The Fair Debt Collection Practices Act limits the amount and type of contact that debt collectors can have with you. Under the FDCPA, debt collectors cannot call you before 8 am or after 9 pm, may not use threatening or abusive language, and may not contact your family, friends, and coworkers with specific information about your debt. If this has happened, you have the right under American law to make an oral request on the phone that the debt collector no longer contact you. Additionally, it is advisable that you submit a written request as well. From there, you can also file a complaint against the debt collector with the Consumer Financial Protection Bureau.
#5 - Record Phone Conversations
One of the greatest weapons you have in your arsenal are the very words the debt collector might use to threaten or coerce you to pay any and all debts. Whether a debt collector has called your home phone or mobile phone, record the conversation to catch the debt collector in the act of breaking the law. Keep in mind that some states require permission of both parties when recording a conversation. With that said, it is generally a good idea (regardless of where you live) to advise the debt collector at the outset that you are recording the conversation. In most cases, a debt collector who knows they are being recorded is much less likely to overstep knowing that evidence of wrongdoing is then in your hands.
#6 - Resist the Scare Tactics
Debt collectors thrive on misinformation and scare tactics in an attempt to bully you into paying debt that is inaccurate, be it the amount owed or the individual who owes it. In addition to standing firm on your rights under the FDCPA, as mentioned above, it is important not to cave in because it could open you up to prolonged contact from debt collectors and the ensuing stress. If you admit to owning the debt in question and agree to make a payment (full or partial), you may unknowingly be restarting the statute of limitations on your debt. A common approach by debt collectors here is to threaten a lawsuit to collect money owed.
#7 - Investigate the Statute of Limitations on Debt
Debt collectors aren’t going to inform you of the status of your debt. Believe it or not, there is a statute of limitations on all debt. This can range from 3 years for some forms of debt, to as much as 10 years for credit card debt. The statute of limitations on debt differs from state to state, so start by learning the laws that impact debt in your state. Once you’ve discovered this, you can determine if your debt is still valid or not. Debt that has passed the statute of limitations cannot be collected through a lawsuit.
Keep a few things in mind here though. First and foremost, a debt collector can still attempt to sue you for that debt. However, if you show up to defend yourself in court you can provide the judge with evidence that the debt in question has passed its statute of limitations. Under the FDCPA, debt collectors cannot sue you to collect on debt that is passed its limitation debt.
Also, remember that just because a debt has passed its statute of limitations doesn’t mean it won’t impact you still. You still owe that money to a creditor and it will still negatively impact your credit score, but collectors are not allowed to threaten you with a lawsuit.
#8 - Don’t Bury Your Head in the Sand
On a related note, it is important to acknowledge any and all notices you receive from a debt collector, especially notices of litigation. In the previous example, if a debt collector attempts to collect on old debt through litigation and you ignore the legal notice, you’ll likely pay a financial price for that decision. If a lawsuit is brought against you and you fail to show up and represent yourself, the judge is highly likely to pass a judgement in favor of the debt collector because you didn’t provide evidence to the contrary.
In this case, your paycheck may be docked to repay the debt, your bank accounts frozen, or your tax refunds diminished. The worst thing you can do is ignore the debt collectors altogether and pretend there isn’t a problem. Even if the debt isn’t yours, ignoring communication from the debt collector can result in inaccurate information being reported to the credit bureaus.
#9 - Watch Out for Fees
When you sign a contract to take out any type of credit, be it a loan or new credit card, you are agreeing to interest rates for overdue payments in the event that you do not make your payments on time. However, debt collectors profit by charging exorbitant fees at times for interest. Most states in the US have laws in place that cap the amount of interest that a collection agency can charge on your debt.
In this instance, it is important that you check the balance listed as “charged off” by your original creditors to ensure that aren’t paying outrageous fees in the event that you decide to settle with the debt collector on your own.
#10 - Negotiate
Although it is not recommend, if you decide to work with a debt collector to pay down your debts, there are a number of critical tips that you need to keep in mind. First and foremost among those tips is negotiation. The debt collector’s number-one job is to make as much profit as possible on your debt repayments. As such, the collector will push you to make a payment in full now to avoid more interest. Avoid making a full payment at all costs.
If you decide to go this route, negotiate with the debt collectors to establish a payment plan that you can afford. If you get the collection agency to accept the terms of your repayment, ensure that you receive confirmation of that repayment plan in writing, including the total amount to be paid, to avoid any problems in the future.
#11 - Focus on Newer Debt First
Again, it is not recommended that you immediately jump to establishing a repayment plan with a debt collector. However, if you feel that you can afford to do this and it is the route you choose, make sure you focus on newer debts first. As mentioned earlier, if you have older debt with an expired statute of limitations, there is really nothing the debt collector can do to you. If they continue to call, you can ask them to stop calling. If they file a lawsuit, it will be thrown out immediately if you can in fact prove it is too old to collect on. Most importantly, older debt has a lesser impact on your credit score than newer credit.
Should you decide to establish a repayment plan with a collection agency, focus on paying off newer debts. These accounts have a greater negative impact on your credit score, and paying them off at an affordable rate will improve your credit standing much sooner. On top of everything else, most older debts drop off your credit report seven years from the delinquency date, further reducing the urgency of dealing with that debt.
#12 - Never Provide Bank Account
One last point regarding repayment plans; never provide the debt collector with your bank account information. You should never pay with a check or authorize an electronic withdrawal directly from your accounts. This not only provides the debt collector with your bank account number and routing number, but also makes it too easy for debt collectors. Insist on paying your debts using a third-party service, such as a money order, that provides the same proof of payment without putting your financial accounts at risk.
#13 - Get Debt Management Assistance
If you’re going to follow the debt repayment path, consider working with an accredited counseling agency. The Federal Trade Commission recognizes two major agencies with legitimate credit counseling services, the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies.
When you work directly with a debt collection agency without representation, you are the only one working to protect your rights and financial security in establishing a repayment plan. Working with a debt management and credit counseling agency puts a partner in your corner who can help you work out an affordable payment plan that doesn’t bust your budget in the process. The FTC does recommend that consumers avoid working with for-profit credit repair companies.
#14 - Seek Legal Advice & Assistance
Finally, it is also a good idea to seek out legal advice in the face of relentless contact from debt collectors. Whether the debt is accurate or inaccurate, and the contact legal or illegal, having legal expert in your corner with expertise in America’s consumer credit protection laws is the best way to ensure that your rights are protected throughout the process.
If the calls from debt collectors become too much to handle, the inaccuracies start to pile up, and you feel overwhelmed, an attorney can help you sift through all the nonsense to get to the bottom of the situation. You can meet with an attorney to discuss the situation, analyze your credit report to determine the validity of a debt collector’s claim, and file disputes when necessary. Further, if you find yourself in the midst of a lawsuit over debt with an expired statute of limitations, a legal expert in your corner will be able to help you fight off the lawsuit by definitively proving the legitimacy of your claim.
Let Vullings Law Help
There’s no need to continue living with the stress of endless debt collection calls. The legal team at Vullings Law has the experience needed to help you put an end to the calls, clear up the errors on your report, and defend you against erroneous lawsuits in a court of law. When you encounter a debt collector that is aggressive, threatening, or flat-out wrong, give the lawyers at Vullings Law a call.
We offer a personal consultation session in which we sit down with you to review your case. We’ll help you go over your credit report to determine the validity of the debt collector’s claim. If we determine that the debt collection efforts are the result of errors on your credit score, we’ll prepare the dispute letter to send to the collection agency and the credit bureaus. Moreover, we’ll monitor the progress of your claim so you can get back to living your life.
In the case of threatening, aggressive, or harassing behavior, we’ll help you go on the offensive. Vullings Law partners can prepare and submit a lawsuit against the offending collection agency to put an end to the contact between the debt collector and you. Last but not least, if you need representation in the event that you are sued over outstanding debt, we’ll stand by your side in a court of law.
Contact Vullings Law today to learn more about the services we can provide, and get back to living your life free of the debt collection calls that generate stress and anxiety.