How to make your life smooth while you deal with debt collectors
Are you continuously getting pestered with calls from debt collectors to pay the money you owe? Don’t panic. It’s a situation which many of us face at some point in life. Dealing with them can be damn annoying but ignoring them can put you at risk. Sometimes, in a desperate run to get the money, they may resort to illegal tactics that could put your property and life at risk.
Who are the debt collectors? Why are they contacting you?
Debt collectors are professionals in charge of collecting debts on a regular basis. They include collection agencies or lawyers who collect the debt as part of their job. There are companies that purchase past-due debts from creditors or other businesses and then collect them. These debt collectors are known by different names like debt collection agencies, debt collector companies, or debt buyers.
There are several reasons for a debt collector to try and contact you:
- The creditor finds out that you have past payments to make. Creditors may appoint their own in-house debt collectors or may refer and sell your debt to another debt collector.
- A debt collector may also call you to get the contact details of someone you may happen to know.
- The debt buyer has purchased the debt and is now hiring collectors to collect the debt.
How to deal with debt collectors when they contact you
Having debt in collections is a matter of concern for many. It is because debt collection companies assert the power to sue you if the debts are not paid on time. As a consumer, your first step is to understand how the process of debt collection works and what rights you can exercise in the process. That’s why there’s a detailed account on tips to know when you are dealing with a debt collector. Follow these tips to get a clear understanding of the debt collection process.
10 Tips for Dealing with debt collectors
- Learn about your rights Under the Fair Debt Collection Practices Act (FDCPA), a common man can educate himself about his rights. The U.S. Federal Trade Commission has several publications designed to educate consumers about their rights.
For instance, if you are facing harassment and continuously getting irritating phone calls and threats, and the collector uses abusive language, then you should immediately report to the U.S. Consumer Financial Protection Bureau (CFPB) and your trusted attorney.
Submit a complaint to the CFPB on its website or call them right away.
- Get your head out of the sandIf you are getting letters or phone calls about debts or court notices about debt lawsuits, then do not ignore them.
The law allows consumers to send written complaints about the verification of their debt within a span of 30 days of being contacted by a debt collector. Don’t waste time if the debt isn’t yours.
Debt collectors can also report negative information to the credit bureaus, which can be in your report for seven years and adversely affect eligibility for getting loans, car insurance, and even jobs.
- Consult a consumer lawyerA consumer lawyer comes into the picture when you are served with a notice of a lawsuit and you are left with no option but to approach an attorney. The consumer lawyer will represent you in court.
Consumers who lose court judgments can have their wages garnished. Some suits are filed by debt collectors only.
It so happens that often a creditor based on scanty information wins the judgment when there is no party appearing in the court to refute the sufficiency of the evidence.
Spectators have observed that there are high chances of having the lawsuit dismissed in court if you are present there and have a representation.
- Maintain copies and keep a recordExperts believe that you should have a copy of the documents as you keep other important documents like tax documents. Some also advise that they should be kept until the expiry of the statute of limitations for that state (where the original purchase was made) or your home state, whichever is more time-consuming.
- Protect your bank accountsDebt collectors can file lawsuits against consumers for nonpayment of debts.
One of the recommended court-ordered options for collecting debts is to freeze savings or checking accounts. This can be a difficult situation for family budgets and cash flow, which is why experts advise having separate bank accounts for funds such as Social Security or disability checks, which are exempt and cannot be utilized for court-ordered debt payments.
Debt collection efforts could be put on hold if collectors are informed about the status of your bank account, which is when it contains only exempt funds. Also, if you file for bankruptcy, the debt collectors will not disturb you.
- Do not reveal your bank detailsSome experts recommend that consumers should refrain from giving access to their bank account and routing numbers.
Instead, use a third-party service or make payments with money orders so that there’s proof of payment but avoid it through a personal check. It is better not to make electronic withdrawals from bank accounts.
- Inform the collectors about their actsIf you are facing harassment through abusive language or threats on your phone, it is time to act boldly. Record the conversation and document it.
If you inform the creditors that their conversation is being recorded, then they will act cautiously. This will compel collectors to stay within the bounds when they know the tape is rolling.
- Get into the discipline of signing agreements Before sending any payments to the collectors, it is always advisable to make agreements for debt collection. You can write and get it approved by a representative of the debt collection company before sending in any payments.
This does not give rise to any misunderstandings about the amount to be paid or the time period to make payments.
- Save your mail Letters can be lost and emails can get deleted.
Therefore, most experts recommend sending all details to the debt collectors via certified mail; some suggest asking for a return receipt as proof that your letter was received by the collectors.
- Negotiate and settle your debtsConsider negotiating with the debt collector if you have some cash to negotiate or if you are thinking of changing the payment terms. Most debts that go to collection agencies include unsecured debts like telephone bills, medical debts, credit cards. If you decide to make a lump sum offer, there is no general rule by what amount your debt will get reduced.
Some may want 70-80% of what is owed by you. Others can settle for 50%. Whatever the situation is, the tip is not to settle for more than what you can afford.
It is evident that you will come in contact with debt collectors if your debts are long due. What really makes the difference is how you tackle their harshness and turn it to your advantage. If you are a man of words and can really provide them with valid reasons as to why the debts did not get cleared, the ball can be in your court. So don’t lose hope, you can win the battle and stay out of debts.