Dealing with Debt Collectors

Dealing with Debt Collectors
Don’t. If you end up with a couple of missed bills and a warning letter comes in the mail by a collections agency or debt collectors contact you via phone, it’s in your best interest to quickly rectify the situation by paying up. However, you don’t usually have to deal with them – it’s much faster and easier to deal directly with your creditor than the usually less-than-pleasant debt collectors.

Three simple steps to quickly resolve a legitimate debt situation that goes to collections:

• Don’t call the debt collection agency. Call the creditors directly and make the inquiries to them.
• To the company whom you owe money, let them know your bill is in collections, then give a reasonable excuse for this unfortunate eventuality. They’re usually pretty forgiving (even with the “dog ate my payment” excuse) because they really just want to resolve the situation and get paid!
• Then, offer to pay up immediately (over the phone, via credit card) and ask them to retract the bill from collections. No questions asked. Moving forward, pay the credit card bill in full afterward.

Ignoring Debt Collectors?
Don’t. Unless you're "judgment-proof" (that is, broke) or plan to file for bankruptcy, most credit counselors believe that you shouldn't ignore your debt or try to hide from a debt collector. Generally, the longer you put off resolving the issue, the worse the situation and consequences will become. Whether you negotiate directly with the collector or creditor or obtain a lawyer's assistance, most counselors feel it is almost always best work out a mutually satisfactory arrangement and not let the situation worsen by ignoring it.

Debt Collection Laws
But the ending may not be as positive for those who are regularly late with their bill payments, or for those who’ve missed or avoided paying their bills altogether, since they’re up against a formidable force with professional debt collectors. Sometimes those who haven’t had any trouble with their payments for some time or who may have forgotten an old debt many years ago may sometimes find themselves getting contacted out of the blue by someone who is dead set in retrieving their money. You never know, loans and debts can be bought and sold, so they may resurface to haunt you later.

According to the FTC debt collectors are the number one complaint they receive from consumers. We believe them. Debt collectors may start to mercilessly hound you if you become inexcusably late on credit payments, either because you lost your job and can no longer make payments, or lost your money in some other unfortunate situation. However, you as a citizen should know your rights and what you can do to deal with unscrupulous collection agency tactics.

Fair Debt Collection Practices Act - FDCPA
The Fair Debt Collection Practices Act is very important to be familiar with, as it sets the rules and regulations that all debt agencies must follow. The most important rules being the ones collection agencies cannot do.

Debt collectors CANNOT: You are allowed to ask the debt collector for proof of your debt breakdown within 60 days of the collection notice. Remember to always take notes and keep track of any information a collector gives you in order to secure you from violations or a court case.

Visit the FTC site for complete details on the Fair Debt Collection Practices Act here

Stopping Debt Collectors
If a collector contacts you about a debt, you may want to talk to them at least once to see if you can resolve the matter – even if you don’t think you owe the debt, can’t repay it immediately, or think that the collector is contacting you by mistake. If you decide after contacting the debt collector that you don’t want the collector to contact you again, tell the collector – in writing – to stop contacting you. Here’s how to do that:

Cease and Desist Letter
A written request to stop all communication with a debt collector is all you need to call it quits. It’s called filing a “cease and desist” claim, which states that the collection agency must not call you or contact you under any circumstances. (Keep in mind that the original creditor, from where your debt originated, is allowed to contact you whenever they please.)

Sample Cease and Desist Letter
Date

Your Name
Address
City, State Zip

Debt Collector’s Name
Address
City, State Zip

Re: Account Number

Dear Debt Collector:

Pursuant to my rights under federal debt collection laws, I am requesting that you cease and desist communication with me, as well as my family and friends, in relation to this and all other alleged debts you claim I owe.

You are hereby notified that if you do not comply with this request, I will immediately file a complaint with the Federal Trade Commission and the [your state here] Attorney General’s office. Civil and criminal claims will be pursued.

Sincerely,

Your Name

Make a copy of your letter. Send the original by certified mail, and pay for a “return receipt” so you’ll be able to document what the collector received. 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. Sending such a letter to a debt collector you owe money to does not get rid of the debt, but it should stop the contact. Note: The creditor or the debt collector still can sue you to collect the debt. Use this option only if you are certain they are contacting you by accident, or if you just want to stop the harassment and are planning to pay up.

If indeed end up getting a lawsuit against you to collect a debt, respond to the lawsuit, either personally or through your lawyer, by the date specified in the court papers to preserve your rights.

Report Debt Collection Violations
If you feel you have been violated by a collection agency committing fraud, you can report any problems you have to your state Attorney General’s office (www.naag.org) and the Federal Trade Commission (www.ftc.gov). Many states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act. Your Attorney General’s office can help you determine your rights under your state’s law. Also, visit our dealing with fake debt collectors page.

You have the right to sue them in a state or federal court within one year from the date the law was violated. If you win, the judge can require the collector to pay you for any damages you can prove you suffered because of the illegal collection practices, like lost wages and medical bills. The judge can require the debt collector to pay you up to $1,000, even if you can’t prove that you suffered actual damages. You also can be reimbursed for your attorney’s fees and court costs. A group of people also may sue a debt collector as part of a class action lawsuit and recover money for damages up to $500,000, or one percent of the collector’s net worth, whichever amount is lower. However, even if a debt collector violates the FDCPA in trying to collect a debt, the debt does not go away if you owe it.