At some point, most Americans deal with the problem of debt. Student loans, mortgages, credit cards – it’s almost unavoidable. The average household debt is estimated at $15,204 and credit card debt is almost half of that at $7,093.
For those who fail to handle their payments on time, it’s only a matter of time before they hear from the mighty debt collectors, who work on behalf of creditors and lenders to get you to pay up.
Debt collection is a massive industry, generating about $13 billion annually, but it’s not without its issues. The Federal Trade Commission deals with hundreds of thousands of complaints about debt collectors every year.
If you currently have a debt in collections and don’t know what to do, here’s some key advice. Bottom line: You have rights and should practice them.
Harassment is Unacceptable
“By the time the average person receives a call from a debt collector, they’re already under some stress,” says Gail Cunningham, spokesperson for the National Foundation for Credit Counseling. “They know they can’t pay their bills and are araid to answer the phone. When they feel they’re being harassed, it really puts them on the edge.” Resolving the problem starts with knowing your rights as a debtor. The FTC enforces the Fair Debt Collection Practices Act (FDCPA) to protect consumers from unfair collection tactics. The law has tons of protections for personal debt, most notable are the following:
○ It limits collection calls to the hours between 8 a.m. and 9 p.m.
○ Collectors must send you written notice of a debt within five days after you’re first contacted about it
○ A debt collector may contact people that know you – except to find out your address, your phone number, and where you work.
○ Collection agencies must honor written requests for no further contact.
○ They also can’t threaten you with garnishment, imprisonment, bodily harm or verbally abuse you with harsh language.
The Calls Can Stop
“If you don’t want to talk to a debt collector over the phone, or think their calls are excessive, they’re obligated to honor written requests that they stop calling,” says Cunningham. “Even if you’re strapped for cash, send the request by certified mail so you have a receipt of it. Once the letter is received, they cannot call you again except for two exceptions: to tell you that you wont’ be called any further and to notify you if they intend to take action against you, like filing a lawsuit.” Cunningham cautions to remember that you’re not absolved of the debt and you’re still responsible for staying on top of it.
Collectors often dance around the FTC’s rules, Cunningham says. Some agencies go rogue, using whatever tactics they can to collect a debt. Still others find ways to skirt around the law without breaking it. “If you think a debt collector has crossed the line, report it to the FTC, the CFPB or your state attorney general,” says Cunningham. The agencies will be investigated and if evidence is found, they’ll be fined. Odds are, once the offending collector is clear that you know your rights and their tactics won’t work, they’ll stop.
Pay What You Can
At the end of the day, debt collectors are most interested in receiving a commission from money collected and are always open to discussing repayment. “Agree to what you owe, explain why you couldn’t pay it and, if you have the resources, explain what you can afford,” says Cunningham. She warns consumer not to over-promise, however. “Once you work out an agreement with a collector, it’s highly unlikely that you can work out another, so be realistic about what you can do with consideration to your finances as a whole. Know upfront that they’re going to press you for more but hold your ground.”
Photo Courtesy, stevendepolo.