Tick-tock debt: Law gives 30 days to respond to collector

Sending letter asserts rights to verify, dispute debt


Let's Talk Credit
Let's Talk Credit columnist Jane E. McNamara
Jane E. McNamara is president and chief executive officer of GreenPath Debt Solutions, a nationwide, not-for-profit, providing financial literacy through consumer education and counseling for more than 50 years. For financial literacy tips and assistance visit GreenPath on Facebook or YouTube.
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Question for the expert

Dear Let's Talk Credit,
I have gone through some financial difficulty over the past year and a half and I am behind on some of my credit payments. I received a letter today from one of my credit cards stating that my account has gone into collections, that the collection agency will now be handling my account and that I should call to make arrangements. It also states that I should write a letter within 30 days. I do not know what I should and should not do. I can't afford to pay the entire balance, which is $6,093. Any advice and suggestions will be greatly appreciated. Thank you. -- Patty

Answer for the expert

Dear Patty,
I am sorry to hear about your financial difficulties. You are wise to determine how to proceed now that your account is in collections. Many people in your shoes choose to ignore the problem and by doing so make it worse.

First, the 30-day letter writing notice is likely applicable if you dispute any part of the debt. For example, if you do not agree with the total amount owed, or if it is not your account, you would need to write to the collection agency within 30 days to verify a debt's validity, and to dispute it if there are errors. The 30-day notice is an important right granted under the Fair Debt Collection Practices Act. If you don't dispute it, the debt will be considered valid. The Consumer Financial Protection Bureau has issued debt collection sample letters to help you craft a response.

How you decide to proceed will depend on whether your current financial situation has improved enough to make payments on the debt. The first step is to determine how much you can realistically afford to pay monthly. Once you know what you can actually afford to pay, then you are ready to contact the collector to negotiate repayment.

Should you need help making room in your budget to pay this account, you might consider contacting a nonprofit credit counseling member of the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling. A certified credit counselor can make recommendations on how to trim your expenses and may be able to negotiate better options with the collector on your behalf.

If you decide to communicate with the collector to work out payment, be sure that you stick with the amount you have determined you can afford to pay. Sometimes the collector will press for a higher payment, but agreeing to a payment that you cannot sustain throughout the agreed upon period will not solve your problem.

The important thing to remember is that you have a large debt that is owed and the sooner you work out the best plan to pay it, the faster you can move on to a brighter financial future.

Let's keep talking!

See related: 11 tips for dealing with debt collectors, FTC: Debt collectors go hunting with skimpy info

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Published: June 12, 2014

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