10 tips for dealing with debt collectors, collection
It's something most consumers dread
-- a debt collector calling to ask about an unpaid credit card debt, past due
student loan or medical debt.
Consumer credit counselors, debt
collectors and state regulators all agree that ignoring debt collectors' letters
and phone calls is a bad idea. Deal with it, they say, otherwise matters can
only get worse.
The best advice is to avoid debt
collectors altogether. If you see trouble coming with debt, try to negotiate
with the original creditor and work out a reasonable payment arrangement before
the debt is sold to a third-party debt collector.
If that's not possible or it's
already too late, experts offer the following 10 tips for dealing with debt
1. Educate yourself about your rights. The U.S. Federal Trade Commission (FTC) has several
publications designed to educate consumers about their rights under the Fair Debt Collection Practices Act. Harassing and nuisance phone calls,
threats and abusive language are illegal and should be reported to the U.S. Consumer Financial Protection Bureau (CFPB)
and your state attorney general's office. Find your state attorney general through the National Association of Attorneys General. Submit
a complaint to the CFPB via its website or by phone at 855-411-2372.
your head out of the sand. Don't
ignore letters or phone calls about debts or court notices about debt lawsuits.
The law allows consumers to send written requests for verification
of debt within 30 days of being contacted
by a debt collector. Don't dawdle if the debt isn't yours: Debt collectors can
place negative information on your credit report that remains there for seven
years, which can affect your ability to get a mortgage or other loans, cheaper
car insurance rates or even jobs.
"If you don't communicate with
a collector, everything after that becomes less consumer friendly," said
Mark Schiffman, vice president of public affairs for ACA International, the
main trade group for collection agencies.
a consumer lawyer. If you are served with a notice of
a lawsuit, find an attorney who specializes in consumer law to represent you in
court. The National Association of Consumer Advocates provides an attorney
lookup page on its website.
Consumers who lose court judgments
may have their wages garnished. Some suits are filed by debt collectors with little proof of the original debt owed, says Mary Spector, an associate law
professor at Southern Methodist University's Dedman School of Law and director
of its Consumer Law Project. Depending on the state, the statute of limitations
may have expired on the debt. "Without a party appearing in court to
challenge the sufficiency of the evidence, the creditor wins -- often based on
scanty information," she says. Chances of having the lawsuit dismissed in
court may be greater if you show up in court and have representation, Spector
copies and records. There is no consensus on how long documents should be kept. Some experts
say keep them as long as you would keep tax documents; some believe they should
be kept for as long as the statute of limitations for the state where the original purchase was made or your
home state, whichever is longer. Still, others say keep documents -- especially
proof of settlement or resolution of debts -- forever. If a question ever
arises about the debt, you will have documentation. "I still have proof
where I paid off my student loans," says Kurt Johnson, past president of
the North American Collection Agency Regulatory Association, a group of
collection industry regulators from 20 states. "I've seen cases where they
came after someone after 18 years for a student loan."
Safeguard bank accounts. Debt
collectors can file suit against consumers for nonpayment of debts. Freezing
savings or checking accounts is one of the court-ordered options for collecting
debts. This can be extremely problematic for family budgets and cash flow, and
experts advise having separate bank accounts for funds such as Social Security
or disability checks, which are exempt and cannot be used as a source of
court-ordered debt payments. Let collectors know if your bank account contains
only exempt funds, experts say. Also tell them if you have filed for
bankruptcy, which puts debt collection efforts on hold.
make it too easy. Some
experts say consumers should avoid giving debt collectors their bank account
and routing numbers. Make payments with money orders or some other third-party
payment service so that you have proof of payment but avoid paying with a
personal check. They also advise against allowing collectors to make direct
electronic withdrawals from bank accounts.
GETTING HELP WITH DEBT COLLECTION
- To file a complaint about a debt collector or creditor's in-house collection agency, call the U.S. Consumer Financial Protection Bureau at 855-411-2372 or use the complaint form on the CFPB website.
It's also a good idea to file a complaint with your state consumer protection agency. State laws governing debt collection vary. Find your state attorney general through the National Association of Attorneys General.
ACA International, formerly the Association of Credit and Collection Professionals, has launched a complaint system to police its members. It also has a look-up page where you can find out if a particular collection agency is a member of the organization.
- The National Consumer Law Center has resource materials to help consumers navigate the debt collection process.
The National Association of Consumer Advocates has a search page on its website for finding consumer lawyers in your city or state.
Record conversations. If
abusive language or threats are used, recording the conversation will document
it. In a dozen states,
you need the other party's permission to record the conversation. "It's
a good idea to record a conversation, if allowed," said Gail Cunningham,
spokeswoman for the National Foundation for Credit Counseling. Telling the
collector that the call is being recorded might be a good idea even where it is
not required, experts said, as collectors are less likely to overstep the
bounds when they know a tape is rolling.
Get it in writing. Any agreements for making debt
collection payments should be confirmed in writing and signed by a
representative of the debt collector before sending in any payments.
This avoids misunderstandings about the amounts to be paid or time period to
that mail. Letters can be lost in the mail.
Most experts advise sending all correspondence with debt collectors via
certified mail; some suggest getting a return receipt as proof that your letter
was received. Need help composing your letters? See the CreditCards.com sample letters to debt collectors.
Debt management. Find an accredited counseling agency. The two major accrediting agencies for credit counselors
are the National Foundation for Credit Counseling and the Association of
Independent Consumer Credit Counseling Agencies. Work out a payment plan that works for your family budget.
The FTC advises consumers to avoid
for-profit credit repair companies.
Connie Prater contributed to this
See related: Robo-signed debt collection under fire
Updated: April 2, 2014
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