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How to deal with debt collectors during the coronavirus crisis

CFPB data reveals that debt collection remains the top complaint of consumers in the last three months

Summary

There are all sorts of emergency suspensions of debt collection activities, but you could still hear from a collector during the coronavirus crisis.  

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Are you finding it difficult to pay your bills during the economic shutdown brought about by the coronavirus pandemic?

As the unemployment toll rises, it induces more economic distress and people need some room to breathe while they deal with a situation that’s not of their own doing.

What if you hear from a debt collector? How should you handle the situation?

See related: Most Americans worried about paying bills during coronavirus crisis: survey

Complaints galore

A lot of people have complaints about debt collectors, even in routine times, going by the Consumer Financial Protection Bureau’s complaints database.

This trend of domination continued in the last three months. From Jan. 30, 2020, through April 30, 2020, debt collection was the issue that consumers complained the most about, accounting for 94% of consumer complaints the consumer protection agency received. The most complaints dealt with:

  • Attempts to collect debt not owed
  • Written notification about debt
  • Misrepresentation
  • Threats to take legal action
  • Communication tactics

According to one complaint from a New Jersey consumer on March 25, for instance, “I ask them to send me proof of the bill they say I owe them. I have also told them that due to the coronavirus I am out of work. They call all day every two hours and when I ask to speak to a supervisor they hang up on me. They are rude don’t [sic] answer any questions.”

See related: Coronavirus: How to deal with credit missteps

Officials have put in various measures

Government officials are aware of this situation and have attempted to ease things for consumers in many ways. States such as Massachusetts, New York and Maryland have put in limits on debt collection, according to a blog post by the U.S. Public Interest Research Group. The city of Chicago has also taken action to suspend collection on debt owed to it.

Legislators are not far behind, with at least two bills pending that seek to put in a moratorium on debt collection activities during the current emergency situation.

Another legislative attempt seeks to amend the Fair Debt Collection Practices Act to provide consumers and small businesses protections from debt collection activities during any emergencies.

The Federal Communications Commission has also clarified that a COVID-19 exception it made to the Telephone Consumer Protection Act to enable emergency-related robocalls and text messages to consumers’ wireless numbers from hospitals, health care providers and government officials does not extend to calls made by debt collectors, even if they relate to medical debt.

These efforts come about as debt collectors continue to work from home in various states. According to a report from The Intercept, the Association of Credit and Collection Professionals is lobbying to prevent suspension of debt collection activities.

See related: CFPB’s fair debt collection update proposal elicits negative feedback 

How to deal with debt collectors when you can’t pay

Seena Gressing, a Federal Trade Commission attorney, said in an online post, “Consider talking with the collector at least once, even if you can’t pay right away or don’t think you owe the money. That way, you can confirm whether it’s really your debt. If it is, you may be able to work out a payment plan or settlement.”

If the debt is really yours, be aware of how long ago you stopped making payments. If that length of time falls beyond your state’s statute of limitations, the collector cannot successfully sue to collect the money from you. However, if you make a payment on a time-barred debt or state your intention to pay, the collector can argue that you’ve reset the statute of limitations.

If collectors continue to harass you, you can also send them a letter asking them to stop contacting you. While this will not cancel the debt, it will give you a reprieve while you figure out what to do.

The CFPB also has some advice for those who are hearing from debt collectors during this emergency:

  1. If your debt is in collection, work with the debt collector to figure out a realistic plan for repayment.
  2. Be aware that the Fair Debt Collection Practices Act requires that a debt collector be fair in their dealings with you. For instance, they cannot threaten to have you arrested or otherwise harass you.
  3. A debt collector can’t garnish some benefits such as your Social Security or VA benefits. (Keep in mind it is possible for them to garnish your stimulus check in some cases unless you take action.)
  4. If you think that you don’t owe the money or even that it’s not your debt, write to the collector disputing the debt. You could also ask for more information about this debt.
  5. See if you can work with a nonprofit credit counselor who can help you settle the debt.
  6. You could also work directly with the creditor to settle the debt.
  7. Debt settlement companies advertise that they can help you deal with creditors to reduce the amount of debt you owe. However, this comes with risks and you should be wary. In particular, beware if they ask you to pay any money before taking on your case.

Have a question? Email me I’d be happy to help.

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