Ignoring a debt collector will only make a bad situation worse, and you should proactively consider other options.
Considering that millions of Americans have seen an adverse impact on their employment situation as a result of the coronavirus pandemic, many are finding it difficult to pay their bills.
If you have fallen behind on your bill payments, or are likely to in future, you are likely to hear from a debt collector. What happens if you ignore them?
If you have not made your credit card payments for a few months (typically six months) your lender might decide you are not likely to make the payments and put your account in collections.
Either a collections department of the creditor or an external debt collection agency would then follow up with you to collect on the debt.
The creditor could even decide to salvage its loss and sell off your account to a debt buying firm, which would then own the debt and follow up with you on its own account. The debt could even be sold more than once.
Debt collection: What are your rights?
First of all, know that you have certain rights under the Fair Debt Collection Practices Act, which is enforced by the Federal Trade Commission, when a debt collector contacts you. For instance:
- Debt collectors can’t contact you before 8 a.m. or after 9 p.m. unless you give them permission to do so.
- They can’t discuss your debt with anyone other than yourself and your spouse, or an attorney if you have hired one to represent you. They can only contact other people to ascertain your whereabouts.
- Within five days of making initial contact with you a debt collector has to provide a written confirmation, or validation, of how much money you owe and the name of your creditor. The communication should also indicate what you can do if you believe you don’t owe this money.
- Debt collectors cannot harass you or lie to you.
In case you think that you don’t owe any or part of the money, you should contact the debt collector and inform them so. If you ask them to verify the debt within 30 days of receiving their validation notice, they will have to provide such proof. They can’t start collecting on the debt without providing such confirmation.
Ignore the debt collector at your own peril
Your financial problems will not disappear if you ignore a debt collector who contacts you. In fact, this sort of wishful thinking will only make a bad situation worse.
Jacob Hippensteel, an attorney at McCarthy Law, noted, “If a borrower ignores a debt collector, the debt collector will continue on their collections plan. That plan normally includes: phone calls, letters, reporting the delinquent account on your credit report, and possibly a lawsuit, judgment, wage garnishment or bank levy. Debt collectors will continue attempting to collect a debt until they are no longer being paid by the creditor to collect on the debt or until the statute of limitations.”
The statute of limitations on debt refers to the time frame after which a creditor cannot sue you over the debt. Each state has its own time period, and it could range anywhere from three years to 10 years. Once the statute of limitation on the debt has passed, a collector has no legal recourse to get payment on the debt.
If a debt collector goes ahead and files a suit past this time frame, though, it may win a judgment against you. It may then be able to garnish your wages and seize your assets, or put in a lien on your property. You could even have your coronavirus stimulus check garnished.
That’s why you should put forth your case, too, even if the debt is past its statute of limitations time frame. Otherwise, there could be a default judgment against you and you could face the consequences.
Last but not the least, there will be consequences for your credit score for seven years after the debt goes into collection, beginning from the time you started missing payments and the lender declared it delinquent.
See related: 8 things you must know about credit card debt
What to do instead of ignoring a debt collector
According to Hippensteel, “The biggest mistake we see people make when it comes to debts in collections is to take the ‘ostrich strategy’ of sticking their head in the sand and hoping that the collector will go away.”
Since that’s just not going to happen, you should consider other fruitful strategies.
- First of all, see if you can come to a settlement with the debt collector.
- You could get help from a nonprofit credit counselor to advise you on how to negotiate.
- Additionally, you could hire an attorney to get legal advice if you can’t reach any agreement with the debt collector.
Whatever you decide, just don’t ignore the debt collector.