Receiving a debt collector’s call can be both frustrating and overwhelming. However, if you receive a call from a collection agency, don’t panic. Pause and plan so you can handle future calls and, if necessary, pay off your debt.
When it comes to debt collection, it’s critical to understand your rights. Let’s go over exactly what a debt collector can and cannot do under the law so you can devise an effective strategy for dealing with your debt collectors.
Who is a Debt Collector?
A debt collector, as defined by the federal Fair Debt Collection Practices Act, is a person or company who regularly collects debts owed to others, usually when those debts are past-due.
What is the Role of Debt Collector?
While some debt collectors work for your original creditor, such as a bank or credit card company, others work for third-party agencies that work on behalf of the original creditor. If the debt collector works for a third party agency, the bill you owe is most likely past due.
Initially, a bank or credit card company will notify you that the time limit for repaying a debt, such as a loan or credit card statement, has expired. This could begin with automated emails or phone calls and progress to phone calls from legitimate debt collectors working with the original creditor.
If you do not respond to these messages, your debt is frequently transferred to third-party debt collectors.
If you continue to ignore paying your debt, it may be transferred to a debt buyer, a company that buys debts and employs its own debt collectors.
Debt collectors are also known as debt collection agencies, debt collection firms, or debt buyers.
Why is Debt Collector Contacting you?
A debt collector may attempt to contact you for the following reasons:
- A creditor believes you are behind on payments on a debt. Creditors may use in-house debt collectors or refer or sell your debt to a third-party debt collector.
- As long as the collector does not reveal that they are collecting a debt, a debt collector may call you to locate someone you know.
- A debt buyer purchased the debt and is now collecting it or hiring collectors.
If a debt collector contacts you for payment on a debt and you have questions about the debt, the amount claimed, or the company contacting you, you should consult with an attorney or a credit counselling organization. Consider making a plan before speaking with a debt collector. You may be able to work out a payment plan or negotiate a settlement with them to resolve the debt.
Important: You have the right to request that a debt collector stop contacting you. This should be done in writing. Requesting that they refrain from contacting you will not prevent them from suing you or reporting the debt to a credit reporting agency. If you do not owe the debt or have already paid it, it is critical that you take action to contest the collection attempt.
How Debt Collectors Obtain Your Information?
If you do not pay a creditor, the creditor may sell the debt to an agency or hire an agency to collect the debt on their behalf. The collection agency is then in charge of collecting the debt.
The creditor will almost certainly give the collection agency some of your personal information, such as your address and phone number. If this information is incorrect, they may attempt to find your current contact information via an internet search.
What Happens If You Ignore a Debt Collector?
Ignoring a debt collector does not make the debt disappear. Debt collectors’ persistent calls, messages, and letters can be one of the most frustrating experiences some borrowers have. However, if you ignore them, there is a slim chance that the debt collector will abandon you.
Debt collectors, on the other hand, are always determined to force you to pay your debt. As a result, they will almost certainly exhaust all legal options, including a debt collection lawsuit, to pursue you.
A lawsuit may be more frustrating and time-consuming, and you may lose the case if you do not know how to respond to a debt collection lawsuit. Finally, the court will order you to pay the outstanding amount owed to the debt collector, as well as any court fees and attorney fees.
If you ignore the lawsuit entirely, the court will issue a default judgement ruling that essentially confirms the collector’s claims. As a result, you will be required to pay all outstanding debts as well as any additional charges.
In addition, ignoring debt collectors may cause your credit score to plummet, potentially limiting your ability to obtain loans, including mortgages.
What are “Unfair” Practices by a Debt Collector?
A federal law, the Fair Debt Collection Practices Act (FDCPA), says that a debt collector is not allowed to use unfair practices to collect a debt.
For example, a debt collector may not:
- Attempt to collect charges in addition to the debt unless permitted by contract or state law.
- Make an early deposit of a post-dated check.
- Postcard correspondence with you regarding a debt.
- Use any language or symbol (other than its address) on an envelope for correspondence with you that indicates it is a debt collector.
Important: Keep detailed records of your interactions with a debt collector.
Keep a file of all letters or documents sent to you by a debt collector. Keep copies of any correspondence you send to a debt collector. Take notes on the dates and times of your conversations, as well as what you discussed. These records can be useful if you have a debt collector dispute, meet with a lawyer, or go to court.
This federal law also prohibits debt collectors from engaging in deceptive, deceptive, or misleading behaviour. This includes the following:
- False statements about the debt, including the amount owed.
- Threats to do things that are not legal, or threats to do things that the debt collector does not intend to do.
- Making a false claim that the person contacting you is an attorney.
- Threatening to have you arrested.
The Fair Debt Collection Practices Act prohibits debt collectors from pursuing a borrower through aggressive, abusive, unfair, or deceptive means. As a result, if a debt collector’s methods of pursuing a debt you allegedly owe violated this provision, you can sue them.
What Time Debt Collectors Can Contact You?
Debt collectors are not permitted to contact you at an unusual time or place, or at a time or place that they know is inconvenient to you, and they are not permitted to contact you before 8 a.m. or after 9 p.m.
Also, if a debt collector knows that you are not permitted to receive calls or communications from the debt collector at work, the debt collector is not permitted to contact you there.
5 Ways to Deal With Debt Collectors
Here are five things you can do to deal with the situation:
1. Learn to Communicate
Debt collectors will contact you until the debt is paid in full. Ignoring a debt collector when you owe them money can harm your credit score and report.
Avoid excessive talking, regardless of whether you know the debt is yours or whether you can pay it. Don’t confirm the debt is yours or share any information over the phone, including whether you can pay and how you intend to pay.
The collector is required by law to provide you with information about the debt in question. This includes the name and contact information of the original creditor, the amount of the debt, when the last payment was made, and what you can do to dispute the debt.
If they do not provide this information at the time of initial contact, they must do so in writing within five days.
2. Try to Settle or Negotiate
See if the debt collector will settle for a portion of the cost if you pay in full up front. If they insist on the entire amount owed, ask if you can set up a payment plan or or seek help from a credit counselling organization.
A credit counselling agency is a non-profit financial institution that will help you create a debt-management plan to repay your debt.
The agency pays your creditors on your behalf and stops late payment fees and charges, lowering your debt burden and ensuring you stay current. You can usually pay off your debt in three to five years through these agencies, and your credit score may even improve during that time.
Also Read: 7 Easy Ways To Close Your Loan Quickly
3. Obtain Debt Information
Get information from debt collectors before making plans to deal with it without admitting the debt is yours. Inquire about the original creditor, the original debt amount, and the amount owed. The more information the debt collector can supply, the better. Again, you should receive this information in writing within five days of a collector contacting you.
4. Maintain Detailed Records in Writing
You have the legal right to record phone conversations with debt collectors. Just make sure you notify them before beginning to record. If they refuse to be recorded, hang up and contact them via email so that everything is documented.
Debt collectors who are legitimate must send you a letter detailing your outstanding debt, including who the original creditor is and how to contact them, as well as how much you owe. You should also get information on how to dispute the debt, which can be useful if the debt isn’t yours.
Within five days of communication, the collector should send you information about the debt. Send a written request so that it can be documented. When you receive a letter from the creditor containing information about the debt, double-check that it is your debt.
5. Raise a Red Flag, If Debt is Not Yours
If you believe the debt is not yours, you must send a written dispute letter within 30 days. At this point, the collector is required by law to halt all communication and collection efforts until it provides you with a written verification of the debt.
Will I be Arrested for Unpaid Debt?
If your debt is the result of the criminal justice system, failure to pay could result in an arrest warrant.
Furthermore, if a collector obtains a judgement against you and you fail to appear in court, a judge may issue a warrant for your arrest for failure to appear. Never disregard a court order. In most other cases, you will not be arrested for unpaid debt.
It may be tempting to ignore a debt collector in the hope that the problem will simply “go away.” Most debt collectors are relentless and will continue to harass you even if the situation escalates to litigation. This is why it is preferable to respond to the debt collector proactively and advocate for your rights and interests.
So, knowing what to do if a debt collector calls can help you deal with the situation. Debt collectors must follow certain rules in order to collect on old debt, so understanding your rights in this situation is critical.
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