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Dealing with Debt Collectors - Know Your Rights

When struggling to get out of debt, it's likely that you may cross paths with a collection agency at some point - a third party agency hired by your creditor to collect on your debt. Some collectors are more aggressive than others. It's important to know your rights as a consumer so that you don't fall victim to an aggressive collector employing unscrupulous methods. If you have past due accounts, it's important to know how to effectively deal with collectors and what recourse you have when confronted with overly aggressive tactics.

Your Basic Rights Regarding Debt Collection

In the 1990s, the U.S. Congress investigated the collections industry and determined that there was "abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors." Because of this, they established the Fair Debt Collection Practices Act (FDCPA). It is good to know the name of this act and some of the key protections it grants consumers, so when you talk to a collector, they realize they are dealing with an informed consumer who is ready to assert their rights. Some of the basic rights guaranteed by this Act are:

Collection agents may not:

  • Harass you with repeated calls, when you've told them not to call.
  • Call before 8 a.m. or after 9 p.m.
  • Call at work if you have asked them to stop.
  • Talk to anyone but you, or your attorney, about the debt.
  • Threaten to garnish wages or seize property unless they actually intend to do so. Garnishment is illegal in some states, and in others requires a court order.*
  • Threaten to sue unless they are actually taking legal action. In some states, third-party collection agencies may not sue.*
  • Threaten you with arrest or jail.
  • Falsely claim to be an attorney, a representative from a credit bureau or a member of law enforcement.

*Check with your state attorney general's office.

How to Effectively Deal with an Aggressive Collector

If you find yourself confronted with a collector who hasn't adhered to the FDCPA, it's best to keep your composure and follow these steps:

  • Inform them that you are aware of your rights under the FDCPA, and that you do not wish to be contacted by phone again. Then hang up.
  • Fax and mail them a certified letter stating that going forward you only want to be contacted by mail.
  • Keep a notebook by the phone to log and take notes of all future calls you receive from the creditor.
  • If possible, be prepared to record future calls. In some states you may be required to inform the creditor that you are doing so.

Once you have informed them that you only want to be contacted by mail, the creditor may not call you except to inform you they are taking a specific action to collect the debt, such as filing a court order for a judgment. If they contact you after you have confirmation that they have received the certified letter:

  • Try to obtain phone records to document the calls.
  • Inform them that you will be filing suit against their company for violating the FDCPA.

How to Report Illegal Tactics

If you suspect that a collection agent has crossed the line and violated the FDPA you have the right to:

  • Call the FTC to file a complaint, or use the FTC on-line complaint form.
  • File a complaint with your state Attorney General.
  • Sue. You can sue for actual and punitive damages, as well as attorney fees and court costs.

Document Everything When Working with Collectors

You have the right to refuse to work with collectors, but if you decide to make payment arrangements make sure you get everything in writing before giving them any money. Whether you pay in full, negotiate for a percentage of the debt or accept a payment plan, get everything in writing and keep this as proof for at least 15 years.

  • Send a letter, return receipt requested, and only promise to pay what you can afford.
  • Make them stipulate that they will not report anything negative to the credit bureaus regarding the debt. And have your original creditor sign off on the deal.
  • Always pay with paper checks -- not electronic bank drafts by phone or debit cards. It's to your advantage to have a physical record that you've paid, plus you control exactly what you're paying and when.
  • If you negotiate a settlement for less than you owe, you could be responsible for taxes on the unpaid portion. But if the unpaid amount is less than $600, a collection agency does not have to report it to the IRS. Get them to agree to this in writing.

Collectors are generally seasoned professionals and they may try a variety of tactics to get you to pay. Don't be intimidated into agreeing to payment arrangements that you can't afford. If you can't afford to pay your debt, seek your own professional help by calling CareOne at 1-800-CARE123, or visit us online at www.careonecredit.com. There are laws to protect you and multiple options available to help resolve your debt.

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