There’s a distinct feeling of fear when being called by a debt collector; fear, anger and anxiety all combine.
Debt collectors cannot contact you at an inconvenient time or place, and must provide any requested information about the debt.
What is debt collection?
Debt collection refers to the practice of collecting debts for creditors. This may involve third-party debt collectors or even the original creditor themselves trying to collect payments.
Debt collectors can be intimidating and overpowering at best; manipulative and illegal at worst. You have some ways you can limit their contact, such as writing them a letter requesting they cease communicating with you – the Consumer Financial Protection Bureau has sample letters you can use as starting points.
As a debtor in collections, it’s essential that you know your rights. For more information about debt collectors and the FDCPA, consult an authority like Debt Collector Watchdog website or speak to a financial adviser who can create an action plan to pay back debts more effectively.
Debt collectors must contact you only in a manner that is convenient for you (for instance between 8 a.m. and 9 p.m.). Furthermore, they cannot call at work or other locations that could embarrass you; notices and letters must also be sent via certified mail as proof that it was sent.
Finally, upon your request they must stop contacting you until there is specific legal action planned (such as filing a lawsuit).
You have the option of asking the debt collector to provide evidence that this debt is yours and the correct amount owed. You have 30 days after first hearing from them to request this validation of a debt if you think something about their claim is incorrect, such as whether you actually owe this debt or its amount owed. This option may help if they misrepresented some aspect of it such as an amount due or whether or not you owe anything at all.
Debt collectors cannot contact members of your immediate family who don’t live with you; however, they can contact your spouse if you reside together and represent legal cases together. Furthermore, debt collectors may contact credit reporting companies as allowed by law.
Debt collectors can legally do
Debt collectors do have some power to collect debts, but they are not allowed to act abusively or unfairly. Federal law, specifically the Fair Debt Collection Practices Act, regulates what collectors can and cannot do – for instance, it is illegal for them to:
- Swear or use offensive language
- threaten illegal activities
- falsely claim they are attorneys or government representatives
- misrepresent the amount you owe
- contact by postcard
- use an unfamiliar company name that mimics court or government documents
- disclose inaccurate credit information about themselves and harass, oppress, or abuse any person they speak with
Debt collectors cannot legally enter your place of employment if they know or suspect your employer prohibits personal communications during that time. If a debt collector attempts to contact you at work, under law they must stop when informed that you have legal representation.
If a creditor or debt collector does file suit against you for debt, they must produce documentation of that debt including an original agreement and any subsequent documents such as assignment agreements.
This process, known as “debt verification,” is essential when fighting back to keep your money safe. If you are in inkasso and your collectors cannot produce this paperwork, that means they do not have legal standing to sue. Asking for this verification can save you lots of time and money in the long run.
Negotiate down your debt
When approached by a debt collector, it’s advisable to speak to them even if you do not think you owe the money or can’t repay it immediately. Doing so might provide additional information or confirm whether it belongs to you; additionally, this may allow an opportunity to negotiate repayment plans or have any unpaid balance removed from your credit report once paid in full.
As much as it’s important to be polite and respectful when negotiating debt collections, don’t give in to pressure from debt collectors.
If they become unreasonable, you have two options for dealing with them: ask them directly not to contact you again or write a certified mail letter asking them not to contact you; both methods should ensure your request will be recorded as received.
When speaking to your debt collector, be honest about your current circumstances and explain that you cannot repay the debt right now. Most collectors will understand this situation and may offer assistance in devising a repayment plan; if however they refuse, legal advice should be sought as soon as possible.
Start by gathering all relevant documents related to your debt, such as statements, payment confirmations, communications from creditors or collection agencies and statements regarding any offers for settlement they may have made.
Assess your financial situation to see how much of an offer could realistically be made in lump sum or monthly payments; additionally it would be prudent to obtain a copy of their debt validation notice from them prior to making any offers.
Ultimately, if an agreement cannot be reached between both parties involved, you can take your dispute to court and have an impartial third-party evaluate all evidence presented and decide if your debt belongs to you or not. But be warned; court proceedings can often be long and tedious processes.
Refinance your debt
Credit card debt can be challenging to eliminate, especially when payments are minimal. Refinancing can help by lowering interest rates and streamlining repayment into one loan payment plan; however, refinancing can be costly so it is wise to carefully evaluate all your options prior to refinancing any debts.
If you fail to pay your debts on time, your creditor may turn your account over to a collection agency for collection purposes. Depending on state laws, the agency could collect on behalf of your creditor for a fee, typically including both commission and a percentage of original debt due. Many creditors attempt to collect the debts themselves before resorting to collections agencies.
When debts enter collections, this indicates that their original creditors have given up collecting them themselves and have passed them to a third-party collection agency in an attempt to recover as much of what is owed as possible. Original creditors generally only refer past-due accounts to collections after 120 to 180 days have passed due.
Before considering refinancing, be sure to complete a budget that details all your monthly owes and where the money is going. If you find that interest payments on loans with less-than-favorable terms are becoming too burdensome, refinancing may be worthwhile to improve terms or reduce expenses.
Rate-and-term refinancing involves switching out your current mortgage for one with different interest rates and repayment terms without altering its principal balance. This could save your company significant sums over the loan term depending on its monthly payments and new rate arrangements secured.
Homeowners frequently turn to cash-out refinancing as a way of unlocking home equity for various uses, from remodeling projects and college education expenses to home repairs or improvements. Although taking out another mortgage incurs costs such as closing costs, it could make financial sense if its interest rate is lower than credit cards.
In many cases, it will be beneficial to refinance in order to pay down your existing debts. Combining this with negotiation tactics can help you conquer your debt.
