As a borrower, it’s important that you are aware of the ways that you should be treated by debt collectors. There are governmental rules and regulations that are set up in order to protect you from being harassed by debt collectors and collection agencies. If you are being treated in any of the following ways, then you have the option of alerting the authorities and taking that next step. Read on to find out more about the Fair Debt Collection Practices Act and how you should be treated as a borrower.
First, it’s important to know what types of debtors that the FDCPA covers. If you’re dealing with third-party debt collectors, such as student loans, mortgage loans, or auto loans, then you’re covered. If you’re dealing with loans from another person, like business loans, then you aren’t going to be covered by the Fair Debt Collection Practices Act. Essentially, the FDCPA deals with business to debtor interactions. Companies like Transworld Systems and Midland Credit Management typically fall under this category.
What is Considered Harassment?
There is a time and a place for calls about your debt, and the FDCPA writes that out clearly. Debt collectors can’t call borrowers before 8 A.M. or after 9 A.M unless the borrower has previously confirmed that this is the time that they wanted them to call. Debt collectors can call you at your home or office. But, if you tell the debt collector verbally or in writing that they can’t call your job, then they have to abide by your wishes. Also, if the debt collector doesn’t have contact information on the borrower, then they have the right to call neighbors or relatives to find out that information. But, they can’t give any information about the bill or reveal the fact that they are calling from a debt collection agency. This leads to the fact that they can only discuss your debt with your or your spouse. If you have an attorney that’s representing you in this matter, the debt collector can speak to them about it as well.
Also, debt collectors cannot use or threaten violence in order to collect a loan. They can’t use profane or offensive language. Lying is completely out of the question. They can’t tell you that you owe more than you do. Also, they can’t misrepresent themselves and call themselves attorneys or police officers when they’re not. They also can’t threaten to sue you unless they are actually planning to take that action towards you. All of these actions are thought of an intimidating the consumer.
What is Fair?
Within five days of the first contact, the debt collector is obligated to send you a validation notice. This notice has to have three key pieces of information: how much money that you owe, the person that you owe it to, and what to do if you don’t think that it’s your debt. If you don’t think it’s for you, you can send a letter within 30 days of receiving the verification notice. Then, the debt collector has to send written proof of your debt, like a copy of your bill. The debt collector can contact you in a variety of different ways including by phone, email, mail, and text messaging. If you don’t want to the debt collector to contact you, you have the option of sending a letter by mail and requesting that they stop. Legally, the next time that they contact you will either to confirm that they’ll stop contacting you or that they’ll be taking a step forward (filing a lawsuit, etc.)
Also, in many states, there’s a statute-of-limitations that debt collectors have to abide by when it comes to contacting you about your debt. The time-limit usually begins when you fail to make a payment on one of your loans. Once a debt is a certain amount of years old, it becomes time-barred. But, the rules concerning statute-of-limitations vary in each state and it’s important to research your state’s particular rules before making a move.
Reporting Illegal Activity
Stated by a credit repair company, ff you encounter any illegal activity, then there are a couple of places that you can get in contact with. This includes the Federal Trade Commission, the Consumer Finance Protection Bureau, or your state attorney’s general office. Your laws vary by state, but getting in contact with your state attorney would be the best bet in order to fully abide by state laws and avoid wasting your time.
You can also sue the debt collector within one year that the law was broken. But, it’s important to know that even if you encounter your debt collector engaging in illegal activity, you still have to repay the debt regardless.
Dealing with debt collectors can be a very frustrating and time-consuming experience. But, becoming aware of the Fair Debt Collection Practices Act, ensures that you know your rights. You then can be aware of any illegal activity and make sure that you’re being treated fairly and honestly by debt collectors.
If you are being contacted by a debt collector or need help rebuilding your credit, The Phenix Group is here to help. We can help you fix your credit scores and achieve financial security through our attorney-engaged credit repair process. Get in touch with us today at (972) 630-6112 for a free consultation!
Dealing with debt collections can be scary, especially if you’ve never experienced the stress of letting a credit account go delinquent. Debt collectors come with a variety of outlooks on how they should treat consumers in their efforts to collect a debt. Many are polite, professional, and communicate clearly all options available to you. Many are not so polite, not so professional, and don’t communicate options very well at all.
All debt collectors, however, are subject to restrictions listed under the Fair Debt Collection Practices Act (FDCPA) that requires them to behave in above board practices when attempting to collect a debt. While many collection agencies adhere to these requirements strictly, there are some debt collectors that seem to walk the line between above and below board.
Transworld Systems is one such company. Besides the countless complaints about Transworld over the past decade, this company has found itself butting heads with the Federal Trade Commission (FTC). The FTC ended up issuing a fine to Transworld Systems parent company, Expert Global Solutions, in the amount of 3.2 million dollars.
The premise behind the fine was that Transworld was giving personal consumer information out to third parties that were not one of the credit bureaus, harassing consumers over the phone, and ignoring consumer account validation requests, all of which are prohibited under the FDCPA.
The FDCPA was passed in September of 1977 in an effort to provide more protection for consumers against unfair debt collection practices. Since debtors prison was no longer an option by the 20th century, the practice of harassing and threatening consumers in an attempt to collect debt became quite common up to this point.
Since the passing of the FDCPA, those types of practices have subsided to a degree, but violations still occur on a consistent basis, and complaints are still being made against a variety of debt collectors today. While some complaint is expected, especially when dealing with such a stressful personal problem as debt collection, many of these complaints can be substantiated by the language of the FDCPA.
Under the FDCPA consumers are protected from a variety of predatory practices by collectors. Violations of these practices are prosecutable under the law.
Consumers cannot receive robocalls or unsolicited texts on their phones by debt collectors. They cannot be subject to vulgar, offensive, or derogatory language. They cannot be sent mail that is outwardly indicative that the collection agency is attempting to collect a debt, or contain any information on the envelope that would be embarrassing for the consumer. Debt collectors cannot send postcards. Debt collectors may not call repeatedly or continuously.
Collectors may not threaten a consumer with violence. They may not threaten to take any action they don’t intend to, are not capable of taking, or don’t have the authorization to take. They may not misrepresent themselves as law enforcement, a government agency, or a legal firm if they are not.
Consumers cannot be contacted at work once the consumer has indicated to the collection agency that they wish not to be. Debt collectors cannot call consumers after reasonable waking hours (before 8:00 a.m. or after 9:00 p.m.) or after hours appropriate to someone working an alternative work schedule.
You have the right to request Debt Validation. Once you’ve made the request, the debt collector is legally obligated to send a debt validation to you in writing. This document contains all of the details of the debt for which the collection agency is pursuing you. If there are any inaccuracies or misrepresentations on this validation you have the right to dispute it.
Debt collectors cannot agree to do one thing and then do the the other. If they make a promise to clear your debt line entry from its report to the credit bureaus in exchange for settlement of the debt, then they must do so. Unless you get it in writing however, you have no proof that the agreement was ever made.
Dealing with Debt Collectors Like Transworld Systems
Despite the protections set forth by the FDCPA, violations still occur. Whether a debt collector is aware of the violations and fully engaged in the unlawful practice, or an honest mistake has occurred, you’ll need to make sure you are protecting your rights.
Put Everything In Writing
Fully record all of your correspondence with the debt collector and require the collector only communicate with you in writing. If you request a Debt Validation report, request it in writing. If you agree upon a payment settlement agreement in exchange for removal of the debt, make sure that correspondence is in writing. Discuss nothing over the phone. Having all correspondence in writing means you can prove everything you say about your experience with the debt collector.
Credit Report Disputes
Always make a Request for Validation with any new collector that comes knocking on your door within thirty days of the initial correspondence. If you do find inaccuracies, you’ll need to file a credit report dispute with each of the three credit bureaus: Equifax, TransUnion, and Experian, in an effort to resolve the mistake or remove the credit line completely from your report.
Statute of Limitations
All debt has a certain number of years before it falls off your credit report. Bankruptcies last 7 to 10 years, while foreclosures last 7 years. Some debt collectors will often engage in unscrupulous practices in order to keep your account alive, as the statute of limitations begins with the last contact with the consumer. Be aware of the statute of limitations on your debt, but don’t ignore debt that can be civically litigated against you.
If you are suffering from outstanding debt that’s gone to collections, understand your rights and collector obligations under the FDCPA before negotiating with any debt collector. Many collectors will operate in somewhat of a gray area legally to get you to pay your debt. Knowing exactly what they are and are not allowed to do will help you keep them accountable for their actions.
If you are being contacted by Transworld Systems, are in debt, or need help rebuilding your credit, The Phenix Group is here to help. We have been helping individuals fix their credit scores and achieve financial security for years through our attorney-engaged credit repair process. Get in touch with us today at (682) 710-2011 for a free consultation!
Living in a world full of easy money means a constant juggle of offers, some great – some not so good, to take on debt. Racking up debt is incredibly easy to do, and before you know it, the amount of debt you have a responsibility to pay off can become overwhelming.
The idea of erasing that outstanding debt you’ve had lingering on your credit report for years can seem like too good of an opportunity to pass up. If you’ve heard of Pay For Delete options, you may feel quite tempted. But before you pick up the phone to strike a deal with that debt collector, it’s important to understand the realities of this gray area practice.
While in the past, collectors who actually have been able to delete derogatory debt records in exchange for payment may have come knocking at your door, most debt collectors neither have the interest or the ability to completely delete your bad credit.
To fully understand all that is great and not so great about Pay For Delete, it’s important to know exactly what Pay For Delete entails. If you have outstanding debt with a creditor, you can contact them to negotiate a deal. The deal entails you paying either all or part of the total outstanding balance in exchange for the creditor removing the record of outstanding debt from your credit report.
Since most debt collectors buy consumer accounts for small amounts or for a percentage of the recovery amount, negotiating a settlement amount less than the total is no problem. Getting a creditor to agree to a Pay For Delete option may be possible, but you’ll need to make sure to get the deal in writing, just in case you see the derogatory account entry pop back up on your credit record.
Most large lenders won’t even entertain a Pay For Delete option with you. So if you give them a call expecting some wiggle room, don’t expect much, especially in a Pay For Delete scenario. What you may not know about Pay For Delete is that it is often not possible for creditors or debt collection agencies to wipe that record of that debt entirely off your credit report.
This is because there may be multiple entries of the debt over the course of that debt’s lifetime. Entries are made on your credit report when your original creditor reported your account past due. Entries are made again when that account is sold to collections. Once you’ve settled your account, another entry is made. So, even if a creditor wipes out one entry, previous evidence of your delinquent account may be lingering on your report.
Also, the practice in general floats around in the gray area of legality. Creditors are obligated to report the most accurate and up-to-date information to credit reporting agencies. Creditors send information on a regular basis to credit bureaus about any or all of the accounts you hold with them, including outstanding debt.
If creditors are agreeing to wipe out your record, then that doesn’t fall in line with policies regarding accurate reporting to the credit bureaus. You may have a difficult time finding lenders who will agree to Pay For Delete, though smaller debt collection agencies, medical debt collection, or creditors that agree to circumstances beyond your control, may be more inclined to do so. All in all, only about 10% of creditors actually agree to Pay For Delete deals.
The other downside to attempting a Pay For Delete deal is refreshing the statute of limitations on the account. All possibilities for litigation in an effort to collect bad debt lives only for a certain amount of time, usually anywhere in between three and fifteen years.
Once you’ve made it to the end of the statute, debt collectors can no longer pursue you to collect the debt through legal means. The statute starts from the date of last activity on your account. So, if the last activity was the transfer of the account to collections, your account may be progressing toward the end of the statute. Once you make that call to the debt collection agency to arrange Pay For Delete, the statute of limitation restarts from the beginning.
The conversation about Pay For Delete is becoming increasingly obsolete, as more financial institutions start to adopt newer credit analyzing algorithms. FICO 8 and VantageScore 3 both no longer hold outstanding debt against your credit rating if you have paid the balance off.
Yes, the record is still listed in your credit report, but these new methodologies don’t pay it any mind. So, if your bank or credit card company hasn’t switched over to FICO 8 or VantageScore 3, they will in the future, and the Pay For Delete conversation will be irrelevant.
FICO 8 already ignores debt less than $100 when calculating it’s scoring, so you may want to consider paying off large debt first, since those bigger numbers have more of an impact on your credit rating.
VantageScore gives less priority to medical debt compared to credit card debt or outstanding mortgage payments when calculating its score. So while it’s important to settle all debt reflected on your credit report, it may be worth your while to start with the more heavily weighted debt first.
In the meantime, even if you choose not to pursue a Pay For Delete option, you should be working to chisel away at outstanding debt, whether the account is held by a creditor, or it’s been sold off to a debt collection. The debt you will have repaid will help raise your credit score. And as more creditors move to the new system, your chances of being approved for a better loan will increase thanks to a combination of the new system and your paid off debt.