You owe money, you’re late on your credit card payments, and you feel like you’re walking around with a permanent stress-induced headache. What’s more, you have debt collectors calling you about the unpaid credit card debt, past-due student loans, and medical bills. It’s enough to make anyone spiral into an anxiety-filled black hole.
How does someone even begin to deal with the debt collectors – especially when they seem to be ever-present, following you around like a shadow? Our first piece of advice is to avoid debt collectors all-together. If you know that you’re making your way into troubled waters with your debt, it’s best to try to work out a deal with the original creditor before letting a third-party get involved.
Below are some tips to help you navigate these murky waters.
First Off, What Are the Types of Debt Collectors?
To understand how to deal with debt collectors, you must first know the different kinds that exist. Here are the types of debt collectors you may deal with:
- Internal Debt Collectors:
- These are the collectors that work for the company you owe money to.
- They don’t collect debts from others.
- These “first-party” debt collectors do not follow the same rules as others.
- Working your debt out with them can prevent your debt from being given to the credit bureaus, which would ultimately hurt your credit score.
- Collection Agency:
- A collection agency gets involved when your lender cannot work a deal out with you.
- Collection agencies charge the lenders a fee to collect any unpaid debts.
- Collection agencies will be relentless when it comes to collecting your money because they get paid based on the amount of money they collect.
- Collection agencies have to follow stricter rules when it comes to collecting money from you.
- Debt Buyers:
- Lenders that have failed to collect a debt will cut their losses and sell the debt to a debt buyer.
- Debts are bought up for pennies on the dollar.
- A little amount is paid because they know that they will not be able to collect most of the debts that they purchase.
Now that we’ve delved into the different kinds of debt collectors, let’s review how to deal with debt collectors.
The Seven Steps for How to Handle Debt Collections
It’s Important to Know Your Rights
In the midst of your panic, you may not realize that just because you owe a debt, does not mean you don’t have rights. The Fair Debt Collection Practices Act provides a detailed outline of your rights, including how a debt collector can and cannot interact with you. No matter what, harassing phone calls and threats, as well as abusive language, are all considered illegal.
What can a debt collector do? They can:
- Reach out to you at your home. They must clearly state that they are a debt collector.
- A debt collector can charge you interest.
- Unfortunately, they can take you to court.
- They can seek payment for any old debts that you may have long forgotten about.
What can a debt collector not do? They cannot:
- Debt collectors cannot keep you in the dark.
- They cannot simply contact you anywhere or anytime.
- Debt collectors actually cannot keep contacting you if you wrote to them telling them to stop. Don’t be harassed by debt collectors!
- They also cannot pester relatives of yours.
- A debt collector cannot pretend to be someone else.
Don’t Ignore Debt Collectors
When you do not have the financial means to pay back owed funds, it may seem easier to simply bury your head in the sand and ignore the calls and letters altogether. This is not something that is going to go away simply because you don’t want it to be real. By law, the consumer is allowed to send a written request for debt verification within thirty days of a debt collector contacting them.
If you continue to ignore them, debt collectors can provide negative intel to consumer credit reporting companies, like Experian or Equifax, which can remain on your credit report for up to seven years.
Know the Facts
You want to be well-informed, that’s how you avoid being taken advantage of.
Here are some facts you should be aware of:
- The original creditor may sell your debt to a third party and then resell the debt again. When this happens, errors can occur.
- Not that you will be shocked by this next statement, but debt collection practices are actually the largest source of complaints to the Consumer Financial Protection Bureau. What is one of the biggest reasons? Being asked to pay debts that person doesn’t actually owe.
- If you do not receive a validation letter within five business days of first being contacted by a debt collector, request one.
Don’t Let Them Pressure You
It’s easy to feel intimidated by debt collectors. You virtually think it’s the end of the world. Just because you owe money, does not mean you should succumb to the pressure.
- Don’t rush to make a payment just because a debt collector contacts you.
- You need to take time to think about your options before you jump into a contract.
- When speaking with a debt collector, do not pay or promise to pay at that time. Also, do not give payment information to them.
- If you make a single payment, that is enough to get you in trouble with a debt collector.
Have a Written Agreement
Do not do anything before having everything confirmed in writing. Furthermore, have a representative of the debt collector sign said contract before any payments are made. You want to avoid misunderstandings.
Communicate via Certified Mail
It is suggested that any correspondence that you have with a debt collector be done by certified mail. It is even suggested that you request a return receipt so that you have proof that your letter was actually received. You don’t want anything that can be used against you. Remember the point we made before – you have rights.
Look into Hiring a Debt Management Company
As you approach this journey of dealing with a debt collector, you should consider finding an accredited counseling agency. This agency will work out a payment plan for your budget that does not have you scraping by and unable to put food on your table due to debt.
We know that no one wants to deal with debt collectors. It’s not a fun time and it’s a source of immense stress. It’s easy to simply advise not to go into debt. But we know with rising medical costs, ungodly student loans, and credit card costs that were needed at the time of emergencies get in the way. If you find yourself in a situation dealing with debt collectors, there is a light at the end of the tunnel.
You can get back on your feet, you just have to take it one step at a time.
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!