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Friday, February 23, 2024

5 Ways to Deal With Debt Collectors if You’re Afraid to Pick Up the Phone

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Having a debt collector consistently contacting you can be a distressing and fearful experience. Their constant phone calls, letters, and emails can cause financial stress and anxiety.

By gaining knowledge about the debt collection process and exploring your options for relief, you might come to the realization that it’s not as daunting as you initially believed to handle debt collectors.

Who Are Debt Collectors, and What Do They Do?

Some debt collectors work for the bank or credit card company you originally owed money to, while others work for third-party agencies hired by the original creditor. If a debt collector contacts you from a third-party agency, it probably means your bill is significantly overdue.

At first, you will receive a notification from a bank or credit card company indicating that the time for paying off a debt, such as a loan or credit card bill, has elapsed. These alerts may begin as automated emails or calls but may advance to personal calls from authentic debt collectors collaborating with the initial lender.

Your debt may be sent to third-party debt collectors if you don’t reply to these messages. If you continue neglecting your debt payment, it may be transferred to a debt buyer – a company that buys debts and has its own debt collectors.

5 Tips for Dealing With Debt Collectors

If you do not have enough money to pay off your debt in one go, the debt collection process can be daunting and seem as if it will never end. Nonetheless, there are steps you can take to settle your debt legally and get rid of old debts.

1. Know Your Debt Collection Rights

The Fair Debt Collection Practices Act (FDCPA) requires internal collectors, third-party collectors, and debt buyers to abide by the same set of rules.

The FDCPA limits what actions debt collectors can take when collecting payments. Despite being a legal act, some collection agencies may ignore these restrictions to unlawfully coerce you into paying your entire debt promptly.

In 2022, a debt collector operating in New York was fined $60 million for conducting a debt collection scam through his agencies. It is against the law for debt collectors to make threats towards you or your family.

You can even cease all communication with your debt collector. However, that is an unwise move and can have a negative impact on the debt collection process, said Bruce McClary from the National Foundation for Credit Counseling.

According to McClary, if you request to have all communication cut off and disappear from the debtor’s radar, it could indicate that you have no intention to pay the debt, which may prompt them to take other actions to recover the debt sooner.

When dealing with a debt collection agency, there are different choices available to you. Additionally, the FDCPA offers various safeguards, such as the ones listed below.

  • Debt collectors must offer evidence that you are accountable for the debt.
  • According to the rules, phone calls cannot be made to you before 8 a.m. or after 9 p.m.
  • If you inform them that it might endanger your job, they cannot contact you at work.
  • Debt collectors can contact your family member or friend to locate you, but they cannot disclose any information about your debt. In most states, they are limited to calling each family member or friend only once.

If you are dealing with unfair debt collection practices from a third-party debt collector, you can file a complaint using these resources. Please note that the FDCPA does not offer protection for personal debt collectors.

2. Know What Collectors Can and Cannot Do to Collect Debts

If you ignore a debt collection agency, your owed amount will not disappear. Instead, it could exacerbate your financial troubles. Moreover, if the debt collector decides to bring a lawsuit against you, you could end up in court. Debt collectors have restrictions on their actions to enforce payment from you.

Can Collectors Sue Me or Garnish My Wages?

Debt collectors may use a court summons to sue you for a debt, and this legal action could lead to wage garnishment. However, their ability to sue is limited by the statute of limitations.

Debt collectors may try to collect on a debt for up to three to six years, depending on the state’s statute of limitations. However, if they attempt to sue you after this period has passed, it is possible to have the case dismissed.

Can I Go to Jail for Being in Debt?

The Consumer Financial Protection Bureau has stated that there are only a few instances where you could be arrested for not paying a debt. These include if your debt is related to criminal activity, such as unpaid restitution for a crime, or if you disregard a court order. In general, outstanding debts will not lead to your arrest.

As long as you do not engage in any illegal activities or fail to appear in court when summoned, you should be secure.

It is against the law for a debt collection agency to claim that you will be arrested unless jail time is a possible consequence of your debt situation. If you were falsely threatened with arrest for unpaid debt and later discover this to be the case, you can use the chart above to file a complaint against the debt collection agency.

Can a Debt Collector Make Me Pay a Family Member’s Debt?

If someone calls you to find a family member, they could be a debt collector. It’s allowed for them to make these calls, but they can only contact you once and solely to find the debtor.

If the debt collector calls you again and asks for information beyond the location of your family member, you can submit a complaint against them. You don’t usually have any obligation for the debt, whether in life or death if you didn’t co-sign for it and the person in debt is not your spouse.

What Should I Do if I Can’t Pay?

In case you cannot pay either the total amount you owe or the monthly minimum payment, it is advisable to coordinate with your creditor to establish a payment plan for the debt. Alternatively, you can also seek assistance from a credit counseling agency.

A credit counseling agency is a non-profit organization that can help you create a plan to repay your debts. They will work with you to manage your debt effectively.

These agencies pay your creditor on your behalf, eliminating fees for late payments. This lowers your debt load and helps you stay up-to-date on payments. Usually, you can repay your debt within three to five years through these agencies, and your credit score may improve during that time.

3. Check Their Facts

Trust your instincts if you believe that the information provided by a collector is incorrect. During the process of debt selling between companies, crucial details can be overlooked. Even if you turn out to be mistaken, it is still advisable to conduct thorough research, which could eventually prove beneficial.

UponArriving website owner and attorney Daniel Gillaspia and his partner Bradley discovered that Bradley’s credit card application was denied due to a $1,000 medical debt that had been sold to a collections agency, potentially resetting the statute of limitations.

Gillaspia sent a legal demand letter to the collections agency because they didn’t think the situation was fair. However, the update did not change the statute of limitations, and the inquiry actually benefitted them.

After receiving the demand letter, the company put the account in dispute status to verify the information. When they reached an agreement on the settlement amount, the company agreed to remove the collections account from Bradley’s credit report.

4. Keep Detailed Records

Remember that debt collectors are not on your side and are simply doing their job. Keep track of any correspondence from them, including letters, emails, phone calls, and financial information.

You can record phone conversations with debt collectors but always remember to inform them beforehand. If they decline to be recorded, end the call and contact them through email to have a written record of the conversation.

If you fail to record a call, make sure to take comprehensive notes about the conversation. This will be useful if you need to file a complaint against a harassing debt collector or if you have to go to court to prove that the debt is not yours.

It is recommended to keep records of your debt even after making the final payment, as they could be necessary in the future.

The author of “My Little Banker” series, Raeshal Solomon, paid off outstanding college debt and obtained a receipt for the settlement. The receipt was sent to her home and emailed to her, confirming the balance as $0.

Solomon stated that the debt balance had been sold to three different agencies over the last two years. Whenever a new agency contacts him, he asks for their email address and sends them a copy of his receipt. The calls usually stop after a few days.

5. Take Control of the Communication Process

If you are receiving constant calls and wish for them to cease, specifically ask for it in written form. You can do this by sending an email or a certified mail containing a cease and desist letter. The CFPB offers pre-made template letters that can assist you in communicating with debt collectors in writing.

If a collection agency violates the law by constantly calling or threatening violence, it’s essential to know your consumer rights and file a complaint with the CFPB. Although dealing with a debt collector can be unpleasant, it’s necessary to take action in such situations.

Usually, filing a complaint with either the FTC or the CFPB is sufficient. However, in extreme cases, reporting the harassment to your local law enforcement agency or the FBI is an option.

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