Debt collectors are aggressive and relentless. If you’ve ever been on their radar, you know how uncomfortable the experience can be. Truth is, we’d rather not ever encounter a bill collector and the best strategy is to pay the bills when they come.
These days, however, more and more people are without the financial means to be as diligent and prompt as they would ordinarily be. Lost jobs and decreased wages have some beating back bill collectors for the first time. Gerri Detweiler, an advisor with Credit.com and co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, provides three tips to help you navigate the waters.
Three Fibs Debt Collectors Use To Get You to Pay Up:
If you’ve borrowed money, paying it back is the right thing to do. But the reality is there are many people these days who simply don’t bring in enough money to keep food on the table, gas in the car, and pay the bills on top of all that.
If that’s your situation, you’ll want to understand your rights when it comes to dealing with debt collectors so you can prioritize your bills, and focus your time and energy on increasing your income, rather than on dodging debt collectors.
Fib #1: If you don’t pay, we’ll ruin your credit forever.
This is simply not true. Under the Fair Credit Reporting Act, collection accounts cannot be reported for more than seven years and six months from the date you first fell behind with the original creditor. That’s true whether the bill was paid or not. The debt collector is supposed to report that original date of delinquency to the credit reporting agencies so the account can be removed at the appropriate time. If a collection account is not reported accurately, dispute it with the credit reporting agency that lists the incorrect or incomplete information. By the way, there is no difference – as far as your credit scores are concerned – between settling a collection account for less than the full balance or paying off the entire amount due.
Fib #2: If you don’t pay, we’ll take legal action.
This may come as an implied threat: “We’ll have to recommend legal action to our client, the creditor.” Or it may be explicit: “If you don’t pay today, we’ll issue a summons.” Unless the collector you are speaking with is an attorney (and I am not talking about someone who just works for a debt collection law firm, but is really just a collector) he really has no business discussing legal action with you.
Often this is just a way for them to add urgency to the situation. You can counter by asking for specific information. “When do you plan to issue this summons?” Or “When do you plan to recommend this legal action.” Thank them for the heads up, then write down the answer they give you. Under the federal Fair Debt Collection Practices Act (FDCPA), a debt collector may not threaten to take action it either cannot legally take, or does not intend to take. In other words, a debt collector can’t tell you that they are going to take legal action if they don’t intend to do so.
This doesn’t mean they won’t take legal action against you. Don’t stop reading yet.
Fib #3: If you don’t pay, we’ll tell your employer (or neighbors or family members) that you are a deadbeat.
Under the FDCPA, debt collectors are not allowed to tell others about your debts unless that other person is your spouse, attorney, or a cosigner. They can call neighbors or relatives to locate you, if they don’t know where you currently live. But they can’t say they are calling to collect a debt. And once they have found you, those calls should stop.
So what do you do if you believe a debt collector is breaking the law? First, take thorough notes every time you talk to a collector. Start a file and stash any legal notices you receive, as well as your handwritten notes from your conversation with the attorney. If you suspect the attorney has broken the law, talk with a consumer law attorney (go to naca.net) who can advise you on your rights and options. Sometimes calling a collector on their fib will give you negotiating leverage to work out a deal. At other times, debt collectors go too far and a lawsuit is in order. And if you are struggling with multiple debts in collections, talk with a bankruptcy attorney.
Have you run into debt collectors? How did you handle the experience?
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