Best Ways To Deal With Debt Collectors And Say Goodbye To Stress

Debt collection agencies are the inevitable evil in the U.S. credit system. Even worse, their tactics can often be predatory or illegal. So if debt collectors have contacted you for a past-due balance, think twice. Stepping into the process blindly can give the debt agency the upper hand.

Instead, get informed on your rights and deal with collectors without allowing them to take advantage of you. Below, we’ve listed several strategies to pave your way to settling debt quickly and without much harm to your credit score. Keep reading and get your finances in order!

What Do Debt Collectors Do?

When you wonder, “what are private debt collectors,” we’re not talking about the bank or credit card company employees that approve loans. Collectors are collection agencies and debt buyers who regularly collect debts as part of their business. There are also dedicated companies that buy past-due debts from creditors in an attempt to collect them.

Debt collectors are people who work for a third-party company that strive to charge money owed to other creditors. When this third-party collection agency gets involved, it means your bill is usually long past due.

Also, most financial institutions engage internal debt collectors to work with borrowers who defaulted on a personal loan. Their job is to help clients get back on track quickly.

If these attempts fail, your debt will get sold to third-party collectors. If that company fails in pushing you to pay, your obligations can transfer to a third collection agency or debt buyer. These companies purchase debts and have in-house collectors.

What Should I Do If I Get A Letter From a Collection Agency?

Once you receive a collection notice, review the information to determine whether you owe it. If you do, cooperate with the collection agency to resolve the debt before your finances get worse. You can discuss matters by mail or through the toll-free number most agencies provide.

In case you doubt whether you owe the specified amount, ask for written verification. Or, if you’re 100% sure you do not owe that money, dispute the account.

It’s vital not to put off action on past-due accounts, even when you cannot pay at once. If you don’t communicate or ignore calls, creditors will think you have no intention to pay. Plus, if your account reaches the credit bureaus, resolving the bill will ensure your credit health in the future.

Regardless of the reason for the defaulted account, reach out to the collection agency and have an honest talk. Often, a simple discussion can lead to a payment plan or financial solution that suits your budget.

Will I Go To Jail For Being In Debt?

You can’t get arrested because you owe money as a result of consumer debt. So, if you have defaulted on a credit card, medical bill, or loan, stop fearing that you might end up in jail.

Furthermore, it’s illegal for debt collectors to threaten you with arrest if prison isn’t an actual punishment for your misdeed. If you got jail threats for unpaid debt and then realized those were false, you can file a complaint.

However, debt collection agencies have other legal recourse, such as suing you for payment. Even worse, some debt types can lead to arrest on other charges, such as theft, fraud, or defying a court order.

More specifically, CFPB lists the very few situations that could lead to arrest over an unpaid debt. First, if your debt stems from criminal activity, such as due restitution for a crime. Second, you can go to prison for ignoring a court order. Overall, if you don’t engage in illegal affairs or ignore court summons, you’ll be safe.

Can I Be Held Responsible For My Family Member’s Debt?

When someone calls you trying to locate a relative, it might be a debt collector. Yet, fear not since these calls are legal but can take place once. The only purpose of getting in touch with you can be to locate the debtor.

So, when you receive several calls asking you for any information other than your relative’s location, feel free to file a complaint. The only reason to be concerned is if you have co-signed for the debt in question. If you didn’t act so and the debtor is not your spouse, you have no responsibility for the debts.

Do I Have To Pay Debt If It Got Sold To Collection Agency?

When you can’t service your debt, most creditors would try to increase their chances of persuading you to pay. To this end, their best tool is to sell your debt to a third-party collection agency.

Once the collection agency purchases the owed amount in full, the new account owner will notify the debtor. Meaning, the collector will try to contact you by phone or in writing. Note that transferring debt from one creditor or collector to another can occur without your permission. Still, selling won’t happen without your knowledge.

The consumer must receive a debt validation letter within five days of the initial attempt to contact you by law. This notice will include the owed amount, the original creditor, and a statement of your right to file a dispute.

Receiving a debt validation letter means the collection process can get complicated and lengthy. For example, if a collector cannot settle with a consumer, the debt can get bundled and sold with other obligations. The process can get repeated many times, often beyond the applicable statute of limitations for the consumer’s debt. Hence, consider contacting a nonprofit consumer protection organization.

When you deal with debt and debt collectors, you should first learn your rights and learn your debt. Then, you will know how to proceed without getting overly stressed out.

How To Deal With Debt Collectors

You will contact many people if you wonder, “what are private debt collectors”. Still, a few golden rules can give you a head start no matter how aggressive and persistent collection agencies are. Below are several things to remember to avoid being taken advantage of by debt collectors.

Be Informed Of Your Rights

Internal collectors, debt buyers, and third-party collection agencies must follow FDCPA rules. The Fair Debt Collection Practices Act limits the actions debt collectors can take to collect on debts from consumers.

FDCPA allows you to restrict or break off harassing and illegal collection calls. Moreover, it lets you decide how debt collectors will get in touch with you. It’s your choice whether you’ll communicate via email or mail physical notices. Plus, you have the right to seize communication altogether and cut all ties to your debt collector.

When you stop communicating, your actions might send collectors a signal that you cannot repay. Hence, they may speed up some activities in trying to recover the funds they lost. While collection agencies can call a relative or friend to find you, they must not give away details about your debt. Plus, they may only call each family member or friend once.

Besides, victims of unfair debt collection practices have a right to file a complaint. Note that FDCPA does not protect you from personal debts but applies to third-party debt collectors.

Among other rights, debt collectors must abide by the ban to mislead you about who they are. They must inform you of the exact amount you owe and the legal repercussions of not paying.

Finally, you can dispute the debt. If you challenge it within 30 days of the first contact, the collector cannot require payment until the dispute gets settled. When you miss the set 30-day deadline, the collector can seek settlement while your case is pending resolution.

Know Your Debts

Knowing what you owe down to the penny will help you when creditors start contacting you. It turns out that most collectors tend to lie to get you to overpay.

The most common debt types that end up in collections are credit card balances and medical bills. Car, mortgage, and student loans are other examples of what can get passed on to a collections agency. Last, tax debts can also be subject to collections.

At this point, you must understand the three phases of debt collection. First, you fail to pay a loan, and your lender calls you to pay the overdue balance. Depending on the creditor, after about six months, this phase will end.

Next, your lender will contact and pass your obligations to a third-party agency. If this agency manages to collect what you owe plus interest and late fees, it will receive a commission.

Finally, if this approach is unsuccessful, your creditor can sell the due amount to a collections agency or a debt buyer. At this point, your lender is trying to earn on your debt and is no longer involved. The collections agency will make efforts to get you to settle the original debt to generate profit.

Know What They Can Or Cannot Do To Collect Your Debt

There are actions that debt collectors can’t take. No matter how much you owe, some measures are off-limits to collection agencies. Here, it’s vital to be wary since aggressive collectors may be poorly trained, unprofessional or scams. By law, legitimate collectors can’t:

·        Lie to you. Debt collectors can’t pretend to be someone else, including attorneys or police officers. The caller can’t accuse you of a crime or lie about the owed amount.

·        Harass you. No debt collector can swear at you, threaten to harm you or disclose your debts on a public list.

·        Share your debt with others. The details of your due obligations can’t get shared with your parents, relatives, friends, or boss.

·        Threaten to arrest or deport you. Callers can’t claim that they’ll take actions the law doesn’t grant. No threats to take your property are legal unless the law says so.

·        Collectors can’t mistreat you. They can’t collect interest, fees, or extra charges on top of the owed amount if not agreed in the original contract or by law.

·        Call at all times or places. Debt collectors have no right to call you before 8 a.m. or after 9 p.m. unless otherwise agreed. Also, the collector must not call you at work unless you can accept outside calls.

Yet, debt collectors have several rights, too. Also, if your question is, “can debt collectors take my stimulus check” the answer is positive. Debt collectors can get in touch by phone, email, phone, or letter to collect on a loan. Finally, your unpaid debts can get reported to a credit-reporting bureau and harm your credit score.

Save All The Evidence

After the initial creditor sells your debt to a third party, which might resell it again, recordkeeping often falls behind. At this point, you’re making a substantial mistake. Many sold debts contain errors about the amount owed or even who the owner is.

Debt collection is the most significant source of consumer complaints to the CFPB. Almost 100,000 complaints get filed each year, so errors are inevitable. More precisely, the most prevalent mistake is consumers having to repay funds they don’t owe.

Hence, it’s a must to request a validation letter from the collector unless you get one in five days after the first contact. This letter must include details on the debt, the collection company and how to dispute the amount owed.

It’s your job to keep track of your debt records, including data on the original creditor and your history of payments. Keep detailed evidence of communication with the debt collector and any costs covered. Think about using certified mail for the essential documentation, too.

Debt collectors can’t harass you, call at all times, or lie to you. Dealing with them may be scary, but it’s not the end of the world and you shouldn’t let them bother you constantly.

Dispute A Debt Or Any Mistakes

If you don’t believe you owe something or that the amount is inaccurate, file a dispute. To do so, you must send a dispute letter to the collection agency asking for debt validation. This way, you demand the collection agency to show what you owe and provide detailed information and documents to prove its claims.

Under federal law, consumers have a 30-day window to send in a debt dispute letter. This letter should include personal information, verification of the amount owed, and the creditor’s name. Remember to ask the agency not to report the debt to the credit bureaus until the matter gets resolved.

Then, send in a second dispute letter to the credit reporting agencies so they too are aware that a dispute is ongoing.

If your case remains unresolved, the default will appear on your credit report and leave a negative print on your score. Still, you have the right to go on with sending dispute requests to the credit reporting agency. This time, you’ll be arguing the accuracy of the information and asking for removal or correction.

Get It All In Writing

When debt collectors first contact you, they should give you the details of your default, including the lender’s name and how much you owe. They must also share that you can file a dispute and request the name and address of the original creditor.

Not getting this information during the first call means you’ll probably get it in writing within five days. Even if you receive essential data over the phone, ask for written verification of the same. Also, consider recording phone conversations to be on the safe side.

It’s also wise to ask collectors to put any promises or agreements you reach on paper. For example, if a collector agrees to settle your obligations for less verbally, inquire about this on paper. Otherwise, you won’t have any legal remedy if they try to charge you extra money after paying the agreed-upon amount.

Last, put in writing any requests you make. Keep a copy for yourself of any communication as proof in case you need it later on.

Try Negotiating Or Settling The Debt

Not settling your debts on time means you leave space for damaged credit and a lawsuit. Still, we don’t suggest agreeing to pay the total balance at first. You have options available to ease the consequences of your financial undoings.

First, offer to pay a part of the lump sum the collector is asking for outright. It’s best to start low because you will likely settle for far less than your initial offer.

As for the amount you can settle for, it depends on the situation. Sometimes, medical providers are more willing to reduce your recent bill. Other times, collection agencies that bought the debt from your creditor at a discount may be more lenient.

If this fails, consider other ways to pay back what you owe over a more extended period. Some creditors may offer you a payment plan with a bit of interest. Yet, the sooner you meet your obligations, the faster you can move on.

Finally, unless you can afford to settle by your rules, work with a credit counselor. This pro can strike you a debt management plan to pay off your debt at a favorable interest rate. If you decide to take this path, reach out to a nonprofit credit counseling agency. To do so, visit the FCAA website or call the National Foundation for Credit Counseling.

Decide How To Communicate With Them

It’s up to you to dictate how and when debt collectors will reach out to you. You can go a step further and drop communication altogether. Yet, you wouldn’t like to take things that far, but keep contact at a decent level.

Once you decide on the means you’ll communicate through (phone, email, or postal mail), collectors must respect your choice. But if you ask the collector to stop correspondence, they can’t call you except to serve you with a lawsuit.

Moreover, collectors can’t use abusive or obscene language to get you to pay. So if the collector sends offensive texts or voicemails, keep the messages. These records can be on your side when you decide to sue the collector or try to settle the debt.

Can Debt Collectors Seize My Stimulus Check?

If you want to know “can debt collectors take your stimulus check,” it depends on the obligations. Meaning, agencies that followed the law to obtain judgments could take your stimulus money to settle an accrued debt. The same is valid for other private due amounts if there’s a successful garnishment against your accounts.

As for federal student loans, your stimulus payment won’t be in danger. Plus, you needn’t have to worry about past-due federal debts, such as tax debt or child support. Last, if you’re in bankruptcy, your stimulus payment will not go towards offsetting your obligations.

Still, the newest stimulus act won’t protect you against private creditors. Having credit card debt means your stimulus funds can get garnished. Meaning, if there’s a levy on your bank account and your stimulus funds hit that account, they will get used to offset that past-due debt.

Finally, those who wonder, “can debt collectors take my stimulus check” for a delinquent debt should take things seriously. If the creditor sued you and obtained a judgment, they can levy your accounts. In short, any stimulus money deposited into those accounts can be subject to garnishment.

What Should I Do If I Can’t Pay The Debt Off?

If you can’t keep up with monthly payments or repay the total amount you owe, be honest with your creditor. Try to make a payment plan for the remaining amount or seek help from a credit counseling agency. This nonprofit financial institution can help you set a debt-management plan.

Then, the agency will pay your creditor and stop charges on late payments. The upside of this practice is that your debt reduces, and you remain current. Through these institutions, you can usually pay off your debt in three to five years and even boost your credit score.

When everything else proves futile, you can file for bankruptcy. This way, you halt all collection attempts right away. Depending on the bankruptcy type, you can eliminate all due amounts by liquidating your property and distributing the proceeds to your creditors. Or you can set up a payment plan with affordable payments over the next five years.

What Will Happen If I Never Pay The Collection Agency?

If you’re feeling stressed out, remember that at some point, things will get straight. Eventually, you will manage to pay off what you owe and find debt relief. Or, you won’t pay off your debts, and they will become obsolete as time passes. Here, the statute of limitations on credit card debt is on your side. It varies by state, or from three to ten years.

One way or another, matters will get resolved sooner or later. What scares most debtors is being on the hook for defaulted loans. The pressure can worsen if collectors are hounding you or a lawsuit is pending.

Overall, three scenarios can get you out of the financial dead-end. What you choose will depend on your current situation, the lender, and the money you owe.

In the best-case scenario, your debt will become time-barred and fall off your credit report. Since the creditor has limited remedies for collection, you no longer have to fear lawsuits or having your credit harmed.

The middle-ground scenario has proven as the most realistic for debtors. Here, the consumer reaches a sensible settlement on the debt to satisfy the balance at a reduced amount. You will even arrange payments structured to match your budget. In this case, you can work with a debt relief attorney or a credit counseling service to negotiate debts or declare bankruptcy.

The worst-case scenario would be a lawsuit once the creditor obtains a judgment. Then the debt will get collected through wage garnishment, asset seizure, or liens against real property.

Bear in mind that the worst-case scenarios happen to consumers who avoid the calls and letters from debt collectors. Hence, steer away from not being proactive to work on the financial problem until it becomes impossible to resolve.

Avoid Debt Collection Scams And Protect Yourself

Unfortunately, leaving open unsettled accounts means you’re a target for debt collection scams. Even if you don’t owe anything, many cons will try to trick you into paying. To ensure the person who’s been contacting is legit, watch out for the following signs:

• Check your mailbox. The validation letter is a clear indication that you’re dealing with a legitimate debt collector. Hence, always ask for a validation notice when you only receive phone calls or emails from an alleged collector.

• Verify your details. Even if the company and the amount owed are legit, it might not be yours. So, find out relevant information on the debt, including the original creditor and the amount. Often, the debt can be accurate, but of someone else who shares your name or an act of identity theft. When getting charged, it’s also essential to ask, “can debt collectors take your stimulus check”.

• Focus on the ways to pay. If the caller demands that you pay through a wire transfer or a prepaid debit card, something might be fishy. In reality, most companies tend to approve terms, and payment means you’re comfortable with. Moreover, legit debt collectors will strive to create a plan that helps you stay current.

Final Thoughts

Being well-informed of the steps you can take once debt collectors contact you can help you deal with them. Collection agencies must follow strict rules when collecting on old debt, so knowing your rights will give you a head start. Most importantly, never ignore collectors but get all essential information in writing.

What about your experiences with overdue loans and credit? How did you manage to deal with debt collectors and get out of the financial mess? Share your past experiences with us in the comments below and sign up for our newsletter.

FAQ

What happens after seven years of not paying debt?

Even though debts won’t vanish after seven years, having them removed from your credit report can improve your credit score. The upside is that only negative information gets removed from your report after seven years. In contrast, open positive accounts will remain on your credit report for good.

What happens if you ignore a debt collector?

Unless you communicate with the collector, they will probably file a collections lawsuit against you. If you also ignore the court filing, the collection company will get a default judgment against you. Anyways, don’t share personal details over the phone to avoid falling for scams or resetting old obligations.

How can I get out of debt collectors without paying?

There are three strategies to remove collections without paying. First, you might send a goodwill letter asking for forgiveness. The second option is to craft dispute letters to challenge the collection. Finally, you could hire a collections removal expert to delete it for you.

What should you not say to debt collectors?

It’s wise to avoid giving away personal information such as phone numbers, addresses, or employers. Plus, even if the debt is yours, don’t admit that from the onset. This way, you can get in trouble when trying to file a dispute for inaccuracy. Also, never provide bank account details.

How long before a debt is written off?

Most credit card companies write off accrued debt when they consider it uncollectable. Giving up on collecting often happens when you don’t make payments for at least six months. Then, most unpaid debt will disappear from your report after seven years. Remember that each state has a different limitation on collection.

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