A Consumer’s Guide on How to Handle Debt Collection Agencies
By: Jeffery Hartman
A Consumer’s Guide on How to Handle Debt Collection Agency
1. You need to be aware of debt collection agencies who tend to offer you with a credit card in the case you repay a potentially expired and old debt, in parts or in full. Different terms like “Balance Transfer Program” or “Fresh Start Program” is continually used by different companies in order to describe the offers that will enable you to transfer the old debt that you have had into a new credit card account, the post you have made a particular number of payments. In the case that you have accepted the offer and started on making the payments for the debt, the time limit for the agency for collecting debt, as per the statute of limitations, that provides them with a timeframe to sue you will restart from the beginning. However, it needs to be noted that the company, which has provided you with the credit card, might not mention that by you having accepted taking the credit card offer in the first place.
2. ‘Caller ID Spoofing’ is something that is illegal for an agency for collecting debt to use against you. It has been found out that certain debt collection agencies are making the use of fake or ‘spoofed’ numbers in order to conceal their identities as debt collectors while trying to contact you. Some instances of such behavior include debt collection agencies using the numbers of government entities or even your relatives or spouse, in order to make you answer your phone.
What needs to be done in case of a debt collection agency tries to contact you?
The first form of contact that is usually used by debt collection agencies while contacting a defaulted borrower is in the form of a call or a dunning letter, also known as a collection letter. It is prudent to never ignore the calls of a debt collector, even if the debt in question is one that you don’t familiarize yourself with having owed. You also need to check if the debt collection agency, that has contacted you is a licensed body that has the power to collect in the State that you live in. Also, make sure that the agency for collecting debt, which has contacted you, has provided you with the requisite information. All debt collection agencies are required by law to provide you with certain information in the case they contact you.
This information that needs to be provided to you during every single communication includes:
Another important thing that you need to keep in mind is that the collection agency or the collector for the debt provides you with proper validation for the debt, especially when the first attempt for collection is done via phone.
The validation needs to include at all costs, the following things:
It is important to note that this validation must be sent to you by the agency for collecting debt, within a span of 5 days from the day that they have first contacted you. Another important thing that you must do includes requesting a written verification from the debt collector, even in the case that you have recognized the debt in question.
Some of the things that must be part of this verification include:
It is also important to note that once you have requested for verification from the agency for collecting debt, they may not create contact with you in order to collect from you the debt that is owed until they have provided you with the legitimate verification document. You must not get pressured into having to make any kind of payment until you are in possession of the verification document of the actual debt.
The next step involves confirming if you actually owe the particular debt or not. Make sure that you know who the original creditor is. If you cannot place them in your head, contact them and inquire from them, whom they sold or assigned your debt to. Try to figure out if you remember even having bought any services or products from the business that you owe the particular debt to, and whether the amount stated in the debt is correct or not. You also have the right to request from the actual creditor, media or copies that state the statements or checks of the actual agreement. Having a look at your credit reports can also prove to be of help.
Try to figure out the age associated with the debt. In the case the statute of limitations pertaining to your debt has expired, your debt collector is supposed to disclose this particular information in front of you and explain to you the legal rights that you have. The statute of limitations is basically the duration of time that any collector or creditor has before opting to go to the courts and sue you as an attempt of collecting the debt that you owe to them. However, they also have the right of call-to-attempt-to-collect in the case you are the resident of a state that has time-barred policies.
In the case the statute of the limitation has expired, it is the collector’s legal obligation to include this information as part of the letter of collection. This information is provided in the form of this following statement, in a format of 12 points and written with a color that is different from the remainder of the text.
This statement is:
“IT IS BY LAW THAT WE ARE REQUIRED TO PROVIDE YOU WITH THE PROVIDED INFORMATION REGARDING THE DEBT THAT YOU HAVE. The time limit that has been permitted by law (also known as the statute of limitations) which protects you from getting sued for the collection of the concerned debt has come to an end. However, if a person decides to sue you regarding the aforementioned matter in order to make you pay the debt, the rule of the court states that you ARE REQUIRED to notify the court regarding the incident, and the expiry of the statute of limitations, in order to prevent your creditor from securing a judgment from the court. You can CHOOSE to CONTINUE MAKING PAYMENTS against your debt, despite the statute of limitations has expired. However, you need TO BE AWARE of the fact that once you proceed with your first payment against the debt after the statute of limitations has expired, the right of the creditor to sue you, so as to make you pay the complete debt in one single payment may/will START AGAIN”
In the case that you have opted to hire an attorney, you must provide the debt collection agency with the name and contact details of the said attorney. After having intimated the agency for collecting debt that you have hired an attorney and provided them with the requisite information stated above, the agency for collecting debt can not make contacts with you directly, however, they can do the same by contacting you through your attorney at all times.
It is important that you always maintain a copy of every single letter that you have ever received from the agency for collecting debtor sent to them. It is important to keep a copy of both the front and the back. Make sure that you also maintain elaborate notes of every telephonic conversation that you have had with such agencies, keeping in mind to include the date of the call, the person’s name that you had interacted with and the subject and details that have been talked upon in the call.
It is illegal to make false claims or harass you. It is a legal obligation for any agency for collecting debt to make any kind of false statements to you. Such false statements may include:
Debt collection agencies do not have the right to:
Disputing a Debt: Steps to take if the agency for collecting debt has provided you with wrong information pertaining to the original debt
In case the information provided by the collection agency regarding the original debt is wrong, please write to the agency after having received the validation. You must make sure that you write within 30 days of having received the validation from the collection agency. It is important to note that you must write a formal notice to the company, and not settle down for a telephonic intimation in order to inform the agency that the information provided by them is wrong. In case the information provided by the collector is wrong, make sure that you include relevant copies of proof with your letters to show that the information provided to you is erroneous.
You also have the option of stopping the collector from contacting you, during the course of this time when you are disputing the debt. All you need to do is write a cease collection letter to the collection agency.
The contents of your letter must include, ‘I am going forward with disputing this debt, and would request you to cease all forms of communication in this regard. In the case that you have contacted a credit reporting agency with regards to this debt, please make sure that you contact them again and notify them that I have disputed this debt, and ask them to delete this debt from the credit report that I have.’ Any kind of contact from the collection agency’s end, other than that which is legally allowed, will be considered a violation of the law. In case the collector’s employees have used any kind of abusive tactics, you must also mention the same in the cease collection letter that you write. Also, make sure that while sending the cease collection letter, you must send one copy to the collection agency and one copy to the original creditor using the means of certified mail. Request return receipts, for the delivery of the letters and, include with the letters any copies of relevant documents or proof that provide a strong reason for you having raised the dispute. Make sure that you keep a copy of the letters with yourself for the records and for future use.
What needs to be done in the case of identity theft?
In the case that a debt collector or an agency for collecting debt has contacted you regarding a debt that you know and believe you do not owe, follow the steps mentioned below:
After you have sent a cease collection letter to the collection agency, they are only authorized by law to contact you for providing you with a due intimation of them planning on taking any kind of legal action against you, or as a response to any other forms of communication that you might have made with them. It is important to note that a collection agency has the right to sue you, even after having received your cease collection letter.
What to do if you find erroneous information on your credit report?
In the case that you have encountered something wrong in your credit report, you are entitled as per the Federal Fair Credit Reporting Act, to dispute any kind of wrong information that might reflect on your credit report. In order to start the process of dispute properly, please adhere to the following checklist:
In almost all cases, the credit-reporting agency is required to look into the dispute that you had risen and provided you with the valid results of the aforementioned investigation, in a written format along with a free copy of the updated credit report that has been rectified after omitting the debt.
Paying your debts in the case of a valid debt
Make sure that you thoroughly review your finances and have a proper idea about the steps you are going to take in order to repay your debt. It is important to gauge at the ability that you have towards paying off your debt. Always keep in mind that being unable to repay the debt will result in you being awarded a poor credit history, which will, as a result, prohibit you from receiving a credit ever again in the future.
In the case, you figure out that paying off the debt immediately is something that you cannot assure; honesty is the best policy to adopt when interacting with the debt collector. Be true and you may be able to negotiate your way towards a lower payment amount. Another opportunity that may arise out of this includes the debt collector working with you in order to devise a workable payment plan to repay the debt. You need to adopt some tips while negotiating with debt collectors and creditors. As is the case with any kind of negotiation, you must be prepared from the beginning. In order to help you best prepare for such negotiations, please follow the checklist provided below
Before the start of the negotiations:
1. Make sure that you know exactly the outcomes that you want from your negotiations, to ensure that you stick to your final goal.
2. Make sure that you have gathered every important document pertaining to the debt.
3. Make sure that you are well aware of all responsibilities and rights that pertain to you as per the law.
4. If possible, try to get additional help to aid you through the negotiation process. This help might be in the form of a credit counselor, interpreter or lawyer.
· At the time of the negotiations
1. Listen very carefully and intently.
2. Make sure you ask questions that have complex answers and cannot be answered simply by saying ‘Yes’ or ‘No’.
3. Have the courage to end the negotiations if you are getting the feeling that you are being pressured into accepting something that doesn’t hold right with you.
4. Whatever final agreement you reach with the creditor or the agency for collecting debt must be secured in writing at the end of the negotiations before sending them any payment information.
Additional things that you must do or mustn’t do
1. Always be honest. Do not provide false promises to the debt collector of being able to clear your debts when in reality you would not be able to do the same and vice versa.
2. Make sure that you pay any kinds of secured debts that you have first. Secured debts refer to the debts that you have, which are backed by some form of property or assets that you own. That being said, make sure that you don’t ignore any kind of unsecured debts that you might have. Attempts to clear them as soon as possible must be made by you.
3. Never get persuaded by a debt collector into opting to borrow money from a relative, family member or friend in order to clear the debt that you owe. Getting into further debt should never be a recourse towards paying off the debt that you already owe.
In the case, you have been able to reach a settlement agreement with the agency for collecting debt regarding the payment plan associated with the debt that you owe, the agency must provide you with a written confirmation that states the agreement has been reached, within the five business days from the date of having reached the agreement. The contents of this written confirmation must include the following:
In the case that you owe debts to more than one creditor, it is the duty of the collection agency to separately list:
What to do in the case an agency for collecting debt to sue you?
It is imperative that you never ignore a court summons. You must always seek to consult an attorney. In the case that you cannot afford an attorney, you must visit the court all by yourself, meet with the court clerk, and answer to the summons by yourself. In the case that you happen to ignore a summons of the court, the creditor is liable to obtain a decision from the court, also known as a default judgment that may order you to pay money that includes additional charges or interest fees over the original debt amount that you owe. If a creditor is able to obtain a judgment against you, the creditor obtains the legal right to take money from you by deducting the same from the wages that you receive.
It is important to note that creditors in order to satisfy judgments as per the State and Federal Laws can never use certain money. This type of money is also known by the name of exempt funds. You have the right to make use of these exempt funds in order to pay off your debts, but a creditor does not have the right to forcibly freeze these funds and help repay the debts they are owed, from you or your bank account where you might have such exempt funds stored.
The lists of funds that fall under exempt funds include:
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