At best, debt collectors can be annoying but at worst, they are predatory and sometimes even illegal. If a debt collector is hounding you, it is vital to know how to handle them, utilize your legal rights, and decide on the best method for managing your debt.
Before you make a payment or even say anything:
- Think before you speak, you may end up causing the situation to get worse
- Find out all the information you can on your debt
- Know your legally protected rights
- Make a plan for taking care of your debt
When a debt remains unpaid for at least a month after the due date, it will be reported as a delinquent account. After 180 days, the creditor usually stops trying to collect your debt. Your creditor may then sell your debt to a third-party debt collector to receive some sort of payment.
You may soon start getting collection notices from a company you do not recognize. You still owe the money, but now it is to a third party company. Around 77 million people in the United States have a debt in collections listed on their credit report.
A debt in collections will leave a mark on your credit score for up to seven years. This makes opening new lines of credit more expensive and harder to get.
How to Deal With Debt Collectors
- Think Before You Do Anything
Do not rush into making a payment when a debt collector reaches out to you. You may want to just get it over with, but do not rush into any decisions. Debt collectors prey on those you are anxious to rush into a decision. They create a sense of urgency to get you to pay anything, they do not really care how much.
Do not give in to the pressure to pay on the first contact. Making a payment as low as $5 is an acknowledgment and may have consequences. Do not pay, do not say you will pay, and do not give any payment information. Ask for further info on your debt and tell them you will contact them later to discuss further.
As debts get sold and sold again, record keeping often falls to the wayside. Many debts that have been sold contain errors, like the amount owed or who owes it.
Gather all the facts you possibly can from your new collector and your own files. Ask for a validation letter from the collector if you do not automatically receive one. This should hold the details of the debt, original creditor, and how to challenge it. Search your own records for any pertinent info. Keep good records of every time you communicate with the collection agency and any payments you have made.
- Be Aware of Your Rights
The “Fair Debt Collection Practices Act” lays out your consumer rights and protects you from predatory collection practices. It lays out rules on things like communication, honesty, and challenging your debt. Your state may offer additional consumer protections. If you feel your protections have been violated, consider filing a complaint with the CFPB.
Learn your rights and use them. Fully understand your rights that are under federal and state protection. Exercise your rights, whether it be sending a letter to request more info or demanding they cease contact, and do not be afraid to do so.
- Make a Plan for Moving Forward
After you take the time to understand your debt and your rights, weigh your options for handling your debt. Find a way to pay it off. Research debt relief options like credit counseling. Challenge the debt. In severe cases where you know you will not be able to pay it off within five years, consider filing for bankruptcy. Assess how well each option would meet your needs and affect your finances. Seek out a local professional for advice, if you need it.