Debt Collector Tips
What is
a debt collector? According the the Fair Debt Collection Practices
Act (FDCPA) a debt collector is:
The
term �debt collector� means any person who uses any
instrumentality of interstate commerce or the mails in any business
the principal purpose of which is the collection of any debts, or who
regularly collects or attempts to collect, directly or indirectly,
debts owed or due or asserted to be owed or due another. ... The term
does not include any officer or employee of a creditor while, in the
name of the creditor, collecting debts for such creditor.
When
you fall behind on your payments, your creditor collections
department will usually try to call you at home or work to find out
why your payments are late. You'll also see a notice of late payments
on your monthly statements and may receive past-due letters in the
mail. Your creditor may also transfer your account to a third-party
to try to collect the late payments; third-party debt collects
receive a fee or a percentage of the debt collected. If your creditor
is unable to successfully collect the debt after six-months, your
account may be charged-off and bundled with other charged-off
consumer accounts and sold, in auction style, to a third-party, a
debt buyer. Debt buyers purchase your account for pennies on the
dollar and will attempt to recover the full amount. At first, the
debt buyer will demand 100% of the payment due. Later on, debt buyers
will offer you a settlement ranging from 20% to 50% off the past-due
balance. The good news, the Federal Trade Commission (FTC) has
created a pamphlet that outlines the Fair
Debt Collection Practices Act (FDCPA), a guideline for debt collectors.
On your initial contact with a debt collector,
send the debt collector a written request to verify the debt. Usually,
the request must be sent to the debt collector within 30-days of initial written communication from the
debt collector.
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Before agreeing to pay-off the debt,
payment plans and/or settlement plans, check to see if the statute of
limitations has expired for the debt. If you except new credit from your
creditor or make payments on your account, you may reset the statute of
limitations. After the statute of limitations has expired, no civil
lawsuit may be filed against you; if so, you can claim the absolute defense of
statute of limitations. Also, most past-due unpaid debts remain on your
credit report seven (7) years after your account became past due; after the
seven years, the past due account falls off your credit report. Hence, when
the statute of limitations has expired and the past due account falls off your
credit report, the only obligation to your creditor or debt buyer is a moral
obligation to pay-off your debt. You can stop a debt collector from contacting
you by writing the debt collect a letter telling them to stop contacting you
at work and home.
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A debt collector is a
professional negotiator. They're more interested in if your employed and if
can you make a payment today. Debt collectors are trained to get you to make a
payment today; they're not your friend and really don't care about the
circumstances surrounding your financial distress. If you cannot make the
payment, just be straight-forward and tell the debt collector that you cannot
pay today, or tomorrow, or the next day or the end of month; unless you win
the lottery.
Many
states have their own debt collection laws. Contact your state's
attorney general.
Prioritize
your bills. Fold a sheet of paper in half. On one side list all your
monthly bills (rent, mortgage, electric, gas, water, car payments,
car insurance, gasoline, lunch, groceries, cable, cell phone bill,
misc) and on the other side list your wages. Add up your wages and
then add up your bills. Are you paying more in bills than in wages?
Finally, start numbering your bills from 1 to n where 1 is the
highest priority: your rent/mortgage will probably be numbered 1,
followed by your electric bill and so on. Prioritizing your bills
will help you decide if you can make payments toward your past due
bill. Do not agree on payments that you cannot afford. Also, do not
send the debt collector post-dated checks or agree to have the
payments electronically taken out of your checking or savings
accounts.
Again,
don't tell the debt collector your financial story; remember, a debt
collector's job is to collect debts, to get you to pay your debt
today or within the next three to six months. Usually, a debt
collector's compensation is based on the amount of debts collected;
listening to your financial story may be perceived as eating away at
the debt collectors compensation. Also, no matter how sad your story
is, you still owe the debt; sad stories won't make the debt go away.
Control
the flow of your financial and private information. The debt
collector doesn't need to know your martial status, your age, your
employment history, employment bonuses, federal tax income refund
checks, your bank account numbers, if you're a homeowner and other
similar information. A debt buyer could later use this information
to help determine whether you're a good candidate for a debt
collection lawsuit.
You
must stay calm when you talk to a debt collector. How do you stay
calm and focused? First, read the FDCPA and take control of the
call. Also, if you have a tape recorder, ask the debt collector if
they agree to the recording of the phone call. The recorded call
will keep the debt collector on their best behavior.
If
you agree to any payment plans, then get the agreement in writing.
If the debt collector claims payment must be received today, then
have the debt collector fax you the agreement.
Ask
the debt collector to positively update any collection agency entry
on your credit report; a status of �paid in full� is
better than a status of �settled�. If the debt
collector agrees, then get the agreement in writing.
Try
to negotiate your account at the end of the month.
If
you've been harassed by a debt collector, but all means take the
time and file a compliant with the Federal Trade Commission (FTC)
and your state's general attorney's office. Filing a compliant is
analogous to voting. When your state attorney general receives
hundreds and even thousands of complaints about a debt collection
agency, that puts the debt collector on the attorney generals
consumer protection division radar; a class-action lawsuit may
follow.
If
you have been harassed by debt collectors and can provide proof of
the harassment, many attorneys are ready to represent you in court.
You also have the option of representing yourself in small claims
court, assuming your state has laws regulating debt collectors; check your state statutes and state attorney general's website.
Disclaimer: This site provides general information for consumers and links to other sources of information. Information provided may not apply to courts within your state. This site does not provide legal advice, which you can only get from an attorney; also, the average citizen may obtain this advice free of charge from the Internet. This site has no control over the information on linked sites.
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