Getting behind on
bills is never a good idea -- but it happens. In fact, nearly 15 percent of
consumers deal with debt collection agencies at any given time. It can be unsettling
when a debt collector tracks you down and inquires about repayment. But owing
money to a creditor does not place you completely at its mercy. The Fair Debt Collection Practices Act enforced by the Federal Trade Commission protects
consumers against unscrupulous tactics employed by collectors. Still, it is up
to you to be educated and know your rights. Here is a look at six things to
know about debt collection.
1. Talking to a debt collector is smarter than avoidance. You should not
ignore notices about debts or debt lawsuits or try to evade all contact with a
collector. It is a good idea to talk to a collector at least once to get more
information and discuss steps to resolve the situation. The collector will try
to direct the discussion toward commitment to payment, but it is important to
obtain data first. It is possible that the collection agency is going after the
wrong person or that their information is incorrect. After this initial
contact, a debt collector has five days to send you a written validation notice
outlining the name of the creditor, the amount they believe you owe and what
actions you can take.
2. You can ask a debt collector to cease contact. You have 30 days after receipt of the validation
notice to send a response to the collection agency. If you disagree with the
assessment, explain why and ask the company to stop contacting you. You can
find sample letters at the Consumer Financial Protection Bureau (CFPB). Keep a copy of your letter and send it via
certified mail so you can verify receipt. Remember, while sending a letter stops the phone calls, it does not
erase the debt. The creditor or the debt collection agency still can sue you to
collect the debt.
3. A debt collector's phone calls are restricted. Debt collectors cannot call you before 8 a.m. or
after 9 p.m. unless you give them permission to do so. They also may not call
you at work if you have asked them not to (you can make this request verbally
on the phone or put it in writing). If you hire an attorney, the debt collector
must go through your attorney instead of talking directly to you.
4. Debt collectors cannot share information with family
or friends. Debt collectors may
contact family members and friends to inquire about your address, phone number
and workplace. However, they cannot contact these third parties more than once.
In addition, they can only reveal information about your debt situation to you,
your spouse or your attorney -- not family members or friends.
You can record your phone conversations. Some states require that you have the other party's
consent before recording a phone conversation. (Visit the Digital Media Law Project to determine your state's recording rules.) Even if
consent is not required and even if you are not actually making a recording,
sometimes it can help to tell a debt collector that he is being recorded. In
the past, some collectors have issued threats, used obscene language, harassed
people, or made false claims or misrepresentations. Today, all of these actions
are illegal. A recording request by a customer can help reinforce the
importance of professionalism with a debt collector – whether the customer
actually records the call or not.
6. You can file a complaint. You have several recourses if you believe a debt
collector is acting unethically. Because many states have debt collection laws
that differ from the federal debt collection act, you should contact your
state's Attorneys General office. (Find yours via the National Association
of Attorneys General.) You also can
file a complaint with the CFPB and
with the Better Business Bureau in the city and state where the debt collection
agency is located.
You do not have to
deal with debt collectors on your own. If you are dealing with serious debt and
having a hard time making minimum payments, a reputable consumer credit
advocate or debt settlement firm can help. Look for a company that is a member
of the American Fair Credit Council.
Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC providing comprehensive consumer credit advocacy and debt relief services. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.
The information contained on or provided through this site is intended for general consumer understanding and education only and is not intended to be and is not a substitute for professional financial or accounting advice. Always seek the advice of your accountant or other qualified personal finance advisor for answers to any related questions you may have. Use of this site and any information contained on or provided through this site is at your own risk and any information contained on or provided through this site is provided on an "as is" basis without any representations or warranties.